Driving Business Through Technology Differentiation

Insurance companies can use technology to help differentiate themselves from their competitors with agents, according to a consulting firm study.

The survey by Celent found independent agents are gravitating more toward the use of technology in their sales culture.

Discussing his firm's findings, Mike Fitzgerald, a senior analyst with Celent, said during a Web seminar today that the survey indicated there is intense competition for agency business among carriers.

Mr. Fitzgerald suggested that carriers should consider such things as making handheld technology available to agents to allow for mobile processing or online chat and Web conferencing for greater contact with their carrier as ways to distinguish themselves from the competition.

The survey noted these types of tools are currently underutilized by agents, the majority of them either not having or using the technology today.

One survey question asked agents how many carriers does it take to cover 75 percent of the business within the agency. The respondents said between three and four carriers are used to fill its underwriting needs.

"This provides specific data for what we already know in insurance," said Mr. Fitzgerald. "It is highly competitive and carriers need to differentiate themselves within an agent's operation on a daily basis, and need to continue to do so."

From a 2004 study to today, the survey shows that an increasing number of agents are moving toward the use of modern technology. In 2004, the survey said, the preferred way of communicating was the telephone for 63 percent of respondents. That number has dropped to 21 percent today, replaced by e-mail, which is now used by 66 percent of respondents.

What this means for carriers, said Mr. Fitzgerald, is as agents utilize more and more technology, there are greater opportunities available for carriers to differentiate themselves through technology offerings.

Drawing on what drives agents to choose carriers, technology is an "untapped" resource for carriers to make themselves stand out.

Among some of the major drivers for an agent choosing a carrier were providing outstanding service to their clients, a good working relationship with the carrier and quick issuance of underwriting decisions.

Celent's survey was an online survey conducted in October and consisted of 27 questions sent out to 12,000 independent property-casualty producers, agency principals and customer service representatives through their association with four carriers. The carriers were Farmers Alliance Mutual, Hastings Mutual Insurance, Zenith Insurance and Zurich North America. A total of 945 responded to the survey.

Among some of the other findings:

o Satisfaction with carrier technology: 39 percent were very satisfied and 50 percent were somewhat satisfied.

o Submissions to carriers: 40 percent of agents enter them into an agency management system, and 23 percent use an insurer's proprietary Web site.

o Repetition of data entry: 30 percent of respondents said that 75-to-100 percent of data entered into an agency management system for new applications must be entered again elsewhere.

o Use of carrier proprietary carrier portals is rising, with almost 65 percent of respondents saying they use one several times a day.

Celent is a member of Oliver Wyman, which is a subsidiary of Marsh & McLennan Companies.

Additional information about the report can be found at www.celent.com.