Predictions on the Demise of the Independent Agent Are Premature Yet …

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This column has covered a number of important technology issues facing agents, including security, social media, mobile technology, and the customer experience. A groundbreaking study issued last month and an equally sobering and hotly discussed report from last year makes clear that agents cannot put off taking action on these issues even as the debate rages on.

The just-released “Evolution and Revolution: How Insurers Stay Relevant in a Digital Future,” by The Boston Consulting Group and Morgan Stanley Research reports that insurance consumers don’t just prefer digital experiences, they expect them.

“Consumers expect digital experiences with insurers to become more “direct, simple, seamless, and intuitive” the report says. Further, “consumers expressed strong interest in insurers developing products that apply technology-driven capabilities and are deployed close to the source of their needs” and “that digital native insurers are well-positioned to address these consumer expectations and can operate much more efficiently.”

The phrase “deployed close to their needs” implies a role for independent agents though the report glosses over their role. Ron Berg, executive director at ACT (Agents Council for Technology), believes the report misses the mark.

“It seems that the big opportunities are not just for insurers to develop innovative and intuitive digital solutions more rapidly to meet consumer expectations, but develop those solution sets to enable their independent agent and broker partners in staying a part of their customers’ support structure,” he says. “This could be accomplished whether it is the moment-of-truth points the study highlights such as claims handling, or other aspects such as servicing to sharing of analytics and business intelligence.”

The BCG/Morgan Stanley report also calls for the need for insurers to completely rethink their customer engagement model.

Last year’s blockbuster report from McKinsey & Co., called the “Agents of the Future: The Evolution of Property and Casualty Insurance Distribution,” elicited both praise and criticism, the latter taking issue with the underestimation of an agent’s local footprint, personal relationships, and consumers’ preference for advisers they know as compared to large institutions.

The report states that “where agents once served as the front-line in risk selection and pricing, advances in predictive models are making this role obsolete. The agent was once the face of the insurance brand; now customers increasingly use multiple channels to connect with their carrier. Perhaps most disruptive to the traditional agent value model, auto insurance – which accounts for 70 percent of personal lines premiums – is fast becoming commoditized.”

“The McKinsey report shines a great light on not just the digital challenges but also the tremendous opportunities for independent insurance agents, provided they act on them quickly,” says ACT’s Berg. “All business models must now rely heavily on digital tools; it’s what consumers want. What’s so exciting, however, is that consumers also hunger for a trusted adviser relationship with their insurance agent. Independent agents who marry the two will be big winners in the years ahead. That’s an opportunity direct writers can’t fully execute.”

Both reports are available online:

• The McKinsey report is at www.mckinsey.com
• The BCG/Morgan Stanley report can be found at www.bcgperspectives.com

Topics Trends Carriers Agencies