The Agents Council for Technology, a part of the IndependentInsurance Agents & Brokers of America (IIABA), has issued areport identifying significant technology and consumer trends andhow they will change the insurance industry's distribution systemover the next five to 10 years. Entitled Important Technology &Consumer Trends Driving Change in the Independent Agency System,the report focuses primarily on “hard” trends, those that theauthors believe are permanent and likely to change the reality inwhich we must operate.

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The work group divided into two subgroups: the first focusing ontechnology trends, the second on consumer trends. The firstsubgroup identified four pure technology hard trends, relating tocomputing power and storage, information availability and access,multiple devices, and biometrics and product/property tracking. Thesubgroup then identified several business hard trends that derivefrom these technology trends.

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The second subgroup focused on consumer-related hard trends, anddivided these trends into those relating to demographics, buyerbehavior, and the insurance environment.

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The authors pointed out that readers will see some similaritiesand interrelationships between the technology and consumer trendsand their associated implications. They noted that this isrepresentative of how the marketplace functions: New technologydrives consumer behavior and preferences, and consumer behavior andpreferences in turn drive technology advances. Neither happens in avacuum.

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This is a synopsis of the council's report hard trends fortechnology and consumers. The full report may be viewed byaccessing the ACT web site through www.independentagent.com.

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Trend: Technology – Computing Power and Storage

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Enhancements in technology will continue to provide significantincreases in computing power and storage capability.

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Business Trend:

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Virtually all communication, data exchange, and inquiry will bein “real time.”

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The ease of entry will encourage new competition from bothtraditional and non-traditional sources.

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Increasingly, the buying process (research – sale) will startand often finish on the Internet.

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Sales and servicing will be processed 24/7 via the device of theusers choice: desktop, laptop, TV, cell phone, iPOD, PDA, etc.

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Customers' expectations will be for full service from anywhereat any time from any device they have in hand, seamlessly, with andwithout the involvement of a human being.

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Customers will expect to access account information from allservice providers online and will become comfortable withperforming increasingly complex tasks in a self-service mode.

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The next generation of web sites will marry voice, video, andgraphics.

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Implications for Agents:

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New competition from groups like warehouse stores and affinityorganizations will challenge you for the same customers.

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Is the one workflow for multiple devices?

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Multiple portable devices will need to integrate with the agencymanagement system and comparative raters.

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Agents need to learn how to take advantage of the power of theindividual communications devices. E.g., do a quote on an iPOD,teleconference with a customer via TV, etc.

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Security will become a more complex issue:

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Secure e-mail needs to fit agency workflow.

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Portable devices need to be secured as storage devices, astransmission devices, and from viruses of all types.

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Support for transactions and service will need to be available24/7.

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Agents will have to build their brand on the Internet asconsumers increasingly go to the Internet first for theirinformation and service.

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Agents will need to be able to provide customers with real-timeservice on the Internet, as their competitors will do.

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Trend: Technology – Information Availability and Access

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We will see ubiquitous availability of, and access to,information, regardless of location, through superior availabilityof broadband and wireless connectivity.

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Business Trend:

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Geographic boundaries will lose relevance and in a practicalsense disappear.

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Telecommuting for work will become more prevalent. (This will beencouraged as a result of environmental and conservationissues.)

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We will see the introduction of “Intelligent Agents” – Completecustomer information that will be used by consumers to search theweb for relevant products and services.

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The ubiquity of “search” will change the way we advertise/marketour products and services.

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The ability to use VoIP as a business telecom network willsupport telecommuting.

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Implications for Agents:

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Need to accommodate the reach to variety of multi-cultural andethnic groups. How will you deal with multi-language self-servicingon your web site?

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Telecommuting for work will become more prevalent.

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Agency web portals will provide an invisible pass-through accessfor the customer to the carrier sites.

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We will be able to find out more about people and organizationsfrom data stored in “cyberspace” and on third-party databases. Whatdo you use? How do you use it?

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Agents will be able to track individuals' behavior on their websites. How can agents use this tool to provide customizedservices?

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With a phone number, one can pull name and address, vehicles inhousehold, employer, family members, current policy, MVR, losshistory, and what else? This provides tremendous efficiencies andbenefits reducing data collection and keying requirements. But howdo you ethically use this data? How do you protect individualprivacy?

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Search engines – on the web and on the desktop – will becomemore sophisticated. What data can you find that helps youprospect?

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Agents will need to market themselves using search engines,because this is where consumers and businesses will look first forinsurance information.

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Using intelligent agents, one can define a profile that willsearch and automatically return leads that match not just what youtype, but what you want. Can one use that for prospecting?Underwriting?

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What are the moral implications of this power/access?

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Agencies will need to tie their computer networks, phones, etc.,together for anywhere, anytime support.

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Trend: Technology – Multiple Devices

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Widespread proliferation and merging of communicationsdevices.

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Business Trend:

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Business will be done via cell phone, iPOD, PDA, instantmessaging, laptops, notebooks, wireless devices, TV as the PCmonitor, etc.

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Implications for Agents:

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Agents need to understand the revolution occurring in portabletechnology, and how they can use it to improve theircommunications, responsiveness, and service.

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Trend: Technology – Biometrics and Product/Property Tracking

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Biometrics will become more commonplace as a way ofidentification and security. Chips and geospatial tracking will beused to monitor and track products and property.

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Business Trend:

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Identification and processing timeframes will be streamlined andminimized as a result of electronic stamping.

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Implications for Agents:

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Will smart tags in cars and other high valued items change theplacement and/or rating and claims of auto insurance?

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How will you convince customers of the merits relative toprivacy? How do you manage insured's concerns when change incarrier?

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What are the implications of smart tags imbedded in customerscars?

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What is the extent of the legal and security concerns? Will webe tracking individual behavior?

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Trend: Demographic – Baby Boomers

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Many Baby Boomers will reach traditional retirement age, butwill continue with active lifestyles and often re-engage with newwork, including part-time positions, in-home businesses, orvolunteer pursuits.

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Implications for Agents:

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Boomers will continue to be important insurance consumers andbusiness owners.

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Boomers need financial services advice and products.

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As Boomers re-engage with new part-time work, agents will haveopportunities to hire them to perform sales and service roles in anenvironment where recruitment remains difficult.

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Trend: Demographic – Diversity

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The U.S. will continue to have a more ethnically diversepopulation, along with many single- parent and othernon-traditional households. In traditional households, both spousesworking will continue to be the norm, and women will increasinglyhold managerial positions.

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Implications for Agents:

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Agents will need to use technology advances to meet the time andlogistical constraints of single parents, busy clients, andcustomers whose ethnicity requires unique handling duringinteraction.

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The Independent Agency System should continue to seek ways to a)employ and b) market to a diverse population.

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Agents will need to customize services and communications to theneeds and preferences of particular customers.

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Trend: Demographic – Next Generations

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Generation X and Y will be in their prime child-rearing years,owning homes, and running businesses. They will have needs similarto those that their parents had at this stage of their lives. Butthey are likely to have some different expectations from theirparents, which service providers will have to ascertain anddeliver. These consumers have grown up with computers, andcomputers are second nature to them.

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Implications for Agents:

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Agencies should develop the capability to keep track of, anddeliver on, any different communications and service preferencestheir customers have. Boomers will expect their agents to be fullparticipants in the networked world, enabling them to communicatewith, receive information from, and transact business with theiragents electronically.

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Agencies that use technology fully and have efficient workflowswill be in the best position to attract Generation X and Yemployees, and these employees will be a great resource infashioning messages and services that resonate with these upcominggenerations of customers.

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Trend: Demographic – Global Economy

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Local businesses will continue to expand overseas, buying andselling across the globe, and setting up remote officesinternationally with U.S. and foreign employees. Personal linescustomers are buying residences internationally or workinginternationally.

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Implications for Agents:

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Agents will need expertise in identifying and managing theinternational risks presented by their customers, as well as themarkets that can insure these risks.

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Agents will need the database to track this internationalinformation and coverages.

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Trend: Buyer Behavior – Time

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Time will continue to be in short supply for most consumers andbusinesses.

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Implications for Agents:

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Agencies must adapt to customers who are shaped by their ownbusy schedules, with both spouses working in many cases, jugglingballs in their own careers, etc. Agents should offer options to dobusiness when it is convenient for their clients, in the mostefficient way possible.

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Agencies must find – and communicate – ways to save theircustomers' time, not cost them time.

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Agents should explore how they might use automated “intelligentagents” to search out the best choices for customers in theshortest amount of time.

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The ACORD electronic standards will be more widely implementedby carriers and vendors, greatly facilitating the real-time sharingof data between more carriers and agencies, for more lines ofbusiness and types of transactions.

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Trend: Buyer Behavior – Information

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Consumers and businesses will face an increasing array ofchoices and greater complexity. The Internet will offer access tomore information relating to insurance and risk management.

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Implications for Agents:

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Agencies will be expected to be knowledgeable advisors.

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Agencies must focus on new training needs to help employeesbecome trusted advisors. In order for their staffs to take on thisnew role, however, their traditional processing functions need tobe automated to the highest degree possible.

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The agency's brand, web site, etc. will need to reflect a higherdegree of professionalism.

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Agencies increasingly will specialize to provide value-addedadvice and services to their particular sectors.

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Agents will retain more customized data relating to customers'preferences and particular needs.

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Trend: Buyer Behavior – Trust

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Because of the well-publicized failure of many businesses todeliver on promises to their employees and consumers, manyconsumers will be skeptical of businesses that approach them.Businesses will have to earn trust in order to build customerloyalty.

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Implications for Agents:

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Agents are in an excellent position to build trust relationshipswith these consumers. In spite of all of the technology, humanbeings still seek relationships with businesses with which theydeal. The foundation of all relationships remains trust.

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Agents should focus specifically on how they can build the levelof trust with their clients.

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Agents should review their current communications and procedureswith clients to ascertain whether these approaches build clienttrust or detract from it.

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Agents should automate processing functions to the maximumextent possible, so their service personnel can transition into therole of trusted advisor, making value-added contacts that buildtrust.

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Business clients will expect agents to provide servicescustomized to their individual needs and to explain the specificservices they provide to justify the fees they earn.

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Trend: Insurance Environment – Privacy/Security

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Laws and regulations will a.) require businesses to undertakeaffirmative actions to safeguard customers' private information andto limit its disclosure to third parties, and b.) specify whatbusinesses must do if there is a breach in the security ofcustomers' private information.

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Implications for Agents:

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Agencies will devote significant attention to policies,procedures, training, and monitoring to protect the privacy andsecurity of their customer data.

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Secure e-mail.

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Encrypted databases.

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Two-Factor Security.

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Special attention to risks of portable devices.

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Trend: Insurance Environment – Efficiency/Service Delivery

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Innovations by competitors will continue to drive heightenedefficiency and improved service delivery in the industry.

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Implications for Agents:

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Drive more efficient ways of doing business and the delivery ofenhanced services to compete effectively and to differentiate theiragencies from the competition.

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Trend: Insurance Environment – Regulation/Litigation

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The basic business of insurance – personal and commercial – willcontinue to be highly impacted by state and federal laws andregulations, as well as by litigation.

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Implications for Agents:

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These laws will require agencies to implement specific measuresto safeguard the privacy of customer information and to respond totheir customers when there is a breach of this information.

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Policy language and market availability will continue to beimpacted by changes of law and litigation.

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These forces will require some agencies to provide new consumerdisclosures.

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Trend: Insurance Environment – Changing Risk

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The scope of risk faced by insurers in various lines ofinsurance will continue to change over time based on natural andman-made causes (e.g. weather, litigation, political pressure,population shifts to the coastline, etc.).

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Implications for Agents:

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Will raise availability and pricing issues that agents mustexplain to their customers, coupled with placement and servicingchallenges.

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Efficient workflows, such as real-time and download will enableagencies to deal with these challenges more efficiently.

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Service needs will develop to customize or individualize eachinsurance package to the customer's specific requirements. This maylead to a Personal Risk Management practice.

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Effective disaster plan to ensure agency continuity in theaftermath of a disaster or systems/communications disruption.

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The Independent Insurance Agents & Brokers of America(IIABA) is a national alliance of 300,000 business owners and theiremployees who offer all types of insurance and financial servicesproducts. The Agents Council for Technology (ACT) is affiliatedwith IIABA. It is a partnership of independent agents, companies,technology vendors, user groups, and associations dedicated toenhancing the use of technology and improved workflows within theIndependent Agency System. To learn more about ACT, visitwww.independentagent.com and click on the Agents Council forTechnology tab or contact Jeff Yates, ACT Executive Director [email protected].