As the insurance industry works to build trust with clients, independent agents and brokers can lead the way by shifting their mindset from sales to service. (Adobe Stock)
Public perception of the insurance industry was already faltering late last year, with more than half of customers saying they had little trust in their auto insurer, according to the 2024 J.D. Power U.S. Auto Insurance Study.
But the catastrophic Los Angeles wildfires in January brought insurance’s image crisis to a boiling point.
Some homeowners discovered their policies were canceled by their carriers just prior to the fires, while others learned they were woefully underinsured. These unfortunate realities created mistrust and frustration, widening the trust gap between customers and carriers while putting agents and brokers in the middle of a no-win situation.
Now, as L.A.-area residents begin to put their lives back together, our industry must work harder to regain trust with our clients. Independent agents can lead the way by shifting their mindset from sales to service.
How we got here
Many of the factors contributing to the strained agent-client relationship have been out of independent agents’ control. Byproducts of the elongated hard market, such as rising premiums and tightened underwriting requirements, contributed to the friction. As prices increased and insurance products grew in complexity, insureds needed more education about the intricacies of their policies, yet many customers lacked access to agents and brokers who could help provide the proper context.
Why were agents left out of the conversation? Part of the reason has been generational, occurring organically as the push toward direct-to-consumer (DTC) business models trickled down from industries like retail and into insurance. Major carriers with huge marketing budgets flooded the airways — traditional media and online — with catchy slogans and money-saving promises. In turn, consumers began purchasing policies directly from carriers. This approach initially felt like a win for insureds who believed they were gaining convenience and value by essentially eliminating the middleman.
Decades later, however, we are starting to see the negative repercussions of this DTC movement. Without an agent or broker to guide them, consumers bought policies piecemeal, starting with auto coverage at the purchase of their first car, and then homeowners’ coverage when applying for their initial mortgages. This patchwork approach left many customers with coverage gaps or overlapping policies. Insureds desperately needed an experienced professional to help them understand the nuances and exclusions of their policies. They needed someone to offer more comprehensive solutions based on their individual risks, not the risks of their socio-economic personas. This lack of individualized, expert guidance has led, in part, to the image crisis our industry faces today.
Playing catchup
Independent agents can meet the moment and help refresh our industry’s reputation by committing themselves to delivering concierge-level services to their policyholders. In the process, they can also build a better, more economically resilient business. Doing so, however, will require a shift in mindset.
For one, agents must abandon a one-size-fits-all approach when communicating with their clients. Today’s customers want to interact with their advisors on the platform of their choice. Sending non-stop emails to a client who would rather receive a phone call won’t build trust, nor will filling up the voicemail inbox of a customer who only wants to communicate by text. Agents who invest the time to know their client’s communication preferences and then follow through with prompt communication on their channel of choice will quickly start down the path of building a stronger relationship.
Secondly, agents must recognize that today’s customers expect to lead the conversation. For years, agents have taken charge of the discussion with a “gather first, guide later” approach. They tend to ask their clients for lots of information up front, which sometimes feels more like an interrogation and less like a partnership. Additionally, when customers do not have the information their agents need on that first phone call, they may grow frustrated and fail to complete the process.
To overcome this barrier, agents must manage the on-boarding process better. Find ways to deliver less friction up front by asking for only essential information, such as name, address, and preferred contact method. Next, agents should ask open-ended questions to understand more about a customer’s needs and then offer to shop policies for them among different carrier partners. By taking this more collaborative, personalized approach, agents will reduce friction and create a smoother, customer-focused experience for their clients.
Agents can then use the follow-up call (or text, email or video conference, depending on a client’s preferences) to gather all the information they need to execute their policies. A savvy agent will provide the client with a list of items they will need in advance of that call so they are better prepared for the discussion.
Gaining equal footing
Perhaps the biggest barrier to rebuilding trust with insureds is limited advertising dollars. Certainly, few independent agents and brokers have the marketing budget to compete with major carriers. However, new business models are emerging to help raise independent agents’ collective reach with far less spend while enhancing their ability to compete with bigger players with bigger marketing budgets.
From accessing marketing support from their carrier partners and network alliances, to tapping into new digital marketing tools to catch a potential client’s eye, independent agents have more options these days to increase their prospect reach and free up their time to focus on client relations.
Aside from these more traditional resources, independent agents can also partner with savvy insurtechs that can help them return their focus to customer service, rather than business development, marketing and leads. For example, our company Freshquote is a lead-generation resource that helps amplify agents’ marketing dollars while refocus the time and attention of those agents from seeking new business to positioning themselves as trusted advisors, delivering the same type of high-touch experiences consumers receive from their tax accountants and financial advisors. Resources and new technology like this not only improve the agent experience, but the customer experience as well. Consumers can connect with an agent who meets their exact needs and can devote sufficient time and offer superior service that includes proactive outreach, check-ins when policies near their expiration date and re-shopping customer policies.
Ongoing communication with insureds is what provides continued value, while agents and brokers develop stronger books of business.
A matter of trust
As our nation begins recovering from recent catastrophic events while bracing for new events and emerging risks, the need to close the ever-widening trust gap between customers and their insurance providers is urgent. Independent agents who abandon a sales-first mindset and instead ease the on-boarding journey and connect customers with the best personalized coverage at the right price will strengthen client loyalty and create sustainable growth for their agencies.
Colleen O’Hara is a senior executive with Freshquote, a provider built to serve as a personal shopper for insurance consumers. O’Hara has two decades of experience advising insurance businesses on data-driven growth tactics and strategy to meet the needs of the industry. She can be reached at cohara@freshquote.com. Opinions expressed here are the author's own.
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