Reclaiming Our Market

The independent agent system is in the midst of a marketing channel crisis. Year after year, greater numbers of automobile insurance buyers are choosing to purchase their policies over the phone and online from the direct writer market. In 2010, more than three million auto policies were purchased through these channels. All studies and projections indicate that these trends will accelerate over the near future and that by 2015, more than 50% of new auto policies will be purchased this way.

If we, as independent agents, continue to be prevented from competing through these market channels, our continued existence is in serious jeopardy. For the companies that write through the independent agent channel, this means the success of their auto business is in peril as well. We are already regularly asked by company marketing representatives to find ways to increase sales and hear complaints of how slow business is. Part of the reason for these circumstances is our inability to compete on a level playing field, and only the carrier can ultimately change that handicap.

Independent agents understand, and to some extent, share the carrier’s concern about doing business without face-to-face personal contact. However, whether we are completely comfortable with this way of selling insurance or not, our competitors and our clients are. The direct writers are capitalizing on the how busy and hurried people’s lives are today, auto insurance buyers are increasingly comfortable with writers that accommodate their lives and we fall further and further behind the curve in delivering what the public wants.

My agency has always tried to be on the cutting edge of selling and delivering insurance products. We utilize any and all opportunities to offer visitors the ability to obtain an online quote (auto, life, health and dental), especially highlight when a product may be purchased online (health and dental) and advertise prominently when the product can be purchased over the phone (Progressive auto, health and dental). We will soon be adding travel and special event coverages to these offerings.

We have always been willing to work with our carriers to try new systems and ways of assisting clients. At this time in market evolution, we are ready and eager to work with any carrier that recognizes the future direction of the industry and wants to explore offering e-signature. We have investigated a number of companies that make offering this easy, and with no cost or procedural changes for your company. We have investigated the EZBuy Qwik Sign and DocuSign products, two systems with full auditing that work entirely within existing workflows.

All of this begs the question: Why are almost all carriers ignoring, or at least not indicating any interest in, offering esign capability to the independent agent channel? The technology and legal backing for esign have existed for over a decade—Progressive, GEICO and other direct writers have been selling through this method since the late 1990s. (To be fair, Progressive did finally grant this capability to its independent agent channel, albeit a decade after they began using it in their direct channel, and only for their personal auto insurance product.)

Having been in the insurance industry in various capacities for over two decades, it is hard to believe that it is a technological issue. Insurance was one of the first industries to adopt computers and data processing, and then it moved to the desktop PC shortly after its introduction. So is it fear that prevents adoption, as mentioned above? If so, you must ask yourself if you fear esign more than extinction, because without a viable personal auto product to attract new clients, it will become increasingly difficult to succeed in other lines of business. Or is it a lack of trust and confidence in the independent channel? We sincerely hope that this is not the reason. It would be difficult to imagine that companies would place more trust in hourly, inexperienced call center personnel than in the seasoned entrepreneurs that own, run and work in most independent agencies. There is certainly no lack of confidence in us where the public is concerned, as survey after survey shows—we just cannot offer them the convenience they increasingly demand.

What is even more frustrating is that esign is hardly cutting edge in 2012. In fact, it is old technology in IT terms. Direct writers are currently way ahead of this channel and what we are asking here. As we write this, many companies are writing insurance directly online through their websites, a capability no auto carrier offers to the independent agent. Additionally, carriers are experimenting with mobile applications and Facebook sales. Forget the 21st Century; we are still trying to compete in the late 20th Century.

If you are as concerned about the future of our participation in the market as we are, there are a number of things we think you can do to help move these efforts forward. Constantly and consistently asking for this from all of your company representatives will communicate to the companies how widespread and general the interest is in esign. Addressing the subject with membership organizations like IIABA and other industry associations will further keep the issue front and center. And, we should insist on a formal structure within these major associations to consistently address all current and emerging channel issues.

It is time we reclaim the market we created.

Dean Basse (dbasse@danburghardt.com) is general manager and Daniel Burghardt (dburghardt51@cox.net) is president at the Dan J. Burghardt Insurance Agency in Metairie, La.