Recently, many independent agents breathed a sigh of relief as Google announced it was withdrawing from insurance. This news was definitely a positive and welcomed by everyone currently in the insurance business.
This is not a time for independent agents to get lax or cocky! Although Google has decided to withdraw, it doesn’t mean the online giant might not return sometime in the future. That's true especially if Google views the insurance marketplace as vulnerable and a significant opportunity to make money. In addition, unless you’ve been living on a deserted island, you most already know there are a number of other technology-driven direct carriers poised to enter the marketplace and make their mark.
What the hell is going on here? It’s the evolution of an insurance industry fueled by technology and the perception insurance can be sold direct, without the professional advice and service of an agent. The scary thing is that many consumers are buying into this concept.
Unfortunately, independent agents bear part of the blame for this occurring. For many years, we shared the marketplace only with captive agents, and we were comfortable and fairly successful competing in that marketplace. Matter of fact, personal insurance, although it developed steady and experienced stable growth, was looked upon at many agencies as a second-class citizen.
That resulted in many agencies not investing in the appropriate training their personal insurance staff needed to compete and grow the agency’s book of business. As things progressed, many agencies competed only on price and their staffs became order takers. In addition, clients were told the agency would regularly review and update their coverage. Unfortunately, it never happened in too many cases. As a result, many customers went years without ever being contacted or hearing from their agency.
Along with the advancement of technology, this neglect allowed direct response carriers the opening they needed to convince and attract consumers to buy through them. Companies like Geico and Progressive were born and flourished. As technology continued to advance and other firms saw Geico and Progressive’s direct market share grow substantially, they decided this market was where some significant inroads could be made.
So here we are in 2016. Independent agents breathe a sigh of relief that a significant competitor has decided to leave the market but realize many more are on the horizon. Your personal insurance clients and even your small to medium business clients might be seriously at risk of being taken away by these companies. If you’re an independent agent who intends to be in the marketplace going forward and generates a good portion of your business from this marketplace, it has got to be keeping you up at night.
So what can independent agents do?
There are four important areas agents need to focus on.
First and most important is staffing and training. These areas are critical to the success of an agency. The value proposition of independent agents involves professional advice and service. If your staff is lacking in this area, you won’t be able to compete. In addition to exceptional training, your staff needs to know how to function effectively in the marketplace. That means understanding how to turn around a prospect looking for “cheaper premiums” into one who values having the right coverage at a competitive price. It's not easy to do with the extraordinary amount of advertising attempting to convince them that all coverage is the same and only price and ease of doing business matters.
It’s no secret that we’re in the early stages of a major loss of agency personal with significant knowledge and expertise due to retirement. How are you going to overcome that growing trend? Have you been developing your younger employees? Where will you find the new employees you need? Its common knowledge that many young people aren’t interested in or don’t even consider a career in insurance. We need to solve this problem and attract more young talented individuals into our business.
Part of the training for all staff needs to revolve around the agency’s commitment to providing exceptional customer service at every level. It has to be an agency mandate that is developed into your agency’s culture. It needs to be consistently monitored and dealt with wherever slippage is discovered. All agency policies and procedures need to be reviewed and made as customer friendly and helpful as possible, starting from the customer’s first call into the agency.
Second and almost equally important for agents is maximizing the use of technology in the operation of your agency. It’s a key to freeing up agency personnel to work with clients as well as allowing your agency to stay in regular contact with clients and offer the exceptional customer experience today’s consumer is looking to receive. Wherever current hardware, software and technology can be placed in your agency’s workflow to speed up processing and free up staff, it needs to be done. I realize it comes with a cost, but there is an even bigger cost in lost business if you ignore this need. Technology and innovation are what the direct response companies are using to lure your customers away. Technology can also uncover valuable time for your staff to work with customers, develop their relationships and improve your retention in today’s marketplace.
The third important area is data analytics. Insurance carriers are using data analytics more and more in the underwriting and selection of their insureds. Progressive’s Snapshot and all the other auto tracking devices were just the tip of the iceberg. Companies are now able to know more and more specific information about your clients and prospects. I just read an article about Verisk Insurance Solutions and the new tool it has developed that allows insurance carriers to more accurately determine the age of your client or prospect’s roof. What effect do you think that has on the underwriting of your new and renewal business? Data analytics will ultimately enable carriers to determine the likelihood of various types of losses for specific risks. Follow it, understand it and be prepared to deal with it as insurance progresses.
Capturing, or mining, data is also important to your agency. The more you know about your clients and prospects and the better able you are to analyze and use that information is important. Your agency’s marketing efforts will be enhanced by the quality of agency information you have and can be analyzed. Being able to focus in on those clients that may have had a life or business event that may require additional protection is invaluable. In addition to marketing, your agency’s data allows you to develop a strong CRM program that will allow for the regular contact that is so important to developing an exceptional customer experience. Today’s consumer wants and expects you to have regular contact, offering advice and information that they might find helpful and showing your desire to have a strong relationship focused on them and their needs. Your agency’s data, the technology tied to it and how you use it will be a critical factor in your success.
Lastly, cyber liability coverage is essential for every independent agency. If you don’t have it, you need to get it! With the amount of personal information that flows through an independent agent and the current atmosphere of cyber hacking, it is crazy not to have protection. If you’re asking clients to buy it and don’t have it yourself, that’s incredulous.
The insurance world is changing rapidly. If you don’t change to meet these challenges, your market share and agency are at risk. I realize it’s easy to outline the issues. The time and money investment to make the changes I'm recommending may be significant. The problem is the time is now. If agencies don’t start to implement these changes, they will find themselves struggling as they go forward. IIABNY has developed tools to help with these four key areas, knowing they are crucial to agency success today and in the future. We are only a phone call away.