Founder and CEO of SmartFinancial.com: on a mission to make the insurance buying process more efficient.
It used to be that if you asked someone who they’re insured with, they’d give you their insurance agent’s name. Billions of dollars in advertising later, people now name their carrier and barely remember the agent that signed them on. Meanwhile, the brick and mortar agencies are waning in importance, and companies like Nationwide are moving to a virtual workforce model. In my role as a CEO overseeing an insurance-technology platform, I’ve observed one thing that remains the same despite all the confusing shifts over the past few decades: Insurance agents are still the primary sales channel for insurers.
Even though carriers can communicate directly with consumers at a lower cost, insurance agents who bring profitable business to carriers are a valued and integral part of the insurance distribution chain. Here’s how future trends will likely shape the carrier-agent-customer relationship and what carriers can do to stay ahead of the curve.
1. Support agents in their role as advisers.
We see a future where insurance agents become more specialized in various niche insurance products. Agents will bring more value to the relationship with the customer by understanding and explaining coverage options on more complex policies. The agent’s role will also become much more of an advisory role that goes beyond the traditional aim of selling insurance products. Because agents are on the front lines serving customers, they will be expected to demonstrate expertise, not only about the insurance products they sell, but also the many ancillary services that insurance carriers are increasingly offering to add value to their insurance products. Car loans, home loans, cybersecurity prevention and other services will become standard package offerings. And someone has to service them. That’s why it’s important for insurers to give agents the training and tools they need to attract and retain customers in the digital era.
Carriers can offer agents cost-share for marketing materials and insurance leads. They can encourage seminars and certification programs for specialization. Carriers can also invest in quote- and policy-automation tools to enable agents to be more effective in writing business online. Faster rating and quoting tools can also mean faster and easier policy submission processes.
Customer expectations of insurance agents have also changed. Personal lines customers and commercial insurance customers want to be able to communicate with agents across all channels: phone, online, video and in person, whenever and wherever they want. They not only expect agents to deliver relevant expertise but they expect a higher level of personalization when it comes to products and services they purchase. The relationship here matters more than ever too, because the customer is reliant on the agent to get the most out of the services and products they buy. Carriers also mirror these new expectations for insurance agents. They expect agents to excel at multichannel marketing, where they must demonstrate their expertise as advisers and answer questions quickly and accurately. And carriers expect agencies to increase their scale and operational efficiency in order to remain competitive.
In response, carriers can offer agents seminars about customer retention, digital marketing and multichannel communication. How much training is required depends on the carrier product, but I think a combination of both field support and online education makes sense.
2. Rethink compensation.
Insurers should also reevaluate all the different ways to compensate agents. For instance, retention and cross-selling add value to the relationship with the client and should be rewarded more heavily than ever. In my experience, compensation models that incentivize growth work best.
3. Be open to working with independent agents.
The good news for agents is that carriers have shifted their focus to distribution, which is an opportunity for all agents to flourish. In fact, the hard and fast distinctions between captive and independent agents are beginning to fade. Captive carriers are working with independent agents and independent agencies are representing captive carriers, like Liberty Mutual and Allstate. The lines have all blurred, but what has not changed and become even more important is the need for the agent to bring added value to a policy. One advantage to working with independent agents is that when an existing customer wants to leave another carrier, they may still be open to working with you.
Insurance has indeed become a commodity, which means that agencies must sell more policies than ever to survive. And all of these policies will need to be serviced by agents, who not only make risk selection and pricing decisions on these products but who also help educate and retain customers. More than ever it’s important to look to new channels to recruit talent and to support agents while compensating them in a way that encourages them to flourish in their advisory roles.