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January 26, 2018

Agents, Brokers Are Dead? Not So Fast!

Summary:

The independent distribution channel is wrangling its own destiny in a new direction using data, business intelligence and analytics.

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For the past several years, a significant number of individuals and new-breed companies have emphatically stated that independent agents and brokers are dead. They don’t serve the needs of today’s consumers. They are behind the times from a technology standpoint. They are difficult to deal with. And a good number of insurtech startups are staking their future success on displacing agents and brokers.

At SMA, we do not believe this. We believe that independent agents and brokers have a critical and, in many cases, an unmatched role in the insurance ecosystem. It is one thing to make this statement, but it is another to provide support for the statement. SMA recently did a study in this area. In the ensuing report, Data, Business Intelligence, and Analytics in Insurance – Agent View, there surfaced some compelling details that point to the independent distribution channel taking action to wrangle their own destiny in a new direction using data, business intelligence and analytics.

See also: 5 Predictions for Agents in 2018  

In prior blogs, I have asserted that data and analytics is actually one word – dataandanalytics! Insurers are on a fast-paced track to bring more and more data and analytics into their organizations. In fact, SMA 2017 survey results reveal that data and analytics was the No. 2 strategic initiative for insurers of all sizes – only three percentage points lower than the No. 1 initiative of customer experience.

For many readers, this might be a case of “OK, tell me something I don’t already know.” However, there is a good probability that many believe that data, business intelligence and analytics initiatives are the domain of insurers only – that agents and brokers are not focused on these types of initiatives.  SMA survey results disprove this and show that 79% of agents are investing in BI for reporting, 44% in dashboards and scorecards and 40% in analytics tools. CRM technology is a top technology for agents of all sizes. Large agents – those with more than $10 million in premium – are additionally focused on customer segmentation, customer lifetime value, campaign analysis and channel performance. This sounds suspiciously like an insurance company!

We are in a world of data-driven decision making – this isn’t going to change. Many agents and brokers totally understand this and are responding. However, not all agents are on board. SMA survey results indicate that smaller agents are trailing in some initiatives. The real hitch is that the pace of change in the insurance industry is exponentially increasing. To successfully compete, agents and brokers need to move more quickly to grow their data and analytics competencies and technology adoption. Insurers can be true partners in these endeavors by doing such things as facilitating data and analytics technology integration with agency-based technology and ensuring that data can be exchanged seamlessly.

See also: Global Trend Map No. 5: Analytics and AI  

There is no doubt that the insurance industry is in the midst of unprecedented transformation. Those agents and brokers who are bringing data, business intelligence and analytics tools into their organizations to gain insights about the changing risk landscape and customer preferences and needs are well on their way to maintaining their vital role in the industry. I, for one, am looking forward to the day when no one is talking about the death of the independent agent and broker, but rather talking about the high worth they bring to customers who value personal advice, risk management and protection!

For information on the research report: Data, Business Intelligence, and Analytics in Insurance – Agent Viewclick here.

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About the Author

Karen Pauli, principal at SMA, has comprehensive knowledge about how technology can drive improved results, innovation and transformation. She has worked with insurers and technology providers to reimagine processes and procedures to change business outcomes and support evolving business models.

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