Direct carriers muscling us out of the market?

[John J90]

I am seeing an increasing number of ads from carriers offering auto and home insurance. Should independent agents be concerned that purchasing personal or even commercial insurance from agents will become obsolete?

[d's insurance store]

Yup, you should be concerned...but that's just a trend in the marketplace for a product that many consumers view as just another commodity, with common features that can be price shopped with very little effort. You're also seeing the major captive and direct selling companies ramping up their advertising in order to capture what little there is in the 'active' marketplace, all touting discounts and saving money.

This is a trend that you can't stop. The best you can do is to take very good care of your current clients, solicit referrals, watch your expenses and hope that's enough for your current stable to view you as an added bonus to the transaction and not spend hours price shopping to save over what you can offer.

I know, there will likely be the postings about how independent agents had their consultative and explanative value to the relationship...blah, blah, blah...if it wasn't for the combination of good service and human inertia, we would all (at least personal lines and small commercial agents) be in a world of hurt.

I'm of the opinion that as a viable business, at least in my area, I (we) have perhaps another decade before obsolete in the insurance marketplace. With the upcoming generation buying this stuff on their smart phones and seeing a diminished need for 'trusted insurance advisor' advice, there will always be a small slice of the buying public that want's what we're capable of offering, but that will be a tiny slice, in my opinion.

Sorry for the pessimism...good luck battling the direct writers and captives, unless you've got a killer rate and they don't.

[Accurate]

Although I can understand the position of the previous post, I don't think that the future is as sad as it's being painted. The key to addressing a potential threat to your company, from direct carriers changing their global strategy, should be about transforming such threat into an advantage.

I think the main characteristic of this new "problem" is a technological issue. It is changing the way insurance is bought and shopped around. Like in any other industry, the web has brought some great advances but at the same time it has opened up the field to include more competition, homogenizing each company's special tools and offers. These changes brought by the "big dogs" are just results from the quick adaptation by regular consumers to this "leveling of the field", when they now use their phones and mobile devices to see everything before buying and comparing before they shop.

So how do you transform it into and advantage? Go digital. Use social media. Give your clients tools that they can interact with when you office is closed. That's the same thing direct carriers are offering. I have talked about this before with some agents, and they always tell me they don't have the time. I answer: "Maybe, it's time your office/yourself thinks about hiring a web media person". Even if you can't afford it as full-time, hiring someone to update and push the use of technology in your office can open you up to younger generations* (that still have no clue about how to buy insurance, and would greatly benefit from your expertise). Otherwise, that growing market, will just go to some other option that will make it easier for them.

I work for an inspection company, not an advertising agency, so I'm not selling anything. But we are already making changes so that it's more convenient for insurance agents to request and refer our services, catering to this generation. It's not only an advantage for us as a business to use new technology to make our turnaround faster, but if a homeowner feels more confident dealing with a company that speaks in their "web language" I bet it will make your job easier too.

Good Luck

* From the Generation Y, which are the "kids" into all the technology and web, over 45% is already over 24 years old. About 40% of this generation total, owns a home too. Source: http://businesscenter.jdpower.com/news/ ... ID=2010193

[d's insurance store]

Everybody else's mileage may vary, but I've had it with the guru's who tout that merely by setting up and maintaining a facebook or twitter page or account, as a retail personal lines and small commercial lines agency, is going to open up a world of possibilities for sales relationships.

I just haven't seen any benefit to an insurance agency tweeting and posting the same regurgitated content about raising deductibles, not leaving valuables in plain sight in vehicles, making sure the coals are cold before shutting down the BBQ, taking a household inventory...blah, blah, blah...so in this moment, I'm not buying the Social Media hype as a benefit for the general lines insurance agency.

Certainly, if an agency has developed a specific niche or three or five, and can contribute to the on line dialog with valuable content specific to a targeted market, then I say hooray...that's what this kind of communication was made for. Also, in a niche, where an agency has been able to develop an integration with a part of the community that goes beyond pitching just insurance products and can contribute to a community conversation about broader issues, then that too appears to add value and elevates the business in the eyes of the community...but pure insurance content...I just don't see it.

The world of personal lines and small commercial has changed dramatically in the past 20 years...no longer do we as agents need to have serious conversations about whether a prospect needs 25/50/25 auto limits or 25/100/25 limits. No longer is there any secret to bundling the auto and home and umbrella in order to obtain discounts. People either have asssets that need protecting to a degree that their pocketbook can afford the premium, or they're living a brick/board & beanbag existence.

I don't deny there will be a future need for a segment of the insurance buying market for an agents input...I just don't think it will be the predominant part of the market.

[mhutch69]

i agree with D's Insurance.
If you do not find a niche whereby the direct big guys are not interested or not totally able to penetrate, you will not survive.

I have partnered with the largest DUI Class School, the largest Ignition Interlock Company and formed
THE DUI MALL.

Granted, do I want to write drunks all day? NO. But is their money green and spend just as well? YES!

If you do not find some value including taking GREAT care of your clients, you will be obsolete.

Reptile insurance and Progressive have both commoticized (work?) the auto insurance market very well. They now penetrate well for Commercial Auto.

It is a matter of time before they just write BOPS, EPLI, GL direct with an alleged agent providing advice for your business.

Lastly, if we do not get rid of the IDIOT in the White House, quickly, it will not matter what you do, your business will continue to decline.

Sorry to make this political, but IMAGINE IF JIMMY CARTER HAD BEEN REELECTED????!!!!


4 years is enough stupidity. Now we need to elect a pro-business President (one that has had a job and possibly run a business rather than scamming grants his entire life) AND does not try to impose Chicago "principles" on the entire country.

[AgencyEquity]

The more sophisticated a policy or client is, the more the agent is needed. The trend we are seeing right now is that auto only and maybe renters insurance are being marketed by online or 800 numbers. Is the client who has a 3000 sqaure foot home with two or three cars and an umbrella policy buying direct? The answer is no, they are not, thus if you want a solid and stable agency, do not waste your time with single auto clients, go for the higher premium multi-line personal lines accounts. Now as for commercial, this is not being done direct in any big way, the only trend I am seeing is that workers comp policies are being sold in conjunction with payroll services. The best way an agency can address this is by offering an integrated comp/payroll product. As for the medium size to larger commercial, these accounts are not going direct and will probably never go direct. The more innovative and service oriented agencies will thrive, including the ones that understand the changing marketplace and what markets to go after.

[rodgwag]

Actually the clients with the 3000 square foot home, 5 cars and umbrella buy online and over the phone all the time. I have sold in every state but two while working for a national agency and run an agency that is in 20 states right now. There is nothing special about having an office around the corner from the client and new clients are becoming aware of that every day. We have also written several commercial properties in other states, this is the wave of the future. Insurance is just another (although complicated) commodity and the insurance companies know it. Allstate just bought the insurance agency that I use to work for at a $700,000,000 premium above its actual worth; I wonder why?

[AgencyEquity]

I have sold in every state but two while working for a national agency and run an agency that is in 20 states right now. There is nothing special about having an office around the corner from the client and new clients are becoming aware of that every day. We have also written several commercial properties in other states, this is the wave of the future. Insurance is just another (although complicated) commodity and the insurance companies know it. Allstate just bought the insurance agency that I use to work for at a $700,000,000 premium above its actual worth; I wonder why?

I am not too sure if you replying to my post, but the key part off what you said is "I have sold in every state but two while working for a national agency" this you have sold, not an automated process where you have no involvment. I have not heard of anyyone who has automated the auto,home, and umbrella policy all online without individual consultation being involved in that process. What you are talking about is the huge growing trend of people doing business over the phone and internet, wether it be having the consultation over the phone or email quotes and applications - this is not the exception nowadays, but more so the norm. What I am pointint out is clearly have the entire transaction of the more sophisticed account be done all online, from A to Z along with an automated system that does it all. It's happaning with personal auto insurance to some degree, but not a huge degree. Beyond that, it's really not happaning in any huge way.

[rodgwag]

The original topic was referring to direct writers muscling corner insurance agents out of the market. On the original topic I say that this is 100% true. The agent on the corner is doomed. Also the insurance process will never have to be 100% automated because direct insurance carriers have agent call centers.