National Underwriter Property & Casualty Editor-in-Chief Shawn Moynihan talks with Patricia A. Borowski, senior vice president of the National Association of Professional Insurance Agents (PIA) about the biggest challenges for agents in 2016, how agents can better coordinate with carrier systems, and why the supposed demise of the independent agent has been greatly exaggerated.
Q: Every year, some consultant or analyst predicts the demise of the independent agent. What do you say to that?
True, but this time around, we're also seeing research speaking to the need for keeping well-qualified professional insurance agents in the mix. In part, when you say to consumers, "Would you rather work with the carrier directly yourself, or would you rather work with your local independent insurance agency that then works with the carriers," still today, for personal or commercial lines, across all demographic groups, 80% to 90% say "agent."
The PIA Partnership, our national agency-company council, came out [in 2015] with the results of its project, "Small Business Insurance & the Internet — The Voice of the Commercial Lines Customer." In nationwide surveys and focus groups, we found that small-business owners strongly prefer independent insurance agents as they make choices in today's online world. This was both an affirmation and a wake-up call for agents. We found that commercial lines customers want digitally engaged local agents as experts, who are backed by the efficiency of the Internet. What that means is they want the agency to use all of today's methods of communication. Web, Twitter and Facebook, as well as e-mail, text message, phone, mail, in-person appointments, all need to be available to the customer. Will they use all of them? No, but they will decide how they want to communicate. They want choices. I have been in this business longer than I care to remember, and one thing has been remarkably consistent: Every decade or so, a new crop of consultants proclaim the impending death of the independent agent distribution system—but it never happens.
Q: How do you see the P&C agent's role evolving as distribution changes to more of a digital experience for the consumer?
What consultants get wrong is thinking that a customer's positive response to using more technology means that they wanted to "do it themselves." This is not so. Sure, when you only have an old car that you need only liability on and you don't have many possessions in the one-bedroom apartment that you share with a friend to afford the rent, then you want to do the "online/go direct" thing, because the direct online route makes things very simple for you, with their pre-selected choices. But, as you move through life and you acquire more—more possessions, responsibility and obligations—guess what? Those insurance choices get a lot more complicated, and your own life's challenges get in your way, as well.
This is why most of us stop going direct online for insurance, and get ourselves an agent that we can trust and knows what they are talking about. I've also noticed a trend in surveys in recent years, in which millennials are more interested in face-to-face meetings than the previous generation.
In our view, and despite competitors that don't want this to be true, all indicators are that if PIA and all independent agencies stay abreast of things so that they can smartly guide their own decisions, the independent agency distribution system is poised to take off like a rocket and soar, performing even better than it has over the last 20 years.
Q: What are some of the biggest challenges that independent agents will face in 2016, and how might they best confront those challenges?
There is no question that for the entire industry, the next generation of technology purchases and adoption will be a huge challenge for carriers and agencies. For many, this can mean the entire replacement of hardware, operating and application systems for core processing systems.
Key decisions to be faced are: Does our company make that scale and scope of investment directly, and exclusively own and operate it? While agencies need to be aware of all the options, they may have to revisit the "systems integration" challenges of the past. Put simply, will what they buy be compatible with what all of their carriers choose to use? Carrier interface will determine how everything works together—or not.
The technology uptick that is coming is not merely a one-time upgrade or addition to your current systems. It re-invents. On the one hand, this can be viewed as an exceptional challenge for agencies, because certainly cost is a consideration. However, beyond that, we may find it liberating for agencies. Why? This time, agencies are already hiring younger staff for whom technology—especially open, social media frameworks—is second nature. Also, the balance of experience among staff is better than during previous major tech upgrades, so staff training this time around may be more successful and quicker.
The biggest challenge will be coordination with carrier systems. We will have to assist agencies in rationalizing the balance between our members' technology decisions and those of their carriers. I think ACORD and our other industry tech leaders will play an even more important role in all this.
Agency owners, along with whatever staff they have in the past assigned to "tech issues," must reengage in understanding what is out there. Last, agencies should not wait until a carrier is banging on their door to advise of their major system change, telling agencies what they must do in the next three months to respond, or not be able to continue their partnership.
There is a belief that investments made in technology are meant to save money. Wrong! Rather, we need to appreciate that technology investments mean agencies are better able to compete, making them better able to integrate and leverage technology to secure more business. As a result, agency staff is once again able to handle even more transactions per employee.
It is a large engagement, but the end result, if done right, will allow PIA agencies to be even more successful going forward.
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