Local agents — longstanding integral parts of the property-casualty (P&C) insurance landscape — continue to play important roles as advisors and intermediaries. However, there has been a gradual shift in the value that carriers and customers (both retail and small business) place on many activities traditionally performed by local agents, which is increasingly calling into question what role they will play in the future.
"Agents of the Future: The Evolution of Property and
Casualty Insurance Distribution"
McKinsey & Company
As Bob Dylan sings, “Times, they are a’changin’.” The customer/agent relationship has been affected in many ways:
- The Internet has shifted sizable power to the consumer, as access to information has exploded and demand for real-time information has solidified.
- Consumers once began and completed their entire insurance shopping experience with and through their agents. No one contemplated “going it alone.” Today, customers can research information independently, when they choose and via multiple channels (phone, online, click-to-chat, self-service portals, etc.).
- Customer service expectations have risen — the internet has created a demand for nearly instantaneous response.
- Just one decade ago, agents placed 80 percent of personal auto policies and nearly 100 percent of homeowner and small business policies.
- Heavy carrier investment in technology has enabled direct contact between consumers and carriers. Customer care centers allow clients to ask questions or conduct transactions directly. This replicates the feel of traditional agent roles (and often eliminates the customer’s perceived need to even have an agent).
- The sophistication of today’s computerized predictive models have also diminished the role agents once played in providing local risk insight to carriers.
The end result? According to McKinsey: “Not too long ago, the average insurance consumer would respond to the question, “Who is your insurance policy with?” by naming her local agent. Today, after 10 to 20 years during which carriers have invested billions of advertising dollars building and strengthening their brands, customers are far more likely to answer the same question with the name of the carrier instead.”
Customer research isn’t something you do one time when you launch your agency or enter into a new market niche. Business conditions change continually, so your research of existing and potential customers should be continuous as well. Otherwise you run the risk of making decisions for growth and change in your agency based on out-of-date information, potentially leading to failure.
The more successful you are in growing your agency, the more competitors notice - and react to - what you are doing. A very successful sales approach could be no better than average in a short few months after launching. Even loyal customers can be quick to change when offered something newer and more innovative
Published information can provide useful insights into market conditions and trends, and even the changing demographics of your community and/or marketing area. As an established agency, your own experience can be even more valuable. You will be able to build up an in-depth picture of what customers want, how they behave and which of your marketing approaches work best. Nobody should know your customer better than you!
Taking the time to talk to key customers pays off. Your social relationships, your community and philanthropic involvement and your professional memberships can be important sources of market information. You should encourage your employees to share what they know about existing and potential customers, changes in the community and areas of growth opportunity.
So how does the independent agent remain relevant and support growth? Begin by accepting that it isn’t business as usual — that the traditional lines between agent and carrier have blurred. Work to build customer awareness for the unique advantages you still provide and be continually adapting and changing to meet the needs of the customers and communities that you serve.