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Technology and the Agent of the Future

Many agents see technology as a threat. Several years ago, when hundreds of millions of dollars began to flow into insurtech companies, the promise these startups made was that they would disrupt the insurance industry. The rise of online insurance distribution firms, with steadily increasing capabilities, has added to the anxiety of insurance agents. 

But as the years go by, what we’ve seen is technology that, while it may be disruptive, holds the promise of reducing the drudgery of agents’ lives. It can do this by eliminating the need for manual data gathering, creation of applications, coverage analysis, policy marketing and proposal preparation. The technology promises to free agents to spend more time with clients and prospects, allowing them to broaden and deepen their relationships, which is the most important and highest-value activity of the professional agent of the future. 

The AI Promise

If one steps back from all of the tasks performed by agents today, data gathering, manipulation and presentation take up a large percentage of the time. All of these tasks can and will be performed more efficiently by artificial intelligence (AI). 

Peter Diamandis, the author of “Abundance: The Future Is Better Than You Think,” says that not only will everything will be knowable in the very near future, but artificial intelligence will be able to retrieve it and organize it for us instantaneously. While this seems fantastic to some, it’s already taking place. Many insurance companies, for example, are already purchasing third party data for all or most of the underwriting information they need to make coverage and pricing decisions and then using this data to make those decisions in real time. 

One of the largest commercial carriers has been demonstrating the capabilities of AI to eliminate agent’s work by quoting business owner policies (BOPs) with nothing more than an address. While this capability is nascent, it will be expanding dramatically in the next few years. In personal lines, Plymouth Rock Insurance has demonstrated its ability to underwrite, price, sell and deliver homeowners insurance with a lower-than-average loss ratio with nothing more than an address. These kinds of capabilities are being developed now and will rapidly reduce the time agents must spend on these and similar activities in the near future. And they won’t be limited to simple accounts; they’ll also extend to the most complex middle market and large accounts, as well. 

See also: The Future of Blockchain Series

AI for agents will be able to collaborate with these smart underwriting systems and do much of the now laborious analysis required on differing policy options. When clients need service, or claims assistance, agency automated technology will handle the details. While some capabilities in these areas are already available. we will look back in the coming decade and think today’s technology is like the Model T when compared with the Dreamliner in speed and ease of use. 

With these capabilities coming soon, what will the role of the agent of the future be? I believe it will be to develop real relationships with clients that go beyond the superficial to a true understanding of the needs, wants, aspirations and fears that an individual organization or person experiences. With that knowledge, agents will be able to tailor coverage solutions in a way that is much more intimate than is possible today. 

No More Free Pass

Until now, clients have largely given insurance agencies and agents a pass on the customer experience they are now demanding from other businesses. This isn’t going to continue. The average person’s routine experience offers customized recommendations based on detailed knowledge and an understanding of their other interests. While this has been fairly simple in the beginning, like suggesting additional products based on purchase history, it is evolving rapidly. 

What people experience in other areas of their lives necessarily informs their expectation in others. For example, Amazon and other online merchants are now able to automatically deliver things as mundane as toilet paper to a consumer before he or she knows she needs it. Soon enough, that toilet paper will not only be delivered before it’s needed, but changes in brand, quality, quantity and other factors will be done automatically on behalf of the consumer because the vendor’s AI will know before the customer does what they really want or need. 

When agents marry this type of technology to the unique human communication that will remain necessary for complex purchases like risk transfer, the future will be much different. 

Some are concerned that technology will enable businesses and consumers to bypass agents and make insurance purchase and placement decisions on the basis of their artificial intelligence alone. I don’t think this is likely. It’s true that properly programmed algorithms can sort and analyze data far faster than any human. But it is only the human who can look into the eyes of another human being, judge the voice tonality, body language and dozens of other nonfactual and nonverbal cues that create and power true communication. When the agent is freed from the drudgery of data analysis and manipulation, she can focus increasingly on the human aspect of serving clients. And she will be able to do so faster, better and more deeply. 

This marrying of technology and human capability will serve to increase opportunity at the same time that it lowers costs. While this future isn’t here yet, it is close, so agents need to begin to prepare now to remain competitive in the future. The first step is to maximize their existing data gathering and analysis capabilities and leverage existing technologies to the greatest extent possible. The beginning point for that is the commonplace agency management system. Automating every agency process possible with current technology will prepare the forward-thinking agent well for what is coming soon.

Beyond the Transaction

The other focus for agents is behavioral. Even in middle market and larger accounts, selling insurance has become largely transactional, particularly in new business situations. Agents all too often allow themselves to be placed in the trap of providing apples-to-apples replacement comparisons. These behaviors serve neither the agent nor the client well. One has only to look at the real, genuine confusion on the part of the business community regarding business interruption policies that did not provide coverage for coronavirus-related losses to demonstrate the result of quoting a standardized set of coverages, instead of focusing on communication about coverage needs and solutions. The agent who ends the process of allowing herself to be treated as a commodity is the agent who has begun to prepare for an effective and prosperous future. 

See also: The Future of Underwriting

As agents are freed up by technology, they will have the time required to delve deeply into their client’s greatest concerns. They will have virtually limitless ways to provide coverage powered by artificial intelligence. And they will have the well-earned trust of their clients because of the deepened relationships that time and technology have empowered.

The Agent of the (Digital) Future

The direct channel has a major impact on the distribution landscape, as customers become the focal point for every transaction and sale. More agents consider the market shift toward online or direct sales a major constraint in the growth of their business.

EY recently surveyed 530 P&C and life insurance agents to better understand trends, growth strategies and ways in which engagement rules have changed. They were asked about carrier selection, support and perceived value, as well as future growth engines and how they see their role as agents evolving in three to five years. Four key themes emerged from this survey.

1. The threat of direct-to-consumer and digital business models is driving insurance agents’ desire to use digital and social sales tools.

Agents are concerned with how they fit into the trend of more direct-to-consumer and online insurance models. Most view the market shift to direct-to-consumer and online channels as the major constraint in the growth of their business going forward. Inadequate products, investment in analytics, administration and automation, and speed and quality of access to customer or policy data also are constraining growth.

Agent perceptions of carriers

While carriers begin to explore alternative distribution platforms, agents still believe they add value and want to be actively engaged with the customer.

Survey findings reveal that agents who sell commercial insurance understand the most about how they fit into their carrier’s strategy, while those who sell personal lines and life insurance understand the least.

Growth is a major concern

The landscape of consumers is rapidly evolving from “traditionalists” to “technologists.” Millennials are the largest customer group in history — and a target growth area for most industries, including insurance. Agents indicated that they need different tools and products to meet their needs and to capture this growth.

Agents currently value basic functionality (e.g., operations and sales); however, the agent of the future will be concerned more with digital capabilities and tools. Quality of tools plays a large factor in the decision-making process.

See also: How to Support the Agent of the Future  

2. Agents expect carriers to enable simple customer and agent experiences, which, in turn, will drive agent loyalty.

Today, 90% of agents tap into multiple carriers, which is forcing insurance providers to rethink their value proposition and ability to differentiate. Personal P&C agents are more likely to have two to five most-favored carriers, while those in commercial lines tend to favor one or two carriers for each product. Only 12% have one primary alliance carrier.

Agents need support from carriers

When asked what carriers could do to ease the operational burden on an agency, respondents universally identified better communication, improved customer service and underwriting.

Agents think simplicity is the key for carriers to improve the customer experience. Across product types, agents have different opinions of what carriers can do to improve their responsiveness to customer service or claims; 45% want fewer forms and less paperwork, while 35% propose simpler products and better customer online tools.

Better sales tools, technology and analytics

Life agents are more focused on systems that support new leads and better underwriting, representing an opportunity for improvement. While 65% of commercial and P&C agents rate current tools as very good or good, only 45% of life agents rank them as such. The larger the agency, the higher the quality rating.

3. The agent of the future is looking for innovative, customized products to meet changing market and customer demands.

Innovation will require product change

Product innovation will be a key driving factor behind the agent of the future’s expanded basket of products. All agents place significant value on innovation that facilitates new business. Nearly half of commercial agents perceive technology that automatically identifies potential opportunities within their existing book of business as highly important.

The majority of agents believe that carriers could be more innovative by producing more simplified products that require less explanation and better address the needs of millennials. Only one third view the needs of Gen-X’ers and baby boomers as the type of product innovation that will help them grow their business.

Wearables and new technology present opportunities

Technology is viewed as an important factor in addressing the needs of a new generation of agents – and adding millennials to the salesforce will better cater to that market. As millennials continue to represent more market share, almost 40% of agents question their preparedness to meet the needs of the next generation.

4. Agents see close collaboration with carriers as driving growth.

Agents want to be more involved in the underwriting process. They agree that carriers could improve underwriting interaction by allowing more access to underwriters, enabling agents to work with the same underwriters and shifting underwriters’ transactional role to a relationship-focused engineer of customer solutions.

Agents seek closer working relationships with carriers

The majority of agents are open to the idea of reducing their role in servicing to focus on sales and growth. Across all product types, nearly half of agents view increased customization as one of the main product changes to address future needs. In line with customization, 40% of agents view the ability to provide many available features to address a wide set of needs as key to meeting evolving market demand.

Improving the agent experience

Strengthening current customer relationships and achieving customer-centricity in core operations have become strategic imperatives. As consumers embrace digital and other emerging technologies, insurers must rethink their distribution strategies, agency interactions and partner relationships.

See also: The New Agent-Customer Relationship  

Conclusion

Listening to the “voice of the agent” can help carriers provide a deeper, more robust experience and support them to rethink their commitment to the agency system. A collaborative process will allow carriers and agents to interact and strengthen their relationship. Our survey supports the concept that insurers and the agent of the future will be stronger by working together.

How to Support the Agent of the Future

New-business sales and servicing has received increased attention from insurance carriers in recent years, and with good reason. Insurers that provide tools and resources that make it easier for agents and brokers to quote and retain clients have a better chance of return business. A key way to accomplish this is through agent/broker portals and exchange sites.

Typically web-based, these portals support the sales and service function of a carrier and aim to improve efficiency in business processing through functionality that authorizes an agent to easily quote new business as well as service in-force business.

With a new wave of millennials entering the workforce, and an entire generation of baby-boomer knowledge holders preparing to leave, distribution management is poised for redefinition along with the rest of the industry. The digitization of core systems is largely underway and is now reaching out toward distribution channels, offering insurance companies a chance to help define what E&Y refers to as the “agent of the future.”

See also: How Insurtechs Will Affect Agents in 2017

The extent to which these agents and brokers will be successful will depend on the ability of both agent/brokers and insurers to adapt and collaborate. Distribution channels need to be willing to adopt new practices, tools, and processes to adjust to changing regulation and customer-centricity. Insurers that inquire into the needs of agents and brokers, and implement portal solutions that address them, can improve business processes and possibly establish a competitive edge.

Craig Weber, CEO with Celent, an independent technology research firm, agrees: “Insurance carriers are starting to more aggressively seek out solutions to help them improve operational efficiencies and deliver better service to customers. In terms of distribution, independent agents have made it abundantly clear that underwriting speed and process support often drive their decisions to place business with one carrier versus another.”

Digital distribution models offer a new array of opportunity for usage, gathering and transfer of data. When insurers provide agents with access to data in the form of quotes, illustrations and marketing material, turn-around times can be significantly enhanced. Simultaneously, data gathered by agents during the sales process (CRM) can populate new business, policy and administration systems, reducing the need to re-key information. Valuable analytics on channel activity and performance can further inform insurers by highlighting top producers and indicate where more support might be needed in the Agent/Broker Portal or exchange site.

IT departments have historically had to develop these portals themselves, but insurtech vendors are responding to the increasing demand. Here is a list some of the standard agent portal features and functionality to watch for in your solution.

Because core insurance technology platforms are as varied as insurance companies themselves, portal and exchange site requirements and solutions are bound to reflect this complexity. Nevertheless, it is in the carrier’s best interest to make the agent/broker experience as easy, even enjoyable, as possible by including the features and functionality that producers, and insurers, need.

See also: Find Your Voice as an Insurance Agent

Insurance companies, as well as offering agent/broker portal functionality, are often tying their own sales and underwriting system into both portals and exchange sites. Exchange sites are numerous and are usually insurance-product-specific (P&C, individual health and life, or employee benefits and ancillary benefits). The more an insurance company can streamline with straight-through processing across various digital media the better and more cost-effective the solution.

FutureTech and Business Transformation

Additional and emerging technologies such as AI, robotics, sensors and predictive data and adoption of digital self-service portals will all play a role in defining the “agent of the future” and the systems that support them. The digitization of distribution is one of many aspects that insurers must consider as business systems transform. If undertaken strategically, with insight from stakeholders, digitization could yield a substantial return for insurers, agents and the customers they serve.