High-digital adopter agencies grew revenue 60% faster than low-digital adopters
SEATTLE – Customer expectations around digital are changing rapidly. To explore how independent insurance agencies (IAs) are evolving to meet new expectations, today, Liberty Mutual and Safeco Insurance released the Rise of the Digital Insurance Agency report. Based on a survey of nearly 600 US-based independent agents and brokers, the research examined the connection between revenue and digital adoption and found that digitally savvy agencies grow faster – 60% more on average – than their less digital counterparts. The report also introduces the Agent for the Future™ Index, which measures the state of digital transformation in the IA channel, and uncovered seven revenue-driving digital capabilities.
“Digital is a trend that has been building for decades now, and COVID-19 has simply accelerated the need for transformation,” said Tyler Asher, president of Independent Agent Distribution at Liberty Mutual and Safeco Insurance. “While we know anecdotally that deeply digital independent agencies generate more leads, operate more efficiently and have happier customers, this research offers a clear picture of the business value digital can provide, which is that high digital adoption leads to faster growth.”
This research comes at a crucial time for the independent agent channel, which continues to grapple with the implications of disruption spurred by the global pandemic and growing expectations around doing business digitally. By examining the business value of digital and distilling key trends into actionable insights, the Rise of the Digital Insurance Agency report helps agents and brokers strategically navigate the rapidly changing marketplace. Core to the research is an evaluation of specific tactics through the inaugural Agent for the Future Index, which scores agencies on a 10-point scale based on adoption across a range of digital capabilities weighted by complexity.
The Index broke respondents out into three groups – low, medium and high digital adoption – to account for variance in adoption and gauge which capabilities offer the greatest lift to revenue growth. Overall, agencies within the low adoption group scored an average of 2.76 while high adopters scored an average of 6.76 on the 10-point scale, highlighting a significant opportunity for all agencies to become more deeply digital. Year-over-year, agencies within the low digital adoption group grew an average of 7.4%, while high adopters grew an average of 12% – equating to a more than 60% greater lift in revenue growth for highly digital agencies.
More than 20 digital capabilities were analyzed as part of the Index, seven of which were strongly correlated with high revenue growth, giving agencies a better understanding of which capabilities to prioritize on their digital transformation journey. The seven opportunities span a range of capabilities across a spectrum of complexity including fundamentals (social media, online quotes), modernizations (self-service portal, live online chat) and innovations (paid social media advertising, video quotes and policy reviews, and AI and chatbots).
Additional key trends and takeaways of the Rise of the Digital Insurance Agency report include:
Marketing will hit its tipping point in the transition to digital in 2021
Now more than ever, independent agents are finding value in digital marketing as a growth lever, with a vast majority of all agencies indicating digital marketing is key priority this year. More than 80% of high digital adopters plan to increase digital marketing efforts in the next year. While about one-quarter (27%) of low digital adopters currently do not do any digital marketing and do not plan to in the future, nearly half (48%) plan to increase efforts in the next year indicating that 2021 is the year marketing in the IA channel will be more digital than not.
Video remains a largely untapped opportunity
One of the deepest digital divides between high and low adoption agencies is in the use of video.Forty-four percent of high adopters plan to either start or continue leveraging video for quotes and policy reviews post-pandemic, with just 9% of low adopters indicating the same. As a key revenue-driving tactic, there is a significant opportunity for agencies at all stages of their digital transformation journey to adopt video for quotes and policy reviews.
Digital agencies can invest more in the customer and employee experience
Independent agencies that already invested in digital can prioritize growth in other areas of the business, such as hiring and customer education. Comparatively, low adopters will be implementing digital fundamentals such as building an online presence and introducing online business tools like e-signature to find success in 2021.Across the board, high digital adopters also hired more.
“Beyond the digital takeaways, the research findings also tell us that the independent agent channel is stronger and more agile than ever,” Asher said. “Independent agents were built to evolve and many are approaching this latest challenge with the same sense of adaptability that has allowed the channel to thrive for more than a century. We at Liberty Mutual and Safeco are here to help IAs push the boundaries of what is possible by offering the resources and actionable advice they need to win with digital.”
The full findings are available on AgentForTheFuture.com, a free resource Liberty Mutual and Safeco offer to help lift up the entire independent agent channel. Through expert insights, agent stories and proprietary research, Agent for the Future offers actionable advice for the most forward-looking IAs. Explore the digital report experience or download the PDF version at www.AgentForTheFuture.com/DigitalAgencyReport.
The Rise of the Digital Insurance Agency report surveyed 596 US-based independent agency principals, producers and CSRs about the impact of COVID-19, the current state of their agency and their digital priorities over the next year. The research was conducted online by in-house Liberty Mutual and Safeco Insurance research experts in October 2020. Survey respondents included independent agencies that sell personal lines, small commercial or a combination of both, with results indicating no significant variance in digital adoption based on the type of policies an agency sells.
More about Liberty Mutual
At Liberty Mutual, we believe progress happens when people feel secure. By providing protection for the unexpected and delivering it with care, we help people embrace today and confidently pursue tomorrow.
In business since 1912, and headquartered in Boston, today we are the sixth largest global property and casualty insurer based on 2019 gross written premium. We also rank 77th on the Fortune 100 list of largest corporations in the U.S. based on 2019 revenue. As of December 31, 2020, we had $43.8 billion in annual consolidated revenue.
We employ over 45,000 people in 29 countries and economies around the world. We offer a wide range of insurance products and services, including personal automobile, homeowners, specialty lines, reinsurance, commercial multiple-peril, workers compensation, commercial automobile, general liability, surety, and commercial property.
More about Safeco
In business since 1923, Safeco Insurance sells personal automobile, homeowners and specialty products through a network of more than 10,000 independent insurance agencies throughout the United States. Safeco works hard to be the carrier champion of the independent agent.
In a survey conducted in 2020 by Channel Harvest, independent agents named Safeco as the carrier that does more than others to support the overall growth of agencies. Safeco is a Liberty Mutual Insurance company, based in Boston, Mass.