Agencies in the Digital Age of Insurance

Today’s insurance agencies are faced with new demands from prospects and customers for mobile capabilities, new opportunities to improve agency-carrier connectivity via digital solutions, and new competition from InsurTechs. In the face of this new marketplace dynamic, many leading agencies, including ours – Crane Agency – have seen the writing on the wall and are transforming to become digital businesses.

While huge efficiencies have been gained by both agencies and carriers who are using digital technology for internal process automation, this alone is simply not enough to grow and thrive. In today’s digitally driven, hyper-connected world, agents and carriers need to extend their use of technology beyond their own offices. By connecting through digital technology, agents and carriers work better together and mutually benefit.

Industry-Wide Trends on Digital Transformation

It is easy to say that partnership is important, but how do agencies and carriers see each other’s contribution toward successful digital capabilities? IVANS and Strategy Meets Action (SMA) conducted a research initiative to delve into many aspects of agency and carrier digital transformation.

Here are a few key takeaways from the report, Agencies in the Digital Age, which really resonated with me:

• Web, social media and marketing tools are the 3 top areas of investments in customer-facing technology for agencies of all sizes.

  

  Expanding our agency’s presence through multiple channels and ensuring that employees are trained to meet our clients’ needs through Web and mobile in particular, is an integral part of our business plan. First, like a majority of agencies surveyed, we have put a huge focus on updating our website. From more descriptive content to enhanced design features, we’ve made a variety of improvements to enable a more user-friendly experience for our clients. Beyond engaging with clients on our website, we’ve developed a more effective social media strategy that focuses on creating more personalized content to reach targeted demographics. We are also in the process of rolling out an online customer self-service platform that enables our agency to meet today’s insurance consumer demand for anytime, anywhere service by providing clients 24/7 access to the policy information they need through a custom-branded portal and mobile app. As the world becomes increasingly more digital, I encourage agents to create a detailed strategy for how to evaluate and implement digital platforms as part of their businesses.

• Over 45% of the agencies under $5M plan to increase investment in their agency management systems.

  

  In 2013, our agency transitioned to a new management system because we understand how crucial a single system is to building a strong foundation. A world-class management system drives the day-to-day operations at an agency, enabling the business and all employees to be as efficient and effective as possible. It’s also the hub for all prospect, customer policy and financial data across the business so it’s important to consider how to protect all this data. Extreme weather and natural disasters are becoming more commonplace and can have financially debilitating effects on businesses that are not prepared. To reduce loss and mitigate risk associated with potentially crippling situations, we decided to migrate to the cloud. Hosting our management system and other applications in the cloud gives us peace of mind knowing our data is safe and secure.

• About a quarter of all agencies believe that InsurTech startups will be either competitors (21%) or potential partners (6%).

  

  A concern weighing heavily on the minds of many agencies is the amount of venture capital investment pouring into the insurance industry. Because of such increased digitization, some may wonder if insurance agents are still needed. The answer is yes. I recently read an article in Insurance Business America that stated that 71% of auto insurance shoppers started online. While consumers may start their search online, 50% of auto insurance shoppers close a purchase through direct contact with an agent, and 22% do so by phoning a call center. Insurance is a complex and difficult product to configure. That’s why insurance agents are so important. Agents are knowledgeable, offer advice and help insurance shoppers make informed decisions. Agents provide consumers with more than a policy sale, and no online bot can replace that level of expertise. Although I believe that technology will never fully replace the independent agent, I do think that these startups will have implications for virtually all agencies, either because they offer digital solutions for agencies, become direct competitors, or change the expectations of carriers dealing with distribution partners. Every agency should at least be kept informed and begin to understand the new entrants and their value propositions.

How Is Digital Changing the Nature of Agent-Carrier Interactions?

For agents: Connecting with carriers enables your agency to access new markets and quickly search carrier market appetite to submit new and renewal business, enabling staff to provide product range and carrier choice. Technology also automates the exchange of policy-related information from carriers’ policy admin systems into your management system to ensure the most accurate information is available for servicing. Ultimately, connectivity technology provides your agency with a single workflow for information exchange, reducing manual processes and allowing you to deliver faster, more complete service to your customers.

For carriers: Agents value ease of doing business – from finding markets, to quoting, to issuance and service – over anything else with carriers. The ability to have information delivered directly to our management system versus visiting countless different carrier portals results in significant time savings. As a result, we prefer relationships with carriers who provide digital services that increase ease of doing business while providing a more diverse product range. A significant opportunity exists for carriers who automate information exchange and appetite communications with agencies.

The bottom line is agencies and carriers must partner for digital success. Both sides of the insurance transaction have a stake in – and influence upon – successful digital execution. And failure hurts both sides as well.

For more insights on digital transformation and key findings from the report, watch the “Agencies in the Digital Age” webinar I recently co-hosted with SMA.

Industry Trends, Agents, 2018