An InsurOp-Ed discussing the results of a new survey on the impact of COVID-19 on independent agents
I continue to hear people talk about what the return to normal will look like once the pandemic is behind us. The reality is that as we work to regain our sense of normalcy, our new “normal” will still look very different, and business will be anything but usual. We have all been forced to adapt and change the way we live in order to survive. In the insurance world, independent agents (IAs) took a big hit due to the pandemic and many were compelled to quickly change their entire business structure in order to survive.
We recently conducted a survey of independent agents to better understand the impact of COVID-19, and the results speak volumes. Not surprisingly, more than ¾ of agents reported a negative impact on their businesses. In fact, on average they reported a massive 38% drop in revenue and sales. What’s more, 54% of agents say they had to make significant changes to the way they conduct business, with another 79% reporting their roles as agents fundamentally changed due to the pandemic.
The data tells us that 2021 will be a year of rebuilding — and it’s also clear that agents learned many lessons in 2020 that can now be applied to help them come back stronger and better than ever. The three biggest are:
Changes to Buying Behaviours are Permanent
For consumers, convenience has always been a top priority when it comes to purchasing decisions. In the last decade, the way we shop has completely changed, from in-store, in-person interactions to online, one-stop shopping. COVID-19 and the accompanying quarantine only intensified the need for convenience amongst consumers. Nearly all [93%] of the IAs we surveyed agreed that when it comes to purchasing insurance, customer expectations are evolving. The in-person, “meeting for coffee and making deals” model is no longer practical or effective when it comes to doing business.
Even prior to the pandemic, IAs noticed a shift in purchasing behaviors with 46% citing that their customers were showing increased interest in digital tools and solutions. In fact, pre-pandemic, 40% of agents had already begun the process of looking into investing in more digital solutions to assist customers. Today, customers are hungrier than ever for technology with 73% of agents saying that customers have expressed interest in a fully digital buying experience. This is why half of the agents we surveyed reported that they are now on the hunt for new technology as they work to mend client relationships while also attracting new ones. There is no doubt that the shift we have seen in buying behaviors due to the pandemic will remain intact long after the pandemic is over, which is why IAs must invest in technology now in order to remain competitive, as convenience remains key for consumers.
Reaching the right audience
When it comes to lead generation, IAs have long relied on word of mouth and rave reviews to build their businesses. And referrals are still a staple in generating business for IAs, with 23% reporting this as their primary lead source. However, in the world of COVID-19, you have to go where your customers are — online. Agents are utilizing affinity groups to help drive business. 81% of our agents say that affinity has been a strong channel for them to attract and retain clients, with the most popular being employers, financial institutions, real estate agents, automotive dealerships, and alumni associations. Affinity provides access to thousands of untapped potential customers and can be a game changer for companies looking to get back on their feet. To best integrate affinity groups into their overall business strategy IAs can start by looking for local groups that have developed trusted relationships with members, customers or employees. Often, the more relevant the trusted source, the better the opportunity will be to add insurance to their offerings.
The rise of social media has also not gone unnoticed by IAs with more than half citing it as their main channel for business leads. 33% cite organic social media as their primary lead generation source, while 19% are using targeted and paid social campaigns to connect with and attract new clients. Tech-savvy millennial agents are also 56% more likely to cite paid social media as their primary source of lead generation. This suggests that they are not as interested in scaling their businesses through more traditional channels and understand that younger generations are more likely to engage with them on social than by email or over the phone. Social media is also an important tool for agents as they look to build trust as subject matter experts amongst customers and prospects. Engagement is a huge indicator of whether or not your message is resonating with target audiences, and higher levels of interaction with posts across channels will help build brand credibility within your industry.
Recovery involves casting a wide net
In order to be successful in business, you have to be flexible. Adaptability and being able to pivot at a moment’s notice is vital to company success. COVID-19 put independent agents to the test and many were unprepared to handle the fallout. In fact, when the global shift to remote work became a reality, 6 in 10 say that they were caught off guard and unable to conduct their jobs fully remote, which had devastating impacts on client retention and attraction. In addition, 57% of agents say that they wish they had better technology available to assist them during the pandemic.
One thing is abundantly clear — investment in technology is necessary for IAs to retain their standing within the insurance landscape. For agents working to rebuild their businesses, having a robust modernization strategy in place will be essential as 75% of agents agree that investment in technology is critical to the survival of their roles. And while IAs collectively have traditionally been slow to adopt technology (91% said so themselves), it is no longer a “nice to have.” Slow technology adoption has not only severely impacted agents’ businesses — it has compromised their value, with 80% saying lack of technology has made them less valuable to carriers and 65% saying the same in regard to the overall insurance ecosystem. This is not the time for IAs to rest on their laurels. They must continue to broaden their perspectives on both where to grow their new businesses and what solutions they can provide to their customers and prospects — and investment in new, innovative digital solutions and technologies needs to be the first step.
Rebuilding is not easy, but we are already seeing that some IAs will emerge from COVID-19 stronger and better than ever. Doing so requires accepting that customers, prospects, and partners have all changed, and that agents must do the same. This starts with engaging with what customers need and understanding how they want to buy it, and then making investments in technology to deliver it. It requires examination of your channel mix — understanding that traditional channels, from referral to affinity, now have larger scale thanks to technology, and also recognizing the importance of a social media presence in order to reach younger customers. Maybe most of all, it will require you to take inventory of your capabilities and history as an agent and know that you have access to all the information and skills you need to set yourself up for long-term sustainability and growth.
President of Bindable
Jean-Marie Lovett is a seasoned operations and marketing executive with more than 20 years of experience. She has a successful track record launching new consumer products and has proven herself instrumental in shaping and growing businesses both large and small throughout her career.
Before joining Bindable at its founding, Jean-Marie served as Vice President at JP Morgan Chase. Lovett is a graduate of Colgate University, where she received a Bachelor of Arts degree with Honors, and holds a Master of Business Administration from the Kenan Flagler Businesses School at UNC, Chapel Hill. She is a member of the Massachusetts Association of Insurance Agents (MAIA). Jean-Marie currently serves on the Travelers National Producer Council, representing New England.