Consumer trends point the agency channel towards a digital future
Competitively speaking, social and digital media matters like never before. Insurers and agents unwilling, or unable, to integrate and engage it effectively will lose relevance and ultimately miss out on growth opportunities. Two major trends suggest that business as usual is no longer viable: the growing number of online shoppers, and the increasingly intense competition from direct writers.
Of the consumers looking to buy insurance, many are incorporating digital channels as part of their buying process. In fact, J.D. Power & Associates research shows that 54 percent of auto insurance shoppers report getting their quote online.2
Online shoppers expect to learn about carriers, compare products, obtain price quotes and purchase a policy quickly and easily. Some rely on social media to get information and advice about products, brands and purchasing decisions. Twenty-one percent of consumers use, or are considering using, social media to perform research on insurance products; 36 percent of consumers under age 34 would consider using social media to perform such research.3
Some shoppers prefer to chat online, text or e-mail rather than to call or meet in person. Many shoppers who conduct research online will ultimately buy insurance from a human—either a local agent or a contact center associate.
Similar to consumer behavior already widely observed in the retail industry, rather than replacing one channel with another, many insurance consumers are diversifying and using more channels than ever to meet their needs.
And, the competition for market share continues to intensify. Direct-to-consumer insurance companies have been quite successful using clever marketing, simplified product design and digital technology to achieve profitable growth and gain market share in personal auto insurance. This growth has primarily been at the expense of insurers that distribute products using agents or brokers.
The online auto insurance market has been dominated by only a handful of insurers over the past few years, with GEICO and Progressive accounting for over 50 percent of all quotes submitted online.4
Reasons for agents and insurers to take notice
These key market trends are causing a shift in the role of agents and brokers, still the primary channel for insurance distribution. Agents are being called upon to increase sales rather than simply retaining the existing customer base built earlier in their careers. Some agents may be willing to make this shift; however, many will not.
To provide increased agent capacity for marketing and sales, carriers are increasingly taking on post-sale service—a role historically played by agents. By using centralized call centers and self-service capabilities, insurers are able to serve customers at a lower cost than agents and at improved service levels, including 24/7 availability.
Even those agents who are motivated to make the shift to a sales focus lack a clear Web or social media strategy; a branded, feature-rich digital presence; relevant digital content and robust tools that better connect them with customers and the insurer. Agents generally do not have available or ample funds, skills and time to construct and run their own high-impact, competitive sites, and do not have adequate marketing budgets to drive traffic to those sites.
Only 48 percent of independent insurance agents have web sites, and of those, only about 20 percent keep the sites updated.6 Half of all agents did not use social media last year.7 Eighty-four percent of captive and independent insurance agents primarily call or meet their clients in person when they need to get in touch with them; only 15 percent regularly turn to e-mail for this communication.8
Additionally, a lack of integration among insurers’ channels hinders a seamless buying experience. A lead passed from the Internet site to an agent, for example, often results in missed consumer expectations of a rapid response and loses important contextual information in the transition process, resulting in sub-optimal sales outcomes. Increasingly, agents are looking to the carrier to help them connect with online shoppers, improve their digital presence and ultimately increase both leads and win-rates.