The relationship between agents and insurers is fraught with drama, with much of the implied dialogue sounding like a soap opera:
Agent to insurer: You're too demanding! I need to retain my own identity! You don't give me enough support!
Insurer to agent: I'm just another one of your pretty faces! I give you everything and what do I get in return? Meet my needs or I'm dumping you!
But something has changed: the buyer. Through social media, the Internet and direct writers who make things easy, homeowners and auto insurance customers can comparison shop and purchase coverage as quickly and easily as buying shoes on Zappos.
And now small commercial insurance buyers are going direct as well.
Deloitte recently made a stir with a study showing that under the right circumstances, almost half of small-business insurance customers are willing to buy directly from a carrier over the Internet, bypassing agents and brokers in the process.
In this month's cover story, Dave Lenckus examines both sides of the agent/carrier relationship, and how marketplace ebb and flow affects it. When he asked carriers and producers about the Deloitte study, they downplayed the possibility of a revolution.
But don't kid yourself: It's coming.
In 2009, Deloitte conducted a survey in which 9 out of 10 agents said they were worried about "increased comparison shopping by existing policyholders, 3 out of 4 worried about "carrier direct sales," and 7 out of 10 agents worried about "online quoting services." Four years later, with advances in technology and more encroachment by direct writers, it's a safe bet that these worries have intensified.
The Deloitte study puts a positive spin on these inevitable changes, urging insurers to get the jump on direct writers by preparing to sell commercial insurance over the Internet.
There's no corresponding advice for agents. But in a section for chief risk officers, the study asks, "Can existing agency relationships somehow be accommodated without undermining the new direct sales initiative? How much business might be lost if agents are alienated and decide to move accounts away from a carrier pushing a parallel direct sales option that competes with them? Is there a tipping point at which a carrier could conceivably lose more business from their agency channel than they might gain by going direct?"
Buyer participants in focus groups preceding the Deloitte study complained about the lack of personalized service from their agents, who often can't justify providing much support on a low-commission small business account.
Which leads us back to agent/carrier relationships—something both parties are going to have to work at if they want to survive the changes wrought by a consumer-driven marketplace.
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