Tag Archives: brokers and agents

No More Apples-to-Apples Comparisons

I don’t know about you, but if I never hear another client, or prospective client, say they “just want an apples-to-apples comparison,” it will be too soon! 

As insurance agents, we don’t just hate that expression, we also know it’s a terrible idea for our clients. They ask for the comparison simply because insurance is complex, and they want to simplify information so they can make a decision and get on with their business. Unfortunately, many in the agent community have cooperated with this poor risk management strategy, which serves neither the client nor the agency, whether for personal or commercial lines. It reduces insurance and risk transfer to a commodity, which it is not and never will be, and results in inadequate or inappropriate coverage that rears its ugly head when a claim arises. 

In the future, agents who cooperate with apples-to-apples quoting will struggle. To understand why, we need only look at how technology is changing the rules of doing business.

Technology-Driven Winners

Technology, driven largely by artificial intelligence, will make it possible for customers to be better-educated, not only on their risks but on the various risk transfer mechanisms available to them. Smart systems will allow both consumer and commercial insurance purchasers to match their needs with available policy coverage in new and unprecedented ways. Also, relentless pressure for improved bottom lines fostered by competition in the marketplace will put an ever-increasing spotlight on the cost of insurance, forcing businesses to make more informed decisions. All of this means that agents must up their game from a technological perspective to prosper. Fortunately, technology will help in at least two ways. 

First, the improving technical tools available to agents will make it easier for them to select specific policy coverage and language for unique client needs. And improving integration between agency management systems and carrier technology will allow better product selection. Within a few years, this integration will increasingly be done automatically, freeing agents’ time. Additionally, as insurance companies continue to learn how to analyze the massive data they are collecting, their pricing methodologies will change. It will become easier for them, and their agency partners, to propose bespoke coverage with tailored pricing for smaller and smaller risks.

Second, a technology that can make a profound difference in moving agents away from commoditized selling is virtual transportation systems. Think Zoom, Microsoft Teams and other widely adopted platforms. Dan Sullivan of the Strategic Coach points out that Zoom is really a transportation technology in that it allows you to transport yourself over endless distance, and enables face-to-face communication with virtually no time or expense. 

But Zoom and similar products are merely the Model T version. Within five years, there will be widespread adoption of augmented reality systems that allow full, 360-degree, three-dimensional, almost physical communication between people at any distance. Agents will be able to market much more broadly than ever before. Agents will be able to fine tune and narrow the niche or target markets in which they work. This will result in increased collaboration among agents, clients and insurance companies as all three seek to fine tune not only coverage, but pricing, as well. 

Agents who adopt these technologies and master them will win. They will write the most profitable business and experience the highest growth rates while leaving other agencies using old technology and outdated mindsets to increasingly fight over the less profitable scraps of business. While this future, which is coming rapidly, is exciting, it is also potentially frightening because busy agents often aren’t sure what to do to prepare. 

See also: 2021: The Great Reset in Insurance

Preparing for Change

The first thing to do to be ready for this impending future is simple: Master your agency management system (AMS) so that data is uniform and complete. Most agencies, according to all major AMS companies, use only a fraction of the software capabilities already at their disposal. Worse, agency employees are not consistent in how they enter, preserve and manipulate data. This data is the raw material for the customized coverage and pricing model of the future. But if it is not accurate, complete and consistent, that future will be much harder to achieve. So, agents should start now by learning how to maximize the capability that is already present in their AMS and working on data collection and discipline. 

A second cultural objective to consider is implementing and enforcing consistent, careful annual coverage reviews with both prospects and clients. While this is standard practice in many agencies, it is often overlooked or involves only a cursory review of changes in business exposure or coverage needs. In the future, when clients know more about their own risks and coverage options, this won’t be adequate. Agents should begin now to increase their thoroughness. 

Third, understand, use and maximize your current carrier’s technology tools. Hartford Insurance Senior Vice President Matthew Kirk said in a recent podcast that using the tools that carriers already provide is one of the biggest opportunities for both agents and companies to reduce costs, increase speed and deliver appropriate solutions. By having serious conversations with carriers about capabilities, agencies can find another way to prepare for a future in which technology increasingly dominates competitiveness.

Finally, agencies should consider adding tools now from those that already exist. For example, many agencies find that tools like Risk Match allow them to do a better and faster job of matching client risk to carrier appetite. And tools like ModMaster allow agents to help their clients understand what drives their workers’ compensation costs and allows for agent/client conversations to move past price — to collaboration on risk reduction and cost elimination. There are many other similar tools in the market now that may be of use to agencies and their specific situation. The key is to become aware of these tools and add them to your arsenal as soon as possible. 

Taking these steps, which appear deceptively simple, will prepare agencies for a future in which the client/agent conversation shifts from fruit comparisons to one that is more like the tailor and his clients while preparing a bespoke suit.

P&C Distribution: What’s Old Is New

There is a great deal of activity afoot in the P&C distribution space. New models are being explored. Old models are being upgraded for the digital era. In a recent SMA research report, I identified eight different models or options for insurers to consider. However, even though I positioned this as a revolution and an explosion of new activity, it is fair to ask if these distribution models are really new. About 3,000 years ago, it was probably King Solomon of Israel who said, “There is nothing new under the sun.” But the thought still holds true: The ideas remain the same; they just get reinvented and modernized.

This is very much the case in insurance distribution. Let me explain.

The new models to consider include: establishing digital brands, new affinity relationships, bundling insurance with the underlying product, digital marketplaces, worksite marketing for P&C, selling through new ecosystem partners and insurtech distributors. Although these certainly provide some interesting and important options for insurers seeking to expand distribution, it is not wholly accurate to say that they are new. In fact, (and now I’m dating myself) I distinctly remember being part of an industry research study in 1995 identifying scenarios for the future of insurance where we discussed options like bundling, affinity, worksite and selling through non-traditional partners in other industries. So, the logical question becomes – what’s different? Why are these types of options becoming popular and part of the strategy picture for many insurers?

There are some fundamental reasons why this whole range of channel options are important now.

  • The digital connected world: The world is undergoing a rapid digital transformation, which drives customers’ expectations. Every other industry is reaching customers via digital and mobile channels and technology have advanced to the point where it is relatively easy to do so.  
  • The API revolution: Connecting with new partners is significantly easier than in the past due to APIs being built into virtually every software solution. The ability to “plug and play” to connect to new partners for information exchange and transactions enables more dynamic partnering.
  • New competitive pressures: Insurers are seeking new ways to reach specific customer segments. As more insurers expand their channel options, they exert pressure on those that stick purely to traditional channels.

Thus far in the blog, I have not said the words agent or broker. But it would be a grave error to think that all the new channels will dominate and leave human intermediaries with a dwindling market share. In fact, agents, brokers, MGAs and other traditional distribution partners are leveraging advanced technologies. Insurers are providing many digital options for intermediaries to conduct business with them. And tech companies are providing innovative solutions for the agent/broker market. In addition, these traditional distribution players are also leveraging some of the other channel options to create hybrid models. Some are creating their own digital brands. Others are expanding their distribution through new affinity relationships, partnering with or acquiring insurtechs or connecting to customers through non-traditional partners.

See also: P&C Distribution: Blending Models

All the participants in the insurance distribution area enjoy many options. Thus, it comes down to selecting the channel mix that best aligns to business strategies and customer segments. The most important consideration is finding the right blend of the old and new. And it is evident that labeling some of the channels as old is a misnomer, given the innovation that is occurring across all the channel options.

In addition to the new SMA Research report, you can find more insights on P&C distribution in our Digital Distribution Virtual Experience on Dec. 16. This event is part of our Insights to Solutions Series.

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 Most Underused Channel for Leads

As captive insurance agencies grapple with increasing online competition and growing product commoditization, they are constantly looking for any competitive edge they can get.

One advantage many captive insurance carriers overlook is connected to what may seem like a disadvantage —  consumer preference for online research. When a consumer searches for products or services, the consumer typically starts with an online search, and the insurance industry is no exception. In fact, research from PWC found that 71% of consumers use some form of digital research before buying insurance (e.g., price comparison or social media). 

Where the local captive agent wins is in physical proximity to nearby consumers. On Google and other popular search engines, this is the most important local SEO (search engine optimization) ranking factor. Therefore, in a search-driven world, carriers with a large network of local agents near millions of potential insurance buyers have a major advantage over online-only carriers, which cannot rank in local search. 

How Local SEO Drives Leads for Local Agents

The first thing most consumers see when performing searches, after a few paid ads, is the top three organic results from nearby businesses: referred to as the Google 3-Pack. Local agents should make every effort to show up in the Google 3-Pack as this coveted real estate drives the most traffic and calls. In fact, a recent study of billions of search results found that 55% of Google search users click on one of the first three organic search results. 

This being the case, the savviest insurance carriers focus on growing their share of voice for the proximity discovery keywords that matter most – i.e., “best car insurance” or “affordable car insurance.” More specifically, they are focused on Google, which accounts for  94% of the mobile search market in the U.S.

Factors That Drive Local SEO Ranking

To increase organic search rank for important keywords like “auto insurance” and improve how frequently local agents appear in the Google 3-Pack, carriers need to optimize for the five known controllable signals that determine local search rankings via a process called Proximity Search Optimization (PSO). Effective PSO requires managing the five known signals: 

  1. Local Listing Accuracy — information accuracy and consistency across all networks not only improves proximity search rank, it also helps customers find businesses in the real world.
  2. Local Profile Completeness — ensuring all applicable fields are filled out on each discovery network gives customers a more complete picture of your business, while improving proximity search rank.
  3. Ratings and Reviews — maintaining high customer rating scores and being responsive to reviews not only affects proximity search rank, it also influences buyers’ decisions on which business to choose.
  4. Local Facebook Publishing Activity — frequent posts containing important keywords can improve your proximity search rank and help brands drive local community connections.
  5. On-Page Local SEO — alignment with Google’s assessment of webpage quality helps determine where those pages and the associated listings rank in local search.

See also: 5 Ways Tech Can Draw Young Talent

Best Practices to Win in Local Search

Recently, my company, MomentFeed, conducted an audit of the top six captive insurance carriers to see how they perform against the five known PSO signals. Given the industry’s marketing maturity, we were surprised to find unimpressive performance on these metrics. 

The good news: There is a huge opportunity for any captive insurance carrier willing to invest in a more comprehensive local search strategy. With even a small improvement, any carrier can dominate in local SEO. Here are some important tips for optimizing for proximity search: 

1. Make sure your listing data is accurate and up-to-date.

This may sound obvious, but with so many pandemic-driven office closures over the last few months, a surprising number of businesses across consumer industries have not kept their listings up to date. Local insurance offices are no exception. The average local insurance carrier was found to have inaccuracies on 55% of its data.

Best practice: Make sure to claim all listings and ensure local listing information is accurate and consistent across the internet. This includes summaries of the business, contact information, address, hours, photos and more. 

2. Make sure all applicable fields are filled out on each discovery network.

When analyzing Google and Facebook, two of the most prominent discovery networks, we found that captive insurance carriers failed to complete 3% to 15% of applicable fields, such as hours and photos. While this may not seem like much, even the slightest margin of error seems to knock carriers out of the Google 3-Pack. Both of the carriers that performed poorly in this category saw a lower number of locations appearing in the Google 3-Pack as compared with others in the study.

Best practice: Review all your Google My Business listings and Facebook pages, and ensure that all fields are filled out. 

3. Reply to most if not all of your reviews.

Over the last decade, online reviews have become a common part of the insurance buyer’s journey. Now, reviews are also a major factor for online search ranking, as well; a poor response rate or lower star rating can bump a local agent out of the Google 3-Pack. This means less visibility for insurance agents not focused on this critical metric.

Best practice: Respond to all reviews, both positive and negative within 24 hours. Ideally, maintain a response rate higher than 90% and aim to achieve an average star rating of four or higher across all critical networks. 

4. Post to local social sites at least nine to 10 times a month.

Another way to ensure your agents are visible when local insurance buyers search is through local social media content. Agents who post more frequently to their social media pages are more likely to be successful at reaching local audiences.

Best practice: Local agents should create local social media pages on Facebook and Instagram and post at least nine to 10 times a month. These posts should include geo-tagging using location hashtags like #SantaMonica, #Seattle, #Boston, local photos (note – photos taken with a GPS-enabled device will embed the photo itself with geo-tagging information) and of course the named location tag. Agents should also include keywords that the agent is trying to rank for, i.e., “car insurance” or “affordable insurance.” 

See also: Are Insurers Ready for Voice Search?

5. Optimize your local agent website’s on-page signals in the categories graded by Google.

On-page signals refer to the characteristics of a location’s webpage that help search engines and consumers use the site. Three of the most important website categories that Google grades are: accessibility (ability of the page to be operated by literally anyone); best practices (overall code of health – security, page load time, load without errors, etc.); and SEO (factors that help search engines find and understand the page).

Best practice: You can run a website assessment on your pages through Lighthouse, a free Google plugin, to see how you are performing across the three categories. 

Now that the vast majority of consumers are going online to research insurance options, a comprehensive local SEO strategy is essential to make sure your local agents are showing up in the top three search results. The payoff for agents that get it right is substantial: improved  local marketing performance and a higher volume of interested and engaged prospects that can ultimately lead to more successful customer acquisition.