About this article: Recent research offers invaluable insights about what drives personal lines consumers to choose particular providers for insurance, what’s important to them in making their decisions and how they want their insurance providers to interact with them. This article pulls relevant consumer data from five different studies and then outlines how independent agencies might use this data to enhance their personal lines operations and strategies to attract and retain today’s changing consumer and compete effectively with the direct carriers and others.
Recent consumer studies provide several insights that can be helpful to independent agencies to attract new personal lines business, as well as to retain current clients. In my article last month, I cited some of the findings in these studies to outline how independent agents can use the technology tools now available to them to attract online auto insurance shoppers and offer them a better value proposition than the direct carriers. Below, I drill down further into the comScore and J.D. Power & Associates research to ferret out additional trends in automobile and property insurance consumer preferences and behavior that independent agencies can use to gain competitive advantage.
Consumer Reasons for Buying Direct or Through an Agent
What struck me about the comScore research was that the reasons given by most consumers for buying from an online carrier rather than through an agent were not very compelling and could be effectively overcome by agencies if they were to use available online tools and were able to get across their “value add” message to consumers while they are in the shopping process. The top five reasons given by consumers for not using a local agent were:
- I found it more convenient to use a website or 24 hour toll free number—29%
- It was faster to purchase online or via a toll free number—28%
- I got a quote online and decided to purchase online—26%
- I prefer to use a website or toll free number—20%
- It was cheaper to purchase online or via a toll free number—20%.
In contrast, the top reason given by consumers who buy through an agent would be difficult for the direct carriers to match:
- I like having a real person who I can visit with or call—39%.
- I have always used a local agent—31%
- The local agent quoted me the best price—28%
- I wanted a local agent from one company to help me with all my insurance needs—25%
- Recommended by a family/friend—23%.
Based upon this research, as well as comScore’s additional finding that 81% of the consumers who use an agent find their agent to be valuable, it is no wonder consumers insuring through an agent are more loyal than consumers who use a direct carrier (70% of online purchasers are seriously considering changing their insurance company, compared to 50% of those with a local agent).
While most agency clients value the relationship they have with their agent, their loyalty goes only so far. Client shopping has hit unprecedented levels, even for agency clients, as every independent agent knows. In addition, as consumers get more comfortable doing business online in other areas, they are increasingly willing to try new distribution methods for insurance as well. For example, in 2011, the percentage of agency clients “not likely” to consider using a distribution method other than a local agent (online, toll free number) was down to 25% (versus being “likely” or “neutral”); the “not likely” percentage having been 34% in 2009.
Communicate Pro-actively & Regularly with Clients
A major way for agents to keep clients loyal to them is to communicate with them regularly. When agents interact with their clients often (monthly) or even rarely (a few times a year), the percentage of clients “not likely” to consider an alternate distribution method rises to 26-27%, whereas if the agent never contacts the client, the percentage “not likely” to consider another distribution method drops to 17%.
Similarly, J.D. Power & Associates found in its research that day to day policy service interactions “most influence a customer’s overall satisfaction with their insurer, and hence their likelihood to both renew their policy and recommend their insurer to others. One would expect this finding to apply equally to the client’s satisfaction with the agent.
Agencies should use each pro-active outreach to clients and each service interaction to communicate and live the agency’s “brand” to reinforce it with their clients. Every agency employee should be trained to clearly articulate the agency’s special “value add” succinctly and to understand what “living” the brand entails.
Agencies will strengthen their client relationships in this way, as well as counter the direct carriers’ efforts to neutralize the agent’s value proposition. The direct carriers understand that many consumers want to deal with a real person in certain situations. This is why GEICO has appointed employee agents in various areas and Esurance has introduced an advertising campaign touting the availability of a person when wanted to supplement the online options it offers.
Offer the Communications Options Clients Want
One of the major findings of the research is that clients are now in the driver’s seat and they increasingly expect their agent and carrier to be able to interact with them via the channels they use in everyday life. We have seen that this means that direct carriers offer some option for consumers to deal with a “real person.” For agencies, it means supplementing their personal client interactions via phone and in person with increasingly robust online options including email, website portals and social media.
Most agency clients still want to talk with the agent when the issue involves counseling, such as policy coverage, obtaining a quote, adding or changing drivers or cars, price changes and billing inquiries. However, there are certain routine transactions where most agency customers’ first preference would be to do them online such as to make a payment (45% online vs. 31% talk with agency), update contact information (43% online vs. 36% talk with agency), order insurance cards (41% online vs. 37% talk with agency). With verify payment receipt, agency customers’ top two preferences do not even include talking with the agency (33% online vs. 30% by email).
It is important for technology providers, carriers and agencies to work together to respond to these changing client preferences by developing agency website portals that provide customers with these online servicing capabilities. Enabling clients to make payments to the company through the agency portal should be the first priority, given that online payments constitute 44% of overall consumer online servicing visits.
As agencies increasingly offer online quoting and make sales by phone, it is also time for them to begin to offer their clients the convenience of using e-signature tools for required applications and other signed documents. Currently, 87% of all online auto insurance purchasers using other distribution systems have been able to sign all required documents electronically.
Growing Agency Client Interest in Other Online Communications
Email is second only to calling as agency clients’ preferred method of contact to the agency, beating out visits to the office. 77% of agency customers send or receive emails with the agency. As might be expected, greater percentages of younger clients (18-34 years) use email as their first method of contact with the agency.
While the trend to use social media for business purposes is still emerging, 20% of 18 to 24 year olds would have an interest in interacting with their agents via a social media outlet like Facebook or Twitter. This level of interest contrasts with that of agency clients overall, where 86% express not being interested in interacting with their agents in a social media context. One wonders, however, if this overall interest level will change when consumers start to use social media more regularly in their daily lives and begin to see how valuable consumer information can be conveyed to them by their providers.
Another emerging trend is for consumers to use their mobile devices to access business accounts. As of 2011, 12% of consumers with the mobile capability to do so have accessed an insurance site via their mobile browser, while 10% accessed an insurance site via an app. Only 9% of insurance consumers have used text messaging to communicate regarding their insurance.
With regard to those who have used a mobile device for their insurance, the top functions used in descending order have been to pay a bill, access the insurance policy, text or chat with an agent, find the nearest insurance agent or office, update personal information, find useful tips or tools, find the agent’s contact info, receive an insurance quote, change coverage, limits or deductibles, receive policy alerts, track a current claim, and report an accident.
Additional Strategies to Grow Personal Lines
The consumer research points to additional ways in which independent agents can attract online shoppers and take business from the direct carriers. Consider these possibilities:
- Sell convenience as part of your agency’s value proposition. As discussed above, most of the shoppers that buy from a direct carrier do so because they believe the online approach is more convenient, when in fact independent agents can shop multiple carriers and take care of servicing needs with a simple phone call or comparative rating portal, along with providing professional guidance at the same time.
- Bundle auto insurance with a quality property insurance product and provide the discount. Many direct carriers cannot offer consumers comparable property products. Also, 25% of non-bundling consumers said they did not even think about using the same company for multiple policies. In addition, 52% of non-bundlers said they would consider switching to the same company if they received a bundling discount.
- Sell renters insurance. 27% of consumers rent rather than buy a home and that percentage is likely to rise in the aftermath of this tough economy. Many renters are currently uninsured, since they represent only 14% of those with property insurance.
- Understand that buying a new or used car triggers a lot of shopping by consumers. Next to looking for a lower price, buying a new or used vehicle is the most common reason for shopping and 33% of vehicle purchasers shopped their insurance and chose a new insurer. 53% of these shoppers who switched carriers were agency customers (and may or may not have stayed with the agent).
- Offer clients the option for pay as you drive insurance, if you have it available. Of the 25% of consumers who have heard of this type of insurance, 55% said they would “definitely” or “probably” be interested in purchasing it.
- Point out the coverage enhancements and optional coverages that your various carriers offer and ascertain which are most important to your clients. This reinforces the benefits of having a professional advisor in your client’s mind and debunks the myth conveyed in most direct carrier advertising that personal lines policies are commodities, where only price and convenience matter.
Creating a Strong Online Presence
The consumer research discussed above provides valuable guidance on how independent agencies can reshape and refocus their personal lines operations to respond to changing customer expectations and preferences.
The challenge remains, of course, that the independent agency has to be able to get the attention of the increasingly online consumer as a first step, in order to convey its value proposition and the better experience it can provide. I believe independent agents finally have the technology tools available to them to create a strong online presence, particularly in their local communities, along with the needed tools to process personal lines business very efficiently.
As I discussed in last month’s article, implementing Real Time, download and going “paperless” can greatly enhance the agency’s efficiency and operations. These technology tools create the time needed for agency employees to reach out to clients to bolster relationships, protect renewals, cross sell and attract new prospects. Finally, agencies now have the tools available to enhance online marketing and service—more effective websites, agent portals for consumers to obtain online comparative rates, free local search and social media sites.
Editor’s Note: See “The Independent Agents’ Opportunity to Take Back Personal Lines” at www.iiaba.net/act for the first article in this series. For numerous articles and recorded webinars on how agents can build effective websites, take advantage of local search tools and use social media, once again go to ACT’s website and click on “Websites & Social Media” in the gray shaded area on the left of the page. See also www.getrealtime.org for resources on how Real Time & Download can help you write business more efficiently.
Jeff Yates is Executive Director of the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. Jeff can be reached at firstname.lastname@example.org. ACT’s website is www.iiaba.net/act. This article reflects the views of the author and should not be construed as an official statement by ACT.
“The Independent Agents’ Opportunity to Take Back Personal Lines,” www.iiaba.net/act . The article outlines how independent agents can give consumers a more efficient shopping experience than the direct carriers, where they can get quotes from multiple carriers in one stop. And independent agents can offer prospects the value add of personalized professional counsel and debunk the myth reinforced by massive advertising campaigns that auto insurance is a commodity and that the coverage and limits bought are not important.
comScore 2011 Auto Insurance Shopping Report (May 2011) & 2011 Auto Insurance Servicing Report (May 2011); comScore 2010 Online Property Insurance Report (November 2010); J.D. Power & Associates 2011 U.S. Insurance Shopping Study (May 2011); J.D. Power & Associates 2011 National Auto Insurance Study, Management Discussion (June 2011).
See “The independent Agents’ Opportunity to Take Back Personal Lines” for more details on how agents might do this. www.iiaba.net/act
comScore 2011 Auto Insurance Shopping Report, p. 46.
comScore 2011 Auto Insurance Servicing Report, p. 7.
comScore 2011 Auto Insurance Shopping Report, p. 7-8.
comScore 2011 Auto Insurance Shopping Report, pp. 44-45.
comScore 2011 Auto Insurance Servicing Report, p. 12.
J.D. Power & Associates 2011 National Auto Insurance Study, p. 1.
J.D. Power & Associates 2011 National Auto Insurance Study, p. 4.
comScore 2011 Auto Insurance Servicing Report, p. 35.
comScore 2010 Online Property Insurance Report, pp. 7 & 21.
comScore 2011 Auto Insurance Shopping Report, p. 12.