Feelings vs. Logic: How They Relate to Insurance Distribution Channels

Nort Salz, president and co-founder of Deep Customer Connections, believes the great insight  the world received from psychology over the last century is that we are feeling beings who are helped by logic; not logical beings helped by feelings.

Salz maintains this insight has major implications for the independent agency distribution channel in the insurance industry. One such implication is that while agents need to operate at a transactional level, they don't just want the coolest technology; they want an underwriter to come by and talk with them.

“I see so many comments from agents that deal with having someone from the carrier stopping by to talk so they can write some business,” he says. “it's really a business relationship they are looking for. To be effective, it has to have some sort of personal component to it.”

Technology is ubiquitous, but Salz typically finds that when agencies are asked what factors they rate highest in importance when it comes to working with carriers, technology is usually ranked fourth or fifth in importance among agents.

“They don't think of it from the technology perspective as much as from an application perspective,” he says. “Is this going to help me write business?”

In some ways, managing technology and relationships takes different mindsets, according to Salz.

“You get the neatest technology sometimes from techy types that aren't always the ones good at building relationships,” he says. “What I think needs to happen is the tech people need to spend time sitting in the agencies and doing some business. It's not just the underwriters that need to build relationships with agents, the technology people and the claims people need to keep dipping their toes into that agent water.”

Ease of Business

Salz recently took part in a panel discussion on how carriers can make it easier for agents to write business. The panelists came from three different perspectives, but all had a common message: To really make progress on ease of doing business and to come at it from a strategic direction, carriers need to focus on three things.

1)      The agency/carrier relationship will only work if there is strong, sustainable leadership from the top

2)      Ease of doing business is not a project, it's a culture. Carriers need to breathe it into the entire organization and everybody, in some way or another, has an effect on that.

3)      You have to find a way to reinforce ease of doing business so people within the organization get feedback to support what they're doing.

One reason the panelists with Salz were emphasizing direct, sustained leadership is because many carriers get started in the direction of ease of doing business, only to find it is hard work, so they return their focus to transactions.

“Carriers have to make their people understand that it is a strategy, not a tactic,” says Salz. “That requires the president of the company getting up and talking about it all the time.”

Agents are looking for effective working relationships with carriers, explains Salz. What that looks like depends on the carrier, though.

“What do you already have in place and in particular what is the culture you currently have?” asks Salz. “For some of my clients, it's clear that ease of doing business is something that's built into the DNA of everyone in the organization, but if I also try to think about more operational terms, I think the first piece of an effective relationship that agents are looking for is support in writing business. Agents are sales people. They are out there trying to sell. They want support in writing business.”

Such support varies among carriers depending upon how they enter the marketplace and where they already are, points out Salz.

“In fundamental terms it starts with carriers having a clear appetite for risk,” he says. “That doesn't mean agents want a checklist of what business the carriers are interested in writing. It's more of a common understanding of what the carrier's business is really about. If the agents 'get it' they will send the right business to the carrier, which will make both sides more efficient. It also means that the relationship between the carrier and the agent will be stronger.”

Agency Skills

Salz believes the biggest challenge agencies face with technology is once they get to a certain point, the technology has already moved on.

“It's a moving target,” he says.

It's difficult to compare an insurance underwriting experience with retail purchases online, but shoppers don't care what a carrier's problems are.

“The competition is tough and carriers understand that, but in some ways it comes back to the question of culture,” says Salz. “Changes are easy to understand at a cognitive level, but that's not where insurance companies come from. A lot of companies solve a technology question and move to the next, but they don't think of a strategy in the larger, system sense. There's no way you can get there if you're always thinking of the next cool tool. It comes back to strategy and leadership. It's hard being sustained and focused and not looking at gimmicks.”

The culture issue is a combination of factors, according to Salz. In some ways it seems transactional, but it's also human.

“Carriers need to pay attention to their underwriting process,” he says. “They need to look at it from the perspective of whether there are steps that can be eliminated. Underwriters need to not only understand how to assess a risk, they need to be great listeners and know how to empathize with agents. As the Moody Blues sang, it's a question of balance.”