Producers are feeling the heat in this tough economy, expecting buyers to cut back on coverage, push harder for the best price and go bare in some areas, according to a new Producer Satisfaction Survey.
Meanwhile, the majority of the 1,596 qualified agents and brokers responding to the survey by Deloitte's Insurance Industry Group, conducted in partnership with National Underwriter, expect increased competition from other distribution systems.
"The majority of producers expect policyholders to increase comparison shopping, assume more risks to reduce premium and cancel policies over the next 12 months," Deloitte noted in its survey report.
This finding is particularly significant because it is "in line with the high importance producers place on products and coverage, policy pricing and customer retention," Deloitte added.
"The economic downturn continues to affect consumers," said Bert Fortney, director, Deloitte Consulting LLP. "Carriers should equip their producers with the tools to compete in this environment."
Specifically, 68.6 percent of producers indicated that competitive pricing is very important, "making it the most salient product and coverage feature," according to Deloitte. The firm observed that "this result is consistent with producers' views toward likely or very likely scenarios in the industry over the next 12 months," including:
o Increased comparison shopping by existing policyholders (expected by 89.5 percent of producers, including 54.2 percent calling this development very likely).
o Increased competition from alternative channels (82.9 percent, with 41.3 percent characterizing this scenario as very likely).
o Clients assuming more risks to reduce premium (78.9 percent, although only 31.1 percent see this path as very likely).
o Cancellation of policies due to economic pressures (78.6 percent, with 34.3 percent seeing this trend as very likely).
The survey found that producers who expect increased comparison shopping place higher importance on:
o Technology features, such as upload technology, interface with mobile technologies, SEMCI (single-entry, multicompany interface) capabilities and real-time processing via their agency management systems.
o Overall relationship/business support, such as backing for sales and marketing, financial needs, lead generation and training for producers.
Drilling down into their fears about alternative distribution systems, the survey found that "producers are most concerned with competition from carrier direct sales and online quoting services."
Indeed, 41.9 percent said they are "very concerned" about potential conflict from carriers selling direct to their clients.
As for online quoting services, Deloitte cited studies indicating growing popularity in many insurance markets, with some expecting consumers to tap comparison-shopping sites to save on their insurance premiums during this economic downturn.
"Carriers should address these concerns to build trust with producers, and provide them with the knowledge and tools they need to compete better against other channels," Deloitte advised.
One interesting finding was that while 42.8 percent of producers said they expect to add additional carriers, more than one-third (36.9 percent) are going in the other direction, noting they intend to consolidate their business among fewer insurers.
"Both figures suggest that carriers are likely to see increased competition for shelf space with producers," Deloitte warned.
When asked to rank their organizational priorities over the next 12 months, growth topped the list, with 46.6 percent of producers citing that as their number one goal, while 84.7 percent listed it as one of their top-three.
Two other factors ranked consistently among the top-three priorities for producers–retaining their existing books of business (28.6 percent listing this number one; 81.3 percent among top three) and meeting customer expectations (17.8 percent listing this as their top priority; 70.4 percent among top three).
In fact, approximately 94 percent of respondents ranked carrier support for customer retention as important or very important.
Expense reduction also ranked among the top-three priorities for nearly one-third (31.7 percent) of producers. Recruiting new talent only made the top-three for 15.8 percent of those surveyed, and succession planning for a mere 6.6 percent.
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