Inside Young Agents’ Shifting Paradigms

Customers’ expectations are changing, and agencies need to make a paradigm shift to remain competitive in the future, according to young agents who participated in the ACT Strategic Future Issues Work Group’s focus group during the Big “I” Young Agents Conference last fall.

The young agents are in their 20s and 30s and primarily focus on commercial lines production. Most are from family agencies, large and small, located in rural and suburban locations.

How do young agents differ from previous generations? They do a lot of buying online to save time and frequent sites that provide a good user experience. They are comfortable using credit cards online and like value-added services, including e-mail alerts.

The agents use e-mail primarily with their commercial clients and their carriers. One agent uses live Internet meetings with commercial lines clients who are located some distance from the agency. Even though these agents are not the primary users of technology in their agencies, they express frustration that the technology they use at work lags considerably behind the technology they use in their personal lives.

According to the agents, their agencies are dealing with changing customer expectations. Customers are more knowledgeable than ever and they want convenient options to deal with their agent when and how they see fit.

The agents believe most customers, particularly in personal lines, do insurance research online. One agent cites COM Score’s 2007 research, which finds that more than 50% of recent purchasers of automobile insurance from agents also got a quote online.

The agents believe their customers perceive personal lines and small commercial lines as a commodity. One agent estimates that 20% of his customers are with him for service and 80% for price. Another says that although his agency provides construction clients with loss control, human resources and Department of Transportation consulting services as value-added benefits, his price must continue to be in the ballpark to keep the business. The agents conclude that even in this highly competitive, commoditized environment, the keys remain building relationships with customers, providing distinctive value-added services and providing responsive service.

Another change the agents note is that their customers want to have the option to pay by credit card so that they can get miles or points. Several carriers offer this option, but it remains a challenge on agency-billed business.

According to the agents, customers are primarily interested in agency Web sites for information on the agency and services relating to their policies, including billing information, making payments, printing auto ID cards and generating certificates of insurance. Some of the agencies are generating online sales for specialty lines such as travel insurance and horse mortality insurance. So far, auto insurance and certain specialty coverages seem to be the only areas where online sales have taken off, but the agencies worry about “the model that has not been created yet” making a big impact on other lines of their business.

Accordingly, there needs to be a major shift in the type of value that independent agencies deliver, the agents say. The value is no longer in the transactions that the agency performs; customers today take these as a given. They are looking for a new value that justifies buying from an agent rather than just going online. “If we just turn ourselves into order takers, we’re out of business,” one agent says.

Another said the industry needs to make transparent all the services agents provide clients, including the fact that agents search the market to present the best options. This new value for personal lines customers might be proactive risk assessment, providing cost-saving options, claims counseling, disaster planning advice, etc. For commercial lines customers, it might be risk counseling with a special understanding of the particular industry, claims experience analysis for loss control, verifying experience modifications, assisting with the audit process, human resources counseling, disaster planning and recovery, legal and accounting seminars, etc.

A paradigm shift in the value the agency provides its customers requires changes in the functions agency employees perform. Transaction processing needs to be automated to the maximum extent possible, freeing up agency employees’ time to provide these new services. In order to accomplish this, there must paradigm shifts in how agency employees do their work, in how agents transact business with their carriers and in the number of transactions customers can perform themselves on agency Web sites. Industry initiatives—i.e., real time, download, paper elimination and enhancements to agency Web site functionality—are creating the critical tools agencies will need to make these paradigm shifts.

The young agents express frustrations with many older CSRs in their agencies who are reluctant to change and use the new technology tools that are available. One mentions how the younger CSRs work fully electronically, while the older CSRs are reluctant to move away from their paper files. Another agent says it’s important that agencies take the time to train CSRs on their agency management system’s capabilities so that more time-saving features are used.

Jeff Yates (jeff.yates@iiaba.net) is executive director of the Agents Council for Technology.