Direct agencies lead adoption in four of six technology platforms, leaving independent agencies in the dust when it comes to technological innovation and advancement, according to new research.

“The State of Techsurance 2015: The Use and Impact of Technology in the Insurance Industry” from the Insurance Technological Corporation (ITC) and Velocify found that directs use lead management software, automated dialers, customer relationship management software and agency management systems the most out of any agency channel.

Why are independent agencies behind on the tech front? Jorge Jeffrey, director of research at Velocify, says it’s a mindset of “have to adopt” versus “need to adopt”—combined with perceived price tag. “Meanwhile, the cost of the implementation and system and processes and automation products would be easily paid for by more sales, better sales, retention and closing,” he says. “[Independent agents] overlook the short-term higher cost versus long-term benefit that they’re going to get from that.”

After surveying 1,000 insurance agencies from independent to captive and single-owned to national brands, the study reports that directs are 144% more likely than independents to use lead management software and captives 56% more likely than independents to use marketing automation software.

“There’s still opportunity to capitalize on the benefits that technology offers,” Jeffrey says. “Those who are using it aren’t to its greatest capacity, and even the larger agencies or the direct-to-consumer agencies don’t use it across the board.”

But it’s also not too late for the smaller agencies to catch up. “The independent and captive agencies can still invest and take advantage of other benefits they offer that larger players may not be able to compete with,” Jeffrey says.

The Tech Landscape

Of the six systems the study examines, “everybody seems to have a rating system, everybody seems to have a management system,” says Laird Rixford, president of Insurance Technologies Corporation. “But a lot of agencies have not focused on the sales, marketing and lead management side.”

Lead management and marketing automation platforms—where independents aren’t investing—go hand in hand, and competitors that use them are seeing results: Agencies that report “heavy use” of a lead provider glean 36% of overall prospects from the software.

“Directs and larger organizations buy leads all the time. They know they can make them work because they have a process in place,” Rixford says. “No leads are lost in the funnel and organizations also have automated email marketing platforms that are continually dripping on the consumer.”

Jeffrey says that profitable and growing companies tend to be more committed to technology—and that makes significant differences in revenue and productivity. Those using any one platform had “greater revenue growth and more policies per producer—up to 43% more—and also more policies per household,” he explains. “They were also more likely to have more structured sales processes that were consistent across the organization that they were able to monitor and help grow their revenue.”

Agency-specific factors play a role, too. Agencies where producers comprise more than 10% of employees were the heaviest users of four technology platforms. And different markets warrant different technological platform investments. The study found a CRM was more likely in agencies with a high percentage of revenue from life insurance and less likely in agencies with high non-standard auto revenue. Agency management systems, meanwhile, are more likely in agencies heavy on home insurance sales or selling six or more lines.

And the technological gap could continue to grow. Today’s heavy adopters and users are the same ones planning on investing even more in technology implementation, development and training. More direct (14%) and captive (13%) agencies report expected significant increases in technology this year compared to independents (11%). Of all investments, captives plan to out-invest independents in marketing automation (51% vs. 48%) and lead management software (32% vs. 29%), with independent agencies taking the charge in comparative rater platforms (12% vs. 16%).

“It’s a wake-up call for everybody who can see maybe we’re not investing in technology enough and we could be left behind,” Jeffrey says. “Or even if we’re ahead, we’ve got to continue to invest in technology and keep that competitive advantage and grow it. It’s not just enough to have the technology. You really need to be committed to it.”

What You Can Do

Rixford notes that independent agents have an advantage over competitors without performing as much technology-intensive work because they can compete more effectively at the local level.

“We see day-in, day-out that they’re getting leads from local search like Bing, Google and Yahoo local,” he says. “These leads are free and you need to follow up with them with the same fervor and the same repeatable, consistent process as you would if you bought the lead. Because in essence, you had—you invested time to put your website up, to build that traffic, to generate that lead, to get that client in the door.”

Regardless of the approach, agencies that embrace technology are “the ones that actually implement it, properly set it up, train their staff on how to use it and train their staff on why they need to use it, create a reason and workflow that build the agency’s workflow around the use of that technology,” Rixford says. “Those are the ones that survive.”

Before investing, Rixford advises independent agencies to focus on developing a website that will capture and covert traffic from both traditional and digital leads, as well as a comparative rater and agency management system that properly manages clients. Next, Rixford advises agencies “to look at their consumers and where their consumers are and then purchase the product that is going to meet their needs best.”

Already buying leads? A lead management system will help manage them. Looking to develop, enhance or improve marketing efforts for organic leads? Consider a platform for email marketing, social-media or SEO.

“Agencies that are not implementing technology are going to begin to shrink,” Rixford says. “The agencies that will survive and grow are the ones implementing and using technology. But technology is not just what is you go out and buy tech today and its good for the next 30 years. You need to continually reevaluate the technology and how the technology is working for your agency as well.”

Morgan Smith is IA assistant editor.