Many changes have happened and are occurring in the insurance industry. New companies and business models are being created that threaten the livelihood of the common agent.
Some agents feel as though they will never be harmed by these changes while other agents have already felt the sting of the new industry trends.
Let’s take a look at these changes and explore their potential effects on your agency.
Is your Insurance Agency being threatened?
There are several start ups being created to change the buyer experience with consumers. Recently there was an article an article in the Insurance Journal (http://www.insurancejournal.com/news/national/2015/12/08/391235.htm).
The article talks about the buzz around a startup called Lemonade Insurance Company. The premise is that our industry is reviled and the buyer experience is not good. I read the article and then went to the comments section and it seems like the audience was what you would expect, insurance professionals. And as you might expect they all focused on how this will not work and end up leaving a sour taste in consumer’s mouths.
These are ideas that are already in market in places like England and Germany. And I do think that as big data gets more intuitive the buying experience will allow this type of model to succeed.
Does this mean the beginning of the end of Insurance Agents being relevant? For some agents yes, but not for everyone. I do think the market is changing rapidly, and we have to adapt to the marketplace.
Trends in the marketplace to be aware of
Driverless Cars, Telematics and Uber – Many insurance Agencies have a significant amount of premium and commission directly tied to Auto Insurance. Cars are becoming safer. Devices are moving towards being able to determine specific risk and premium to each consumer. And the people who own Uber honestly believe they will be the transportation of the future and many people will abandon car ownership altogether. I don’t know if that will happen but I do think Insurance Agencies that are significantly dependent on commission from auto insurance better rethink their position and start to adapt to the reality that this segment will be squeezed and squeezed hard.
Big Data and Millenials – As technology improves and the Millennials take over the world, (which is in the next ten years) traditional sales models will be greatly challenged. When, not if but when, it becomes easier to use your smartphone to negotiate your insurance and do it with information that you have confidence in, many people will opt to do it on their own. Think of when you are on Amazon.com and you buy something. They are now able to suggest to you other things you would like and it seems that they know you better than your spouse. At some point, the insurance process will be simplified using digital technology.
How Small and Local Agents can Still Compete in the Marketplace
JD Powers did research in 2012 on what consumers prefer when it comes to the ideal insurance buying experience. They then compared it to how insurance is most often purchased today. It was very interesting because consumers are most interested in having an Agent, but they also desire the agent to use emerging technology. This tracked with both Millennials and Boomers. In 2012 the Agents using emerging technology made up the smallest segment of sales made in our industry. So the take away from this is that what the consumer wants the most is what we offer the least. That is where Root and Lemonade are hoping to make their move.
So are we doomed!? Hardly. The important part that Root I think understands but maybe Lemonade does not is the consumers want emerging technology, but they also want an agent. We are not selling downloads of movies or music and books like Amazon. We are negotiating complex contracts that keep families and businesses safe from financial ruin.
So what can we do to meet the consumer demand for emerging technology? We can offer things that keep us connected and relevant.
Mobile Apps – People are attached to their smart phones. In just about every industry consumers are expecting to be able to use their smart phone for a better experience. Not only is this convenient for your clients but it also takes work off your agency staff. When given the use of a mobile app, clients will be able to make changes, report claims, get id cards and more without having to call in and take up the time of your staff.
Web Optimization and Blogging – One of the biggest reasons insurance agents are struggling to compete, is because they are simply not found. Blogging and Web optimization allows consumers to find you and it allows you to show your expertise and knowledge with clients and prospective clients.
Web Service Portals – Lemonade seems to offer no choice, just use the app. Many agents also only offer one choice, call me, but make it between 9 and 5 on weekdays. A web service portal gives your customers the best of both worlds. It is not just about convenience, but it allows you to be there when your client needs you the most.
These are just a few of the examples that allow you to stay relevant and compete in the insurance industry. There are many options to choose from, but keep in mind, some options are more ideal than others.
Where to start to stay relevant
Look at your current position and get to work on your digital insurance marketing strategy. Invest in what will keep you in the place your clients and new clients are looking for. Get the correct technology.
We believe agents now need a CMS Website. One you can control and update more often than you change batteries in smoke detectors. You need a blog and a mobile app. And you need to track who is looking at you, what is working and how is your presence in the marketplace?
Develop Personas, these are fictional, ideal clients. This will allow you to focus on who you want and maybe identify and avoid those you don’t. Take advantage of the law of large numbers and aggregate your presence with things like Trusted Choice offered by the Big I.
Sounds like a lot right?
It can be without guidance and a plan, but we’re here for you.
Our insurance agency’s first step was to get a Webgrade assessment. We believe this may also help you. This was eye opening for us and we believe it will help set you on the right path. Click here for your free webgrade.