Last year, insurtechs received $10 billion in investments worldwide. And, as direct-to-consumer (D2C) distribution becomes more and more popular, some analysts have even questioned whether insurtechs will replace the insurance agent altogether.
But agents deliver value that tech can’t quite replicate. Independent agents, in particular, have the combination of human touch, industry knowledge and carrier access needed to build and retain customer relationships. Instead of sidelining them, D2C insurtechs should partner with agents to increase revenue and maximize customer satisfaction.
Here, we’ll take a deeper dive into three ways that insurtechs and independent agents can benefit from joining forces.
#1: Independent Agents Build Customer Trust and Loyalty
In the insurance industry, consumer trust and loyalty aren’t just important – they’re essential.
Customers insure property that’s valuable to them, and they rely on the insurance provider they’re working with to find the best coverage. As part of the process, customers have to disclose personal information. They’re trusting their insurance provider to handle it with care. Trust and loyalty go hand in hand – a breakdown in trust will push customers away.
Here’s the problem: Consumers don’t exactly trust digital insurance services. When it comes to claims, for instance, Accenture research shows that…
- 49% highly trust human professionals.
- 12% find automated services to be similarly trustworthy.
- 7% trust chatbots at a similar level.
For digital-first D2C insurtechs, these numbers should be alarming. Even with insurtechs’ explosive growth, low consumer trust spells a future of high customer turnover.
To avoid this outcome, D2C insurtechs need a way to build personal connections that generate trust. The simplest route? Partnering with independent agents.
From the first consultation, agents and customers establish a rapport that strengthens over time.
With each personal connection they make, agents also help D2C insurtechs build a more loyal customer base.
As it stands, all-digital insurtechs give customers little reason to stick around. If pricing or product offerings change, customers won’t hesitate to switch providers. Agents, however, can create that crucial link between customers and insurtechs. When customers feel a connection, they’re more likely to stay loyal to the agent – and the company – they’re working with.
#2: Independent Agents Deliver Custom Professional Guidance
Insurtechs excel at digital innovation, and the right tech can make for a smooth and convenient user experience. But when customers have questions about their coverage, digital tools can’t offer much beyond general guidance.
For example, think about an insurtech that relies on AI chatbots to answer customer questions. If a homeowner asks, “Do I need flood insurance?”, the chatbot’s ability to respond is limited. In this case, it might be able to provide a general answer. But what happens when the customer doesn’t know enough to ask a question in the first place? Here, the chatbot can’t address the customer’s needs.
Agents can help D2C insurtechs overcome these shortcomings.
For example, with flood insurance, the agent might look up whether the customer's home is in a floodplain – and when the floodplain map was last updated.
The best part about this interaction: It points the customer toward information they didn’t know they needed. This both makes for a better-informed customer and builds trust in the agent’s expertise.
In this model, when pricing or product offerings change, the agent can educate the customer about their options – and the customer trusts the agent to guide them toward the one that makes sense.
See also: Agents Must Become ‘Discussion Partners’
#3: Agents Need the Digital Tools That Insurtechs Can Offer
As insurtechs have matured, the reigning industry narrative has been framed in terms of opposition – a battle between D2C insurtechs and independent agents.
The reality, though, is that these two parties don’t have to compete. Agents can help insurtechs build trust, and insurtechs can help agents streamline and digitize their operations.
Insurtechs can leverage their tech capabilities to address critical agent pain points. The right tech (including the following) can empower agents to deliver a seamless user experience that’s on par with what insurtechs themselves provide:
- Policy/carrier rating software.
- A policy management system.
- Robust IT infrastructure.
- Omnichannel distribution tools.
- Data-driven digital marketing support.
Tech-enabled agents can help more customers find the best available policies. With each customer they serve, agents will build and deepen relationships that make everyone happy – agents, insurtechs and customers.
High-Powered Partnerships Are the Future of Insurance
In a rapidly changing industry, neither insurtechs nor independent agents can afford to operate in a silo. Without a more human touch, insurtechs will struggle to build the connections that create lifelong customers. Meanwhile, agents need digital tools to overcome their inefficiencies.
For both parties, a future of growth will require tech-powered partnerships. Working together can create more efficient paths to stronger customer relationships that keep customers coming back.
The information contained in this page is provided for general informational purposes only and may not be applicable to all situations. PEAK6 makes no guarantees of results from the use of this information.