In 1997 Progressive Casualty Insurance put US independent agents on edge when it began selling auto insurance online. Two decades later, independent insurance agents are developing their own digital solutions, with online propositions that look increasingly like those of direct carriers.
This reflects fundamental changes in how customers buy and agents sell insurance. Smart agency owners are following the lead of their carrier partners, and investing in web analytics, chat bots, and two-way texting to make it easier for customers to connect with them. Agency and broker owners and financial professionals are incorporating digital self service capabilities into their own operations because they must:
- Cement loyalty. Customers have historically stuck with their agents for a long time. In a Forrester survey of online Americans conducted during the fourth quarter of 2016, we found that the average tenure with the agent that sold personal auto and homeowners insurance were each more than 10 years, while the average life insurance customer had been with their agent for more than 13 years. But in that same survey, 43% of Millennials between 25 and 34 agreed with the statement “I plan to change agents soon” versus 21% of all those surveyed. Startup Clearsurance is aiming to help consumers hook up with the right insurance agent with its launch of agent ratings and reviews later in 2017.
- Use analytics to improve conversions. It’s not only carriers that are embracing data and analytics. Agencies are also mining data from their agency management systems and web and mobile sites to grow their businesses. Companies like UK-based ResponseIQ track the behavior of web visitors, identifying the best opportunity to offer the visitor a button to click for a 27-second call back. One independent agency that trialed the service booked more than $120,000 in premium during its 2-month service trial.
- Operate more efficiently. Auto insurance has been commoditized by the pricing transparency that online quoting and selling has enabled. That’s driven independent agencies to specialize–and pressured insurers to help boost agency efficiency. With agency compensation based on the price coverage, agency principals are turning to digital tools to wring more productivity out of producers and customer service representatives (CSRs). Agencies are looking for simpler submissions, streamlining access to underwriters, less manual data entry, and metrics that help keep the agency and staff on track to meet their financial goals. Digital agency portals AgencyPort, BrovadaOne, and Guidewire’s Gateway Portal For Agents streamline access to carrier systems, saving producers and CSRs time that can be spent on selling new business.
- Extend their reach with video. Agencies are discovering the effectiveness of video as way to improve their customer experience. When we asked independent agency professionals about their planned technology investments, 35% indicated that their agencies were implementing video as to deliver advice and content to their customers. Low cost video recording like Jive and conferencing platforms like Skype allow producers to connect with customers that they can’t meet in person. Agencies are also embedding video content as part of marketing campaigns, using libraries of pre-recorded video content from firms like MyInsuranceVideos to successfully drive conversions with more engaging content.
- Compete with emerging digital insurance disruptors. Insurance startups are offering new ways to package and sell coverage for both personal lines and small commercial customers. Many of these start-ups are distributing coverage, competing with both captive and independent agents. Agency owners must learn about what these 173 insurtech disruptors that received nearly $1.7 billion in venture funding in 2016 are up to and if there’s an opportunity to collaborate. Events like this week’s InsurTech Boston provide three hours of networking and discussion about what the insurer of the future is going to look like (and for a mere 25 bucks!).
- Test artificial intelligence tools to help customers get answers. Bots and virtual- and robo-agents are hot. When it comes to getting a quick answer, 10% of US smart phone users surveyed that Forrester surveyed opted for a mobile voice assistant. These AI tools can step in when customers need help after agency business hours. Bots also relieve agency CSRs and producers from mundane, low-value interactions so that they can focus on advising and cross-selling to their customers. The value of these helpful assistants isn’t limited to captive agents: Independent agencies are deploying them too. As an example, Canada’s ProNav Technologies has already made inroads into the North American agent/broker market with its ProNavigator chat bot. Carriers should subsidize these AI tools as both rewards to the most loyal agents as well as controlled-risk pilots to test out the bugs.
More about the author
Ellen Carney is Principal Analyst, Digital Business Strategy at Cambridge-based Forrester Research.