I could see captive agents getting sucked up by the internet since they work for the insurance companies not the customer.
Independent agents have a better chance since they do not work for insurance companies, they work for the client. They provide more value to the customer since they are on their side not the companies. The customer gets real advise not advise jaded by a company employee. Also, an insurance company employee will only do a good enough job not to get fired.
This guy’s out to lunch. It’s just a matter of time before the internet truly catches on for homeowners and auto sales. Who needs and agent taking 15% off the top?
I’m sure that netinsurance.com or a similar company selling policies online would argue that this is a growing business. Everything is going online, why not insurance?
I agree with Richard on this issue. It has been my experience, as one of the few E-Aggregators in business, that agencies not only like what we have been able to provide to them, but that insureds themselves have not been overly interested in doing this themselves.
Since most BOPs average around the $2200-3400 mark, even if the agent is getting 15%, you are only talking about a few hundred dollars for their expertise and experience.
It is pure fantasy to think that any system in place right now, for commercial lines, can completely handle even 50% of the insureds that need insurance.
I have seen, talked to, and studied too many of the failed B2C’s, Business to Consumer companies, to believe we are close to having a internet solution for commercial lines insurance coverage to insured programs.
E-Aggregator systems work, but at this time, and for the close future, I do not see the agent in any real danger in losing commercial business to the internet.
While this might crop up, B2C insurance business, we are probably 1-2 years away from getting a decent system in play.
Buying Insurance on the internet is not something most people want to do. Most people would prefer to go through an Independent just to avoid the hassle because an Independent can explain things in a non technical way to help Insureds have a better understanding of what they are getting. Of course you are going to have those nickel & dimers who will try to save a penny but the american society does not work like that. If it did we would all mow our own lawns and not pay someone to do it. I am speaking more along commercial lines as far as personal lines I cant really state an opinion except that I would rather talk to someone than do it on the computer. Power to the the Independents!!!!!!!!!!!!!!
Pretty soon we will all be buying our personal lines insurance from a chinese company who can afford to do it for the 3% commissions that these lines will be paying.
sorry, better get used to it, but anything that can be automated will be done where labor is cheapest. why will i pay 15% over the top when i can quote, bind and print for 3% and not even know i’m doing all my business in india or china?
i give it 3 more years tops. then those independent agents better learn how to specialize. hell my son just bought a car online and saved himself $2000 over the dealer’s best offer. if people are buying cars that way, you’re nuts if you think they won’t do insurance the same.
dont woory ,as identitiy theft goes on the rise, and the lawsuits start flowing with people being underinsured, we will continue to grow!we are selling more now than ever, our market is only like 9 billion for auto ins alone. i will continue to live a very lavish life, so back to your little cubicle or bar stool!
DB – it sounds like you are a pure commodities shopper. Whoever is the cheapest provider is who you use. While that is a valid method of doing business, some people like to work with an agent or broker (independent or direct writer).
Many people like you think insurance is simple, and it is until a claim occurs. As a broker I was able to get a liability claim denial reversed for one of my clients. I think they appreciated the $10,000 I was able to save them.
There will always be commodities shoppers (Wal-Mart), and there will be people who want Nordstrom type of service. The irony is that with the intense competition in the marketplace most consumers can get very competitive pricing AND excellent service. I know that I am not concerned about being replaced by the internet.
I try to avoid people who want NOTHING other than the cheapest cost; I sell value to my clients. It has been my experience that price only shoppers are the ones that are not happy when the insurance carrier does exactly what the contract states (unfortunately they did not know what they were buying and try to blame the agent/broker when they don’t get what they think they deserve). Good luck to you and I hope you never run into me as your Chinese insurer will not be fun to deal with. Alan.
As an independant agent, I have come across only one insured who has cancelled his insurance with me because he found “a cheaper rate online”. He shortly came back when he discovered he couldn’t get it done on his own and found that there was no customer service with the company in question to help him.
I’ve also written policies for people that they had previously had online, but they said that they liked the personal service and were afraid of what they’d get if they had a claim. The most common online company that I quote against is Progressive, and often times Drive, Progressive’s agency brand, is cheaper for some reason.
I don’t understand why people would buy insurance online. Most people know next to nothing about auto and homeowners insurance, and the internet doesn’t offer them too much help in that department. I do believe that through educating ourselves, independant agents will always have an edge.
Independent Agents average about 13.7% commission on personal lines business. They only get paid if the sale is made and the coverage renewed. Internet sales expense is not zero, they have employees to pay with their attendant employee benefits, and these employees get paid even while standing at the water cooler. Personal lines property & casualty insurance is complex, more so commercial lines. People enthused with online sales are those that have no vast experience in sales. Companies would be wise to expend their capital expanding their base of agents. Online sales is more condusive for life insurance, annuities and banking.
I doubt insurance will go ultimately go soley online as many predict. In the wake of Katrina just look at how many people were not properly covered. That doesn’t bode well for lots agents but there will be many people who were happy to have paid 15% commission as they receive their proper settlements and rebuild as opposed to those who have to rely on the courts or government.
It’s been my experience (I’m not an agent) that when talking casually to someone about insurance, it’s not too difficult to make them quickly see the value of a good company and proper advice.
How does Market Scout fit into all this? Kerr raises his head about every two months to tell us how the market is doing in HIS world, then he goes on to discuss the benefits of doing business with his company, Market Scout. But here there’s no mention of Market Scout. There must be some other motive, but I’m sure it’s some way of Kerr promoting Market Scout. Or maybe Market Scout just died out since they couldn’t write business for the Agents who tried to access them. Is this author somehow associated with Kerr? It’s not like Kerr’s an Insurance Icon who needs to be quoted.
Verrrry interesting . . . . I smell the Society of CIC somehow behind this.
I sell Drive and compete against Progressive Direct. Drive is cheaper 80% of the time. Consumers “mistakenly” think
if the Companies don’t pay the Agents the 15% commission (most my Companies pay 10%)
then the savings go to the Client. Stupid!
Progressive Direct, Geico, ect. we BEAT regulary. It’s not cheaper going direct you just get to do the work yourself and you can’t sue the Company because you picked your own coverages. The 15% doesnt cost YOU a dime, is saves you money (and your rear)when you have a loss.
Remember that the insurance business has probably the most confusing supply-chain of any industry.
We are still in our infancy with regard to online business. Amazon.com has figured out how to “get it done” on the Internet, but it is much simpler model than insurance.
Those of you who insist that you’ll be fine and your clients have no problem paying extra for your services, well I hope you have a good retirement plan.
I remember my good friend Bobbi, who was regional head of Customer Service for a large agency. 10 years ago she told me she was glad she had chosen CS as her profession, as customers would always need help, so she would always have a job. Except now Raji is answer her phone from Dehli and Bobbi is working at Safeway.
Don’t worry independent agents, with all your exceptional sales skills, you can always sell used cars.
Barry, sure internet expense is not zero. But when they are in India and China it’s pretty close. Benefits? Ha! FYI, those guys get 2 10 minute bathroom breaks and lunch in a 10 hour shift. There is no water-cooler time for them. They work a lot harder than us! I’ve been there and seen it!
Get ready, because 80% of the insurance industry, the most bloated inefficient industry in the world, will be working from Western China in 10 years, once some of the industry is streamlined.
What everyone here fails to see is that; Yes the IA provides value. However if you run it through a whoresaler like Marketscout or an E-Aggravator you lose that vaule. You are now the consumer shopping on-line with them.
Raise you hands if you think that MarketScout is out to protect the model of distribution for the IA.
It is comical to listen to the responses on this forum. NO PERSON PAYS THEIR AGENT 15% COMMISSION. With the rare exception agents are paid a commission by the company. Yes the insured is ultimately paying the cost, but it is less than the cost of the advertising and lets not forget the boiler room that the direct writers use. It is NOT cheaper to not have an agent. Yes you will find a cheaper rate online for some risks, but you will find cheaper rates between 2 agents most of the time also. People have been duped into thinking that all insurance is the same and that if you find it cheaper it is just money saved. I do not have ANY concerns that I will be threatened by people going to the internet for insurance, It just has not happened. Don’t misunderstand me, I know it happens but I will not go out of business because of the internet. My clients know the value we add and respect the advice we offer. Alot of people shop on the internet but buy from an agent, Why do you think this is? Between ID theft, SPAM and having some idiot in India have access to your personal data, alot of people don’t think it is safe, others just know they don’t understand insurance and want someone to advise them. Bargain hunters will always have a place in society and they are welcome to make the mistake of not having an agent. As far as becoming a used car salesman, no desire and no need, besides it would probably raise my tax bracket.
Imagine the prospect trying to understand just auto insurance for the state of PA from a web page or someone from China. Limited Tort or Full Tort, stacking of um or uim, added FPB, underlying limits required for umbrella, various tiers, minium required limits etc etc etc. If they do get through this maze and buy, when the next bill comes just pop the info into another online carrier and renew there.WOW – What a profit online sales will be to carriers.
Did we not see the part that said simple coverages like personal property, auto, homeowners will be automated & offshored? Where did i mention complex P&C lines? Nowhere. That’s why i said IA’s need to start specializing.
If you don’t like bad news, go ahead and keep your head in the sand.
Simple coverages like Auto and Home?Apparently you are not an Agent. Sure you can pick and choose from a list on a computer screen, how do you know if you picked enough? Does it satisify your
Umbrella requirements? Did you want water and mold covg? Are you in co-insurance compliance? No it’s not brain surgery but there is a difference between a guess and an informed decision.
Companies post approx 13.7% for sales expense and that’s rather efficient. I recently retired after many years of sales experience and have no reason to fool myself. India and China – give me a break! Possibly on non complex products, but not property & casualty. There is a possibility the novelty of online sales could go the way of the CB radio.
It never ceases to amaze me that some people are able to actually obtain a license, and then they go on a forum and tell everyone just how dumb they are.
I have NEVER EVER had a customer tell me there was anything simple about insurance.
If it were so simple than why is it a requirement in every state that you be licensed in order to advise people on insurance products. If it were simple anyone could do it, and that simply is not the case. Two years ago my town was a test market for auto insurance being sold via ATM type machines in conveinence stores. The thought was that it was simple and that for whatever reason there was a need to allow people to buy auto insurance 24 hours a day from the local 7-11 store. Agents freaked out, especially the, “buy here pay here” auto shops. Well over a 12 week trial case and 10 ATM locations, there was a total of 11 policies that were bound, of which 0 renewed and all were cancelled for non pay by the 3rd month. ALL were minimum limit policies, and guess what, the survey at the end of each session indicated that that people choose to buy because they thought it would be cheaper, It was not cheaper, it actually was 32% higher than the average rate for the same territory, but it did prove the point that consumers know nothing about insurance and don’t know what cheaper means. It was promoted as ” $ValYou Do it yourself auto insurance.” Miserable flop, and it did not affect agents in the least, But it did prove the value of an agent. This test resulted in 11 policies sold, and only 31 quotes were completed on the systems, pretty good sales rate and that is about the only thing you can say about the whole scam. I still feel confortable that agents will ALWAYS have an audience of customers to work with and a good portion of those that go to the internet or direct writers don’t stay there for long, especially after a claim with lousy service. Please can anyone tell me why they think a home or auto insurance policy in SIMPLE?
JR… I agree. Don’t spend time wondering for I have been in the industry too long. After a while a person gets tired of listening to people that are too naive.
Banks enetered then pulled out yet the Agents have learned to retool and become more efficient. We support our local communities by paying salaries which in turn supports our local schools etc.
Should I say more. Keep plugging away and I enjoyed your comment.
Buying a commodity online makes sense. A car, computer, whatever. The key is if you buy a car online and the local dealer treats you like a stranger when it is service time, is that worth the savings? If it is then great.
Insurance is not a commodity! If you want some 19 year old phone rep counseling you on insurnance go ahead and save the 10%. Again, have fun a claim time when you get a different person each time you call. And that is personal lines, don’t even get me started on the issues of commercial coverage!
I could see captive agents getting sucked up by the internet since they work for the insurance companies not the customer.
Independent agents have a better chance since they do not work for insurance companies, they work for the client. They provide more value to the customer since they are on their side not the companies. The customer gets real advise not advise jaded by a company employee. Also, an insurance company employee will only do a good enough job not to get fired.
Anyway thats my two sence.
Out!
This guy’s out to lunch. It’s just a matter of time before the internet truly catches on for homeowners and auto sales. Who needs and agent taking 15% off the top?
Two cents, sorry
I’m sure that netinsurance.com or a similar company selling policies online would argue that this is a growing business. Everything is going online, why not insurance?
I agree with Richard on this issue. It has been my experience, as one of the few E-Aggregators in business, that agencies not only like what we have been able to provide to them, but that insureds themselves have not been overly interested in doing this themselves.
Since most BOPs average around the $2200-3400 mark, even if the agent is getting 15%, you are only talking about a few hundred dollars for their expertise and experience.
It is pure fantasy to think that any system in place right now, for commercial lines, can completely handle even 50% of the insureds that need insurance.
I have seen, talked to, and studied too many of the failed B2C’s, Business to Consumer companies, to believe we are close to having a internet solution for commercial lines insurance coverage to insured programs.
E-Aggregator systems work, but at this time, and for the close future, I do not see the agent in any real danger in losing commercial business to the internet.
While this might crop up, B2C insurance business, we are probably 1-2 years away from getting a decent system in play.
I wonder what the advertising budget is for Geico and the like. I think paying an agent 15% for acquisition and service is a bargain.
Buying Insurance on the internet is not something most people want to do. Most people would prefer to go through an Independent just to avoid the hassle because an Independent can explain things in a non technical way to help Insureds have a better understanding of what they are getting. Of course you are going to have those nickel & dimers who will try to save a penny but the american society does not work like that. If it did we would all mow our own lawns and not pay someone to do it. I am speaking more along commercial lines as far as personal lines I cant really state an opinion except that I would rather talk to someone than do it on the computer. Power to the the Independents!!!!!!!!!!!!!!
Pretty soon we will all be buying our personal lines insurance from a chinese company who can afford to do it for the 3% commissions that these lines will be paying.
sorry, better get used to it, but anything that can be automated will be done where labor is cheapest. why will i pay 15% over the top when i can quote, bind and print for 3% and not even know i’m doing all my business in india or china?
i give it 3 more years tops. then those independent agents better learn how to specialize. hell my son just bought a car online and saved himself $2000 over the dealer’s best offer. if people are buying cars that way, you’re nuts if you think they won’t do insurance the same.
dont woory ,as identitiy theft goes on the rise, and the lawsuits start flowing with people being underinsured, we will continue to grow!we are selling more now than ever, our market is only like 9 billion for auto ins alone. i will continue to live a very lavish life, so back to your little cubicle or bar stool!
DB – it sounds like you are a pure commodities shopper. Whoever is the cheapest provider is who you use. While that is a valid method of doing business, some people like to work with an agent or broker (independent or direct writer).
Many people like you think insurance is simple, and it is until a claim occurs. As a broker I was able to get a liability claim denial reversed for one of my clients. I think they appreciated the $10,000 I was able to save them.
There will always be commodities shoppers (Wal-Mart), and there will be people who want Nordstrom type of service. The irony is that with the intense competition in the marketplace most consumers can get very competitive pricing AND excellent service. I know that I am not concerned about being replaced by the internet.
I try to avoid people who want NOTHING other than the cheapest cost; I sell value to my clients. It has been my experience that price only shoppers are the ones that are not happy when the insurance carrier does exactly what the contract states (unfortunately they did not know what they were buying and try to blame the agent/broker when they don’t get what they think they deserve). Good luck to you and I hope you never run into me as your Chinese insurer will not be fun to deal with. Alan.
PS In short, you get what you pay for.
As an independant agent, I have come across only one insured who has cancelled his insurance with me because he found “a cheaper rate online”. He shortly came back when he discovered he couldn’t get it done on his own and found that there was no customer service with the company in question to help him.
I’ve also written policies for people that they had previously had online, but they said that they liked the personal service and were afraid of what they’d get if they had a claim. The most common online company that I quote against is Progressive, and often times Drive, Progressive’s agency brand, is cheaper for some reason.
I don’t understand why people would buy insurance online. Most people know next to nothing about auto and homeowners insurance, and the internet doesn’t offer them too much help in that department. I do believe that through educating ourselves, independant agents will always have an edge.
Independent Agents average about 13.7% commission on personal lines business. They only get paid if the sale is made and the coverage renewed. Internet sales expense is not zero, they have employees to pay with their attendant employee benefits, and these employees get paid even while standing at the water cooler. Personal lines property & casualty insurance is complex, more so commercial lines. People enthused with online sales are those that have no vast experience in sales. Companies would be wise to expend their capital expanding their base of agents. Online sales is more condusive for life insurance, annuities and banking.
I doubt insurance will go ultimately go soley online as many predict. In the wake of Katrina just look at how many people were not properly covered. That doesn’t bode well for lots agents but there will be many people who were happy to have paid 15% commission as they receive their proper settlements and rebuild as opposed to those who have to rely on the courts or government.
It’s been my experience (I’m not an agent) that when talking casually to someone about insurance, it’s not too difficult to make them quickly see the value of a good company and proper advice.
How does Market Scout fit into all this? Kerr raises his head about every two months to tell us how the market is doing in HIS world, then he goes on to discuss the benefits of doing business with his company, Market Scout. But here there’s no mention of Market Scout. There must be some other motive, but I’m sure it’s some way of Kerr promoting Market Scout. Or maybe Market Scout just died out since they couldn’t write business for the Agents who tried to access them. Is this author somehow associated with Kerr? It’s not like Kerr’s an Insurance Icon who needs to be quoted.
Verrrry interesting . . . . I smell the Society of CIC somehow behind this.
I sell Drive and compete against Progressive Direct. Drive is cheaper 80% of the time. Consumers “mistakenly” think
if the Companies don’t pay the Agents the 15% commission (most my Companies pay 10%)
then the savings go to the Client. Stupid!
Progressive Direct, Geico, ect. we BEAT regulary. It’s not cheaper going direct you just get to do the work yourself and you can’t sue the Company because you picked your own coverages. The 15% doesnt cost YOU a dime, is saves you money (and your rear)when you have a loss.
Remember that the insurance business has probably the most confusing supply-chain of any industry.
We are still in our infancy with regard to online business. Amazon.com has figured out how to “get it done” on the Internet, but it is much simpler model than insurance.
Those of you who insist that you’ll be fine and your clients have no problem paying extra for your services, well I hope you have a good retirement plan.
I remember my good friend Bobbi, who was regional head of Customer Service for a large agency. 10 years ago she told me she was glad she had chosen CS as her profession, as customers would always need help, so she would always have a job. Except now Raji is answer her phone from Dehli and Bobbi is working at Safeway.
Don’t worry independent agents, with all your exceptional sales skills, you can always sell used cars.
Barry, sure internet expense is not zero. But when they are in India and China it’s pretty close. Benefits? Ha! FYI, those guys get 2 10 minute bathroom breaks and lunch in a 10 hour shift. There is no water-cooler time for them. They work a lot harder than us! I’ve been there and seen it!
Get ready, because 80% of the insurance industry, the most bloated inefficient industry in the world, will be working from Western China in 10 years, once some of the industry is streamlined.
I agree with Fraud
What everyone here fails to see is that; Yes the IA provides value. However if you run it through a whoresaler like Marketscout or an E-Aggravator you lose that vaule. You are now the consumer shopping on-line with them.
Raise you hands if you think that MarketScout is out to protect the model of distribution for the IA.
It is comical to listen to the responses on this forum. NO PERSON PAYS THEIR AGENT 15% COMMISSION. With the rare exception agents are paid a commission by the company. Yes the insured is ultimately paying the cost, but it is less than the cost of the advertising and lets not forget the boiler room that the direct writers use. It is NOT cheaper to not have an agent. Yes you will find a cheaper rate online for some risks, but you will find cheaper rates between 2 agents most of the time also. People have been duped into thinking that all insurance is the same and that if you find it cheaper it is just money saved. I do not have ANY concerns that I will be threatened by people going to the internet for insurance, It just has not happened. Don’t misunderstand me, I know it happens but I will not go out of business because of the internet. My clients know the value we add and respect the advice we offer. Alot of people shop on the internet but buy from an agent, Why do you think this is? Between ID theft, SPAM and having some idiot in India have access to your personal data, alot of people don’t think it is safe, others just know they don’t understand insurance and want someone to advise them. Bargain hunters will always have a place in society and they are welcome to make the mistake of not having an agent. As far as becoming a used car salesman, no desire and no need, besides it would probably raise my tax bracket.
I would love to hear someone in China or India explain coinsurance to someone in NY, TX, or CA.
Not only will the subject be hard to understand over the phone, the language barrier will be hard to overcome as well.
Imagine the prospect trying to understand just auto insurance for the state of PA from a web page or someone from China. Limited Tort or Full Tort, stacking of um or uim, added FPB, underlying limits required for umbrella, various tiers, minium required limits etc etc etc. If they do get through this maze and buy, when the next bill comes just pop the info into another online carrier and renew there.WOW – What a profit online sales will be to carriers.
Did we not see the part that said simple coverages like personal property, auto, homeowners will be automated & offshored? Where did i mention complex P&C lines? Nowhere. That’s why i said IA’s need to start specializing.
If you don’t like bad news, go ahead and keep your head in the sand.
Simple coverages like Auto and Home?Apparently you are not an Agent. Sure you can pick and choose from a list on a computer screen, how do you know if you picked enough? Does it satisify your
Umbrella requirements? Did you want water and mold covg? Are you in co-insurance compliance? No it’s not brain surgery but there is a difference between a guess and an informed decision.
Companies post approx 13.7% for sales expense and that’s rather efficient. I recently retired after many years of sales experience and have no reason to fool myself. India and China – give me a break! Possibly on non complex products, but not property & casualty. There is a possibility the novelty of online sales could go the way of the CB radio.
My last post was in reference to BD at 1:39PM
sorry
“Did we not see the part……”
Who wrote that? Another person with no personal lines property casualty experience?
I hope you have no capital invested in personal lines property casualty online sales.
It never ceases to amaze me that some people are able to actually obtain a license, and then they go on a forum and tell everyone just how dumb they are.
I have NEVER EVER had a customer tell me there was anything simple about insurance.
If it were so simple than why is it a requirement in every state that you be licensed in order to advise people on insurance products. If it were simple anyone could do it, and that simply is not the case. Two years ago my town was a test market for auto insurance being sold via ATM type machines in conveinence stores. The thought was that it was simple and that for whatever reason there was a need to allow people to buy auto insurance 24 hours a day from the local 7-11 store. Agents freaked out, especially the, “buy here pay here” auto shops. Well over a 12 week trial case and 10 ATM locations, there was a total of 11 policies that were bound, of which 0 renewed and all were cancelled for non pay by the 3rd month. ALL were minimum limit policies, and guess what, the survey at the end of each session indicated that that people choose to buy because they thought it would be cheaper, It was not cheaper, it actually was 32% higher than the average rate for the same territory, but it did prove the point that consumers know nothing about insurance and don’t know what cheaper means. It was promoted as ” $ValYou Do it yourself auto insurance.” Miserable flop, and it did not affect agents in the least, But it did prove the value of an agent. This test resulted in 11 policies sold, and only 31 quotes were completed on the systems, pretty good sales rate and that is about the only thing you can say about the whole scam. I still feel confortable that agents will ALWAYS have an audience of customers to work with and a good portion of those that go to the internet or direct writers don’t stay there for long, especially after a claim with lousy service. Please can anyone tell me why they think a home or auto insurance policy in SIMPLE?
JR… I agree. Don’t spend time wondering for I have been in the industry too long. After a while a person gets tired of listening to people that are too naive.
Banks enetered then pulled out yet the Agents have learned to retool and become more efficient. We support our local communities by paying salaries which in turn supports our local schools etc.
Should I say more. Keep plugging away and I enjoyed your comment.
Buying a commodity online makes sense. A car, computer, whatever. The key is if you buy a car online and the local dealer treats you like a stranger when it is service time, is that worth the savings? If it is then great.
Insurance is not a commodity! If you want some 19 year old phone rep counseling you on insurnance go ahead and save the 10%. Again, have fun a claim time when you get a different person each time you call. And that is personal lines, don’t even get me started on the issues of commercial coverage!