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
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.