Is this a threat to the independent agency distribution system? I say no, selling auto only policies online does IA’s a favor as keeps the low premium unprofitable business online and allows IAs to focus on higher premium business where a consumer or business client needs the professional services that an IA provides.
“Is this a threat to the independent agency distribution system? I say no…”
Well I say yes, carriers selling direct is a threat because it is taking sales away from me. I sell insurance face to face if that is what the customer wants. But I’ve found that more customers don’t want the inconvenience of driving to my office (gas $4 per gallon) or using a fax. I’ve also found that customers who start the shopping process by filling out lead information online usually expect to complete the sale online as well. For those customers I offer a process called EZBuy e-signature. It allows me to get insurance applications and forms electronically signed online thereby locking the customer into buying from my agency instead of a competitor. Either way I’m maximizing all my customer inquiries by offering in-person and online buying options. I have the best of both worlds and wish I had done it sooner.
We are talking apples and oranges. My point was that doing the complete sale online can only be done for the simple transactions like a auto only policy. Are more involved account with higher premiums and a higher level of sophistication is going to need the agency. If you agency focuses on auto only accounts, then there is concern, but if you are a commercial agency or focus on higher end personal lines, the marketplace will demand the insurance professional. It’s just like taxes, the CPA will be needed for the higher type account, but if it’s a simple return, it can be done online or through services like turbo tax.
I think this article should be a good wake up call to Insurance Agencies that don’t sell insurance online or don’t even have a web presence. The opportunity that Independent Insurance Agents miss is that they can sell insurance online AND provide professional advice and service. People still want an agent but they don’t need to live down the street or even the same state.
It’s an interesting debate. I think as long as direct companies are unable to adequately service multi-line policies, then the agent will be in high demand. But, it should be interesting to see if the behavior of the digital generations change as they age and have more assets. Clearly they are more comfortable transacting online than older generations. There is an interesting article I came across a few weeks back that looks at direct vs agent preferences: http://insurancenewsnet.com/article.aspx?id=242152&type=all
That Insurance News Net article was interesting. But what is noticeable to me is that although the change isn’t abrupt, the trend is moving towards online transactiong. Similar information provided by ComScore, a leader in surveying online insurance activity, shows a slow but definite movement to more online insurance purchasing preferences. ComScore also found that “convenience” was equal to “price” in a customers decision to buy insurance. My experince tells me that some customers still want to talk to an agent to get clarity and knowledge on what they are buying, which is usually done over the phone. But, when it comes time to sign and pay for it, many want convenience and the easiest way to do it. Heck, $4+ gasoline is all the more reason for me to offer non-driving buying alternatives. I simply let the customer decide how they want to buy by saying,”You can drive to my office, we can do it by fax or you can do it online by e-signature with EZBuy. It’s up to you.” I personally don’t care which one they pick. But at least I don’t lose them because my buying options were limited or a hassle. It’s getting harder and harder to acquire insurance customers these days. As a result, I don’t want to lose a potential customer to a competitor because I was old-fashioned and therefore not as “convenient” to buy from. Since I can beat GEICO, Progressive Direct and the other directs prices much of the time, it’s evident (to me anyways) that the online convenience factor has been key to their successes. As the saying goes, “If you can’t beat ’em, then join ’em.”
I think Esurance’s tag line sums this up pretty well – “People when you want them, technology when you don’t”. AgencyEquity’s analogy of simple tax returns done through Turbo Tax hit the nail right on the head. In order to advance and even maintain nowadays it is impetrative to have the technology side down pat but you also have to have strong professionals to deal with more complex cases or sophisticated buyers. I worked for an agency that tried to go 100% online and the consumers demanded a licensed agent to consult with even though they could complete the entire purchase transaction on the web.
Obviously this is a concern to Geico because they’ve started opening store front locations. 21st Century is also running ads comparing themselves against Progressive.
Competition is going to drive up online marketing costs. It will also add confusion to the marketplace by overwhelming consumers with options, which will probably drive down the closing rates on sales. Website traffic does not always equate to sales revenue.
GEICO opening up retail offices tells me that they’re declaring WAR to invade what has historically been the independent agent’s territory. Likewise, to level the playing field, us agents need to defend ourselves by competing in their online territory by having online selling capabilities. GEICO is basically a one carrier, one price model. But as an independent agent, I have a bunch more carriers with a bunch more pricing choices that can beat GEICO any day of the week. Since GEICO and others seem to be launching a ground assault against us, my recent focus has been making myself as easy to buy from online using the EZBuy e-signature I mentioned in my earlier post. Even though I may be small potatoes compared to GEICO, I’ll be ready to beat them, in both price and ease of buying, if I’m quoting against them.
All is well for Geico and Progressive but not for the consumer. These companies are low-balling the coverage just to get people in the door. I’m a captive agent and have seen some of the policies that these companies issue. Minimum liability, no medical and HIGH deductibles. Agents and companies have to adapt with the times and online is where we are at right now. The party that is being hurt by these companies is the consumer that doesn’t know very much about insurance, hense the value of an agent to sit down with them and educate them on the coverage that they are buying. I recently had a client that had a claim against Geico. The Geico customer ran a stop sign and t-boned a vehicle and then pushed that car into another vehicle, guess what?? The policy had 10,000 coverage for property damage, not enough to cover the damage to the 2 vehicles that were the victims in this accident. GEICO did not do its job in covering there client and it’s happening way too often.
The online marketplace actually gives the consumers more choice, it also may save them money as you piont out. But again, it’s a marketplace, some may want to do the online thing and others may not. The client that wants to save that last dime and call you up at your home phone on Sunday Morning (this actually happened to me early in my career) for a $5 rate increase is probably not the client you want. The marketplace is huge, target clients that want you services, target the more sophisticated clients, don’t waste you time on the 22 year old who wants minimum coverage, also don’t waste you time on a homeowners who thinks it’s better to put their auto with GEICO at minimum coverages. I would tell them it’s best to have all your insurance with one carrier, the good clients listened, the bad one’s ran, it was a great way to wead out the good and the bad!
Initially I had hopes for internet business’ availability. But internet business is typically low yield/high risk business that wants nothing but the lowest-priced legally passable coverage. It is also drawing in customers that don’t know their options and need to be speaking to an agent for advice.
Is this a threat to the independent agency distribution system? I say no, selling auto only policies online does IA’s a favor as keeps the low premium unprofitable business online and allows IAs to focus on higher premium business where a consumer or business client needs the professional services that an IA provides.
“Is this a threat to the independent agency distribution system? I say no…”
Well I say yes, carriers selling direct is a threat because it is taking sales away from me. I sell insurance face to face if that is what the customer wants. But I’ve found that more customers don’t want the inconvenience of driving to my office (gas $4 per gallon) or using a fax. I’ve also found that customers who start the shopping process by filling out lead information online usually expect to complete the sale online as well. For those customers I offer a process called EZBuy e-signature. It allows me to get insurance applications and forms electronically signed online thereby locking the customer into buying from my agency instead of a competitor. Either way I’m maximizing all my customer inquiries by offering in-person and online buying options. I have the best of both worlds and wish I had done it sooner.
We are talking apples and oranges. My point was that doing the complete sale online can only be done for the simple transactions like a auto only policy. Are more involved account with higher premiums and a higher level of sophistication is going to need the agency. If you agency focuses on auto only accounts, then there is concern, but if you are a commercial agency or focus on higher end personal lines, the marketplace will demand the insurance professional. It’s just like taxes, the CPA will be needed for the higher type account, but if it’s a simple return, it can be done online or through services like turbo tax.
I think this article should be a good wake up call to Insurance Agencies that don’t sell insurance online or don’t even have a web presence. The opportunity that Independent Insurance Agents miss is that they can sell insurance online AND provide professional advice and service. People still want an agent but they don’t need to live down the street or even the same state.
It’s an interesting debate. I think as long as direct companies are unable to adequately service multi-line policies, then the agent will be in high demand. But, it should be interesting to see if the behavior of the digital generations change as they age and have more assets. Clearly they are more comfortable transacting online than older generations. There is an interesting article I came across a few weeks back that looks at direct vs agent preferences: http://insurancenewsnet.com/article.aspx?id=242152&type=all
That Insurance News Net article was interesting. But what is noticeable to me is that although the change isn’t abrupt, the trend is moving towards online transactiong. Similar information provided by ComScore, a leader in surveying online insurance activity, shows a slow but definite movement to more online insurance purchasing preferences. ComScore also found that “convenience” was equal to “price” in a customers decision to buy insurance. My experince tells me that some customers still want to talk to an agent to get clarity and knowledge on what they are buying, which is usually done over the phone. But, when it comes time to sign and pay for it, many want convenience and the easiest way to do it. Heck, $4+ gasoline is all the more reason for me to offer non-driving buying alternatives. I simply let the customer decide how they want to buy by saying,”You can drive to my office, we can do it by fax or you can do it online by e-signature with EZBuy. It’s up to you.” I personally don’t care which one they pick. But at least I don’t lose them because my buying options were limited or a hassle. It’s getting harder and harder to acquire insurance customers these days. As a result, I don’t want to lose a potential customer to a competitor because I was old-fashioned and therefore not as “convenient” to buy from. Since I can beat GEICO, Progressive Direct and the other directs prices much of the time, it’s evident (to me anyways) that the online convenience factor has been key to their successes. As the saying goes, “If you can’t beat ’em, then join ’em.”
I think Esurance’s tag line sums this up pretty well – “People when you want them, technology when you don’t”. AgencyEquity’s analogy of simple tax returns done through Turbo Tax hit the nail right on the head. In order to advance and even maintain nowadays it is impetrative to have the technology side down pat but you also have to have strong professionals to deal with more complex cases or sophisticated buyers. I worked for an agency that tried to go 100% online and the consumers demanded a licensed agent to consult with even though they could complete the entire purchase transaction on the web.
Obviously this is a concern to Geico because they’ve started opening store front locations. 21st Century is also running ads comparing themselves against Progressive.
Competition is going to drive up online marketing costs. It will also add confusion to the marketplace by overwhelming consumers with options, which will probably drive down the closing rates on sales. Website traffic does not always equate to sales revenue.
GEICO opening up retail offices tells me that they’re declaring WAR to invade what has historically been the independent agent’s territory. Likewise, to level the playing field, us agents need to defend ourselves by competing in their online territory by having online selling capabilities. GEICO is basically a one carrier, one price model. But as an independent agent, I have a bunch more carriers with a bunch more pricing choices that can beat GEICO any day of the week. Since GEICO and others seem to be launching a ground assault against us, my recent focus has been making myself as easy to buy from online using the EZBuy e-signature I mentioned in my earlier post. Even though I may be small potatoes compared to GEICO, I’ll be ready to beat them, in both price and ease of buying, if I’m quoting against them.
All is well for Geico and Progressive but not for the consumer. These companies are low-balling the coverage just to get people in the door. I’m a captive agent and have seen some of the policies that these companies issue. Minimum liability, no medical and HIGH deductibles. Agents and companies have to adapt with the times and online is where we are at right now. The party that is being hurt by these companies is the consumer that doesn’t know very much about insurance, hense the value of an agent to sit down with them and educate them on the coverage that they are buying. I recently had a client that had a claim against Geico. The Geico customer ran a stop sign and t-boned a vehicle and then pushed that car into another vehicle, guess what?? The policy had 10,000 coverage for property damage, not enough to cover the damage to the 2 vehicles that were the victims in this accident. GEICO did not do its job in covering there client and it’s happening way too often.
The online marketplace actually gives the consumers more choice, it also may save them money as you piont out. But again, it’s a marketplace, some may want to do the online thing and others may not. The client that wants to save that last dime and call you up at your home phone on Sunday Morning (this actually happened to me early in my career) for a $5 rate increase is probably not the client you want. The marketplace is huge, target clients that want you services, target the more sophisticated clients, don’t waste you time on the 22 year old who wants minimum coverage, also don’t waste you time on a homeowners who thinks it’s better to put their auto with GEICO at minimum coverages. I would tell them it’s best to have all your insurance with one carrier, the good clients listened, the bad one’s ran, it was a great way to wead out the good and the bad!
Initially I had hopes for internet business’ availability. But internet business is typically low yield/high risk business that wants nothing but the lowest-priced legally passable coverage. It is also drawing in customers that don’t know their options and need to be speaking to an agent for advice.