For many people, the arrival of the New Year heralds the promise of achieving bigger and better things, reaching new heights, and perhaps accomplishing things in the new year that weren’t done in the prior year.
2017 is going to mark a pivotal year for agents and brokers as InsurTech distributors really hit the marketplace with new ways of fulfilling customer sales and service expectations. Agency-carrier connectivity (upload, download, and portal) is a critical point for success on the path to being the digital agent both personal lines and commercial lines consumers expect. Depending on which path a distributor chooses, it can either be a happy New Year — or it can be a very un-Happy Year.
Unfortunately, Strategy Meets Action (SMA) survey results show that many distributors have a long, arduous path ahead. Sixty-three percent of responders indicated they were mainstream investors in connectivity technology, not investing for differentiation, or not investing at all. This strategic and tactical direction needs to be reversed, or those distributors will likely face a very sad New Year’s Day in 2018.
Small agents with under $1 million in premium are in the most defensive position, with 67 percent believing the number one business driver for investing in connectivity technology was customer retention vs. 58 percent agents with over $1 million in premium indicating that same driver. In either case, given all the changes in distribution over the past several years, customer retention is a big deal!
Barriers to success
Being the owner or principal of an insurance agency is not an easy job. There are many factors that contribute to success, but there are also many barriers.
Agency survey responders indicated the top barrier to improving connectivity is workflow challenges, with 44 percent indicating so. It's very important for agency owners and principals to assess why this is the case. If it is internal culture — “we have always done it this way” — it's imperative that agency management work to change this attitude as quickly as possible so that progress can be made. The other potential cause of workflow challenges is how insurers execute connectivity — it’s a two-way street.
Agency management needs to work with insurers on how they connect with the agency. If an insurer cannot change how they deal with connectivity issues, agency owners and principals should assess just how much value that insurer brings to the agency, and if the inefficiencies are worth it.
SMA has looked at the connectivity issue from the perspective of commercial lines insurers and personal lines insurers, and now from the agent and broker point of view. There were similar responses to many of the questions asked. For example, conflicting priorities were the number one inhibitor to investment for all groups. However, there were some disconnects.
Lack of satisfaction with connectivity solutions
Probably the most disconcerting were that the majority of agents and brokers indicated a lack of needs satisfaction with connectivity solutions. However, over 50 percent of personal lines insurers believe that needs are being met. Clearly, there is work to be done!
While some consumers want a completely automated insurance and sales process, a good number of others want the help of a knowledgeable insurance professional, and they want a personalized experience. There is much opportunity for agents and brokers to deliver on those expectations, but change is needed.
On New Year’s Day 2017, agents and brokers should make a resolution to adopt technology that will facilitate seamless, straight through processing to support customer requirements. This is not a resolution that can be broken!
Customers are demanding service transparency and real-time execution. There are some emerging InsurTech distributors who will be very happy to fulfill the needs of customers with all the bells and whistles customers have come to expect. New Year’s Day 2018 could be a sad day for the agents left behind with a deteriorating customer base.
Karen Pauli is a principal at Boston-based SMA. Email her at firstname.lastname@example.org. This article first appeared on StrategyMeetsAction.com and is reprinted here with their permission. Opinions expressed in this article are the author's own.