How technology is changing the way agents do business
Many believe there is still opportunity for independent insurance agents and their carriers to grab personal lines market share. But to do so they must find a way to compete against the giant direct response and captive carriers that are beating them at personal lines. While technology must be part of independent agents’ strategy, that alone is not enough.
“There are a small but growing number of agencies that are seeing that personal lines actually has some great opportunities for them,” says Steve Anderson, a technology expert who advises insurance agents how to use technology to increase revenue.
The high-tech tools that will enable agencies to grow their business in personal lines already exist, Anderson says. “We could argue how good it is, or what pieces are we missing, but the reality is there’s more technology available today for personal lines than there ever has been to streamline both the sales and the service process.”
For agencies to beat the competition in personal lines requires more than technology, he says. It requires a change in the way agents think and how they do business.
“The agency actually has to think differently about how to implement technology and use those tools in their organization,” Anderson says.
But Anderson says the opportunity for agents to grow in personal lines is there. “I believe there’s lots of opportunity in the personal lines arena to build the book. It really takes a marketing mindset. I think that’s where a lot of agencies are struggling. There is certainly technology, which can really help them with that process.”
Personal Lines Game
For years, independent agencies have been losing their grip on the personal lines market.
In the personal auto insurance market alone, direct response carriers grew their share of the market 10 times faster than independent agency companies, according to the study by Independent Insurance Agents & Brokers of America, “2011 Property/Casualty Insurance Market: Opportunities & Competitive Challenges For Independent Agents & Brokers,” released in March.
Direct response insurers now control more than one in every six dollars of personal auto premiums. If that growth rate holds, direct writers will approach 20 percent of the auto market share in the next year or two, the IIABA report says.
But technology is closing some of the gap, some say.
“Technology has enabled agents to level the playing field with direct writers by being visible in the Internet space with millions of consumers,” says Angelyn Scardino Treutel, president of SouthGroup Insurance, Gulf Coast in Bay St. Louis, Miss., and former chair of ASCnet, the Applied Systems user group. “Internet shoppers do much more research online, but they prefer to buy complicated products from a real person, and that is where agents add value.”
Anderson agrees. “Agencies have a great story to tell and could compete pretty effectively if they have the opportunity.”
Another consideration, according to a survey by Reagan Consulting, is that personal lines represents twice the profit potential than commercial lines, Anderson says.
“Personal lines is perhaps one of the best opportunities available to the agencies,” Anderson says.
Independent agents also have an advantage through technology when trying to gain personal lines market share, Treutel says. “Independent agents provide choice, convenience, and advocacy for their clients, which in today’s fast-paced world is very appreciated by consumers.”
If agencies will look at personal lines a bit differently the opoortunity for growth is there, Anderson says. “From a technology standpoint, there are some real tools available, if they’ll use them,” he says.
The only thing standing in the way is the agent, Treutel says. “Agents are only hurt by not embracing the available technologies.”
Insurance customers are using technology to their advantage and so should agents, says Stephen Moriyama, senior vice president of Hayward Tilton & Rolapp Insurance Associates Inc., an independent agency headquartered in Southern California.
“With the proliferation of the Internet, consumers have become very savvy,” Moriyama says, “Knowledge is power” for both consumers and the agent, according to Moriyama, who also serves as incoming president of the Vertafore user group NetVu.
Moriyama, an agent for 24 years, says years ago his agency could provide just one or two quotes for a personal lines prospective client. Today, that’s not enough. “You have to canvass the market.” To do that, independent agents have to use comparative rating technologies just to survive, he says.
“That’s where technology has really changed things,” says Bruce Winterburn, vice president of industry relations at Vertafore.
Comparative rating systems have been a game changer, Winterburn says, allowing agencies to aggregate a rate for all of its carriers. “They can enter the data one time and in an instant get a quote for every one of their carriers,” he says.
While technology has opened the door for consumers seeking information on insurance, it also has led to new ways that the industry can profile risk.
“Today there’s an unbelievable amount of information that goes into generating a guesstimation of risk for a premium,” Winterburn says. “Without technology it’s almost impossible to know where a carrier is going to fall on a given risk.”
In Winterburn’s view, the industry is nearing a point where each individual will have their own unique set of characteristics that add-up to a premium just for them.
“We are almost getting to a rate for one or a premium for one,” he says. “To me that’s where technology has made an independent agent competitive to a degree that they weren’t in the past in personal lines.”
Anderson sees agents putting more emphasis on website development and their ability to allow for personal lines quoting directly from an agency’s homepage.
“The personal consumer is definitely starting their research online, with a Google search,” Anderson says. Technology focused on website rating, search engine optimization, and search engine marketing is a piece of the puzzle in winning personal lines market share, according to Anderson.
“Being available online is a key part of how they can, at least initially, contact and interact with consumers,” he says.
Social Marketing and Mobility
One way to beat the competition is through the use social and digital marketing methods and technology that allows mobility in the sales and service process, the experts say.
According to one agent, the digital world is a perfect tool for insurance agents trying to build strong relationships with clients and others.
Social and digital marketing enhances relationships, says Jason Cass, owner of the JDC Insurance Group based in Centralia, Ill., who also serves as chair of the IIABA’s Young Agents Committee. “It’s is a branding, marketing and relationship building tool,” Cass says.
That doesn’t mean agents can’t make sales too, he adds. Cass has built his agency on nothing but social media and digital market methods.
“I don’t advertise in the phone book, on TV, in the newspaper – the only place I advertise is on Facebook,” he says.
His Facebook page, JDC Insurance Group, has close to 4,800 “likes” and counting. He posts regular comments to his page and writes an insurance-related blog at least four-to-five times a month. But it’s not just about selling insurance; it’s about relationships, he says – relationships that often develop into personal relationships, thanks to Facebook.
“I’m at a lot of sales and marketing meetings. They say you need to touch your client at least two to three times a year,” Cass says. “Well, how about trying to touch them three times a week?”
That would have been impossible to do just five or six years ago, but in today’s social media world one post or blog entry creates value and builds stronger relationships with clients, he says.
“Whether they are your client or your prospect, you are touching them.’”
Not only can Cass provide insurance-related information to his clients and prospects, those same individuals learn more about Cass’ personal life. More importantly, Cass learns more about the lives of his clients and prospects.
“This is how we need to be selling,” he says. “It’s more personal.”
To compete, agents need to move beyond the tradition client-agent relationship, says says Joyce Sigler of Jones & Wenner in Ohio and the Real Time/Download Campaign co-chair. “Today, we can think outside the realm of customer face-to-face in-person interaction. Technology allows us to be anywhere, anytime,” she says. That allows agents to tailor needs to the individual and react as never before.
Being mobile is just as important in today’s fast-paced world, Cass says. “Mobile is huge and it’s going to get bigger.”
One easy transition agencies can make to become “mobile” is to ensure their agency’s website is “mobile ready,” Cass says. “Not having a mobile ready website drives people crazy,” Cass says. It’s easy to do and very affordable, he says.
Anderson, the technology consultant, sees some agencies beginning to experiment with mobile apps for smartphones or tablet devices in an effort to become more mobile.
“That is beginning to get some play although I think that’s probably a small piece right now,” he says. “From a customer service standpoint, providing some functions into either agency systems or agency processes for mobile devices, be it a smartphone or tablet type devices, is another area where I’m seeing agencies experiment.”
Anderson says the industry hasn’t identified exactly what the consumer wants when it comes to technology tools in personal insurance, but he predicts that agency-branded mobile apps that offer customer service options, such as auto ID cards, requesting vehicle changes and basic customer service activities will become more important in the future.
One of the biggest problems Anderson sees agencies making in personal lines is what he calls “followup failure.” Most agencies do not do a good job of following up with prospects and clients to offer additional services, additional policies or upgrades to policy limits, he says.
Customer relationship management and marketing automation technologies can help, he says.
“It’s not just a place to list prospect information. It truly is creating a multistep, marketing process, a system software program and process,” Anderson says. “The benefit is that the agency doesn’t have to have personnel to remember what to do next. The system is built to allow them to do that.”
Vertafore’s Winterburn says the technology is there. “We’ve reached a point where technology has almost leapfrogged our imagination,” he says. “So a lot of agents are still struggling to figure out how to take advantage of some of those technologies.”
Anderson believes agencies can grow with the right technology. “Personal lines is just a huge opportunity for those agents who are willing to work on it,” he says.