Tag Archives: brokers and agents

Lessons on Reaching Customers Remotely

Although insurers have readily adopted technologies to serve their customers, they’ve been less enthusiastic about using the same technologies to support their employees. Perhaps that’s one reason only 4% of millennials in 2018 showed an interest in working in insurance and 28% of financial services employees expected to leave their employers within five years.

To remedy this talent problem, there’s been a call for insurance companies to adjust their organizational structures, give young talent greater flexibility and improve their work cultures. If collective calls for change were the push, then the pandemic was the shove. Practically overnight, insurance companies had to adopt tech solutions for their employees and agents to maintain business continuity without being in the office or visiting prospects and clients. One recent survey reports that 60% of insurance professionals who responded have been working from home 100% of the time during the pandemic.

It’s clear that the insurance industry may not return to “normal” for the foreseeable future. When the first wave of the pandemic hit, companies learned to use tech to facilitate business. Now, the challenge will be adopting tools and practices that balance the best of technology without losing the one-to-one connectivity that’s the industry’s lifeblood.

Social Media and the Future of Work for Insurance Companies

The insurance industry’s evolution may have been slow until recently, but the industry hasn’t been stagnant. Most companies have shifted toward providing more customer-centric experiences.

Some have leveraged artificial intelligence to deploy more personalized services, such as using chatbots to answer inquiries or process claims. These solutions can serve as a framework for using even more advanced technologies. For instance, casualty companies are using IoT-connected sensors, real-time satellite information and unmanned aerial vehicles to assess accidents and natural disasters with unprecedented speed and efficiency.

No matter how useful these solutions may be, however, they cannot replace the human connection, an essential element in insurance. In my view, success with technology starts with taking the authenticity of relationships to digital channels, social media being chief among them. Here’s why:

1. Social media helps maintain smooth, consistent communication.

Communication skills have always separated the underperformers from the superstars, and, in insurance, effective and proactive customer communication is king. In fact, a survey from Collinson showed that two-thirds of customers want further communication from their insurance providers, and three-quarters would like to receive product and benefits recommendations. Yet most insurance companies reach out only for transactional matters like policy updates (67%) and renewal notices (79%).

The tech industry has mastered digital communication because tech companies have always sold products and services to customers remotely. Now, it’s time for the insurance industry to adopt a similar communication style, and social media is the medium of choice. This is especially true now that American adults are using social media more frequently. Insurance companies must prioritize consistent, engaging social media communication with prospects and customers to future-proof their businesses.

See also: Insurance Tips for the Remote Workforce

2. Social media allows agents to connect with customers from anywhere.

Many tech companies were already experimenting with remote work before COVID-19. Twitter, for example, was testing ways to create a decentralized digital workforce. Now, more are pledging to embrace remote work permanently

While a permanently digital workforce might not suit insurance companies as well, there is still a lesson to be learned: The impacts of the pandemic have launched us into a lasting transition to the future of work. As agents turn to social media as a new way to connect with their customer base without the opportunity to meet face-to-face, they’re discovering that no other marketing channel can come close to replicating the two-way dialogue of face-to-face conversations. The benefit of connecting with customers from anywhere at any time won’t be lost once agents can meet with clients in person again. Social media outreach and engagement should continue alongside traditional communication tactics as an efficient way to form connections.

3. Social media amplifies the voice of your best brand ambassadors.

Tech companies have understood for years that people trust other humans over brands and companies. It’s no wonder tech influencers on social media can gain millions of followers. Insurance companies should take note and put real people behind the face of the brand to build trust.

An insurance carrier’s agents have, arguably, the most intimate knowledge of the company’s culture, service offerings and customer needs, so the marketing team would be wise to tap this organic source of advocacy. Empower agents to use social media on behalf of the brand, whether that means posting branded content to humanize the brand, sharing educational articles for customers and prospects or simply answering questions and concerns directly.

Don’t forget to arm them with the right tools and content to represent your brand properly. As digital natives enter the industry, they’ll want access to resources to help them succeed and organizations that will offer egalitarian structures. Social selling gives each agent a voice and flattens the organizational structure. However, as agents have greater geographic flexibility, it’s important to manage social media activity for compliance and brand continuity.

Insurance companies rely on genuine connections and risk management expertise daily, but the workforce won’t be back in the office anytime soon. With digital transformation already underway in the industry and the astronomical growth of social media use among adults, it’ll be easier for them to find their footing in the future of work.

Does Pandemic Signal the End of Agents?

With each new wave of technology over the past few decades, there have been many predictions that this is the end of agent distribution. You know the drill: “Technology can be so much more efficient and remove all that expense related to those human distributors.” I can remember back to the dawn of the internet, when there was all the discussion about disintermediation. I heard that term in all kinds of insurers’ strategy discussions. I never believed agents and brokers were going to be displaced then, and they certainly have not been displaced. In fact, as digital technologies have advanced in the intervening decades, agents and brokers are still dominant. 

Now, we are in a pandemic. It has been world-changing. And it has accelerated the digital transformation of businesses, society and our industry. The inability to meet in person and the rapid shift to everything online has put pressure on the agent distribution model. So: Has the pandemic finally put the nail in the coffin of agent distribution (for all those folks out there who don’t like agents or don’t think they add value)?

The answer is a resounding “no.” I think this idea is a myth. For complex lines of insurance, mid- to large commercial line specialty insurance, high-net-worth on the personal side and other segments, agents will be necessary. There will always be a need for expert advice on risk management. And there will always be a need for intermediaries who deeply understand customer needs and can create that right combination of coverages linked to the right underwriters. These areas will benefit more and more from technology over time. But the agents and brokers are likely to be around for a very, very long time. 

It could be a bit different for simpler lines like personal auto, homeowners, pet, travel, etc. and some of the new, on-demand or gig economy types of insurance. There are strong arguments that those lines will migrate more rapidly to direct digital distribution. But even then it’s not going to happen overnight. There will be a slow evolution. My prediction is that there will still be agents selling all of those lines in 2030.  

See also: 4 Predictions for Independent Agents

Are there people out there who think you should be able to just press a button and get your insurance, so why have human intermediaries? Yes, but they are oversimplifying, and I believe it’s a myth to assume that agents are superfluous. 

In that vein, this is your call to action: Strengthen the relationships you have with various distribution partners and with the technology companies that support you in the distribution space. Agent-carrier connectivity solutions, portals and self-service capabilities all enhance that connectivity. You must form strong bonds and leverage those technologies as much as possible to improve relationships and to provide more value. And, finally, we live in an omnichannel world with many different options. Customer journeys often involve the use of multiple channels, so agents need to be incorporated into the overall omni-channel strategy.  

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.