How I See It – 2019 & Forward
Our business is changing. Unless you have been living under a rock you know that already. Change in and of itself is not good or bad. Instead, good or bad is determined by the results of that change.
Insurance consumers want speed and simplicity in purchasing and handling their insurance needs. They also want to do business when it is convenient for them, using whatever method of communication they choose. They search for information to better understand insurance protection, to be informed and, to be smart consumers of the product. The new tech-based competitors are meeting these consumer’s demands.
These new competitors are gaining traction because they have been able to offer consumers the speed and convenience they want. They use technology to eliminate human staff, replacing them with tutorials and artificial intelligence applications. Those changes mean cost savings from quoting and selecting coverage to the paying of claims. The savings developed from these changes have allowed them to reduce the cost of coverage.
It would appear these new competitors have revolutionized the industry and are the companies of the future. If we were selling a simple product without serious financial implications, that might be true, however, insurance protection doesn’t meet that definition.
Insurance is a complicated purchase based on legal contracts where minor changes in wording can impact whether coverage applies or not. The average consumer doesn’t have the knowledge or experience necessary to fully understand insurance coverage and how it works. Understanding and selecting insurance protection is a very personal and HUMAN process best handled between the consumer and a trusted, experienced and knowledgeable licensed agent. There’s a reason states require agents to have a certain level of training, test and pass to get a license and meet future continuing education requirements.
So far independent agent companies have not moved to use available technology and streamline the process between the agent and company. Nothing agents do will fix the problem unless carriers immediately move to improve the process for placing client’s coverage. To be competitive, the process needs to take seconds not minutes or hours. It needs to provide agents with a seamless, integrated platform between the agency and the carriers they represent. That platform should prefill public information and provide for instantaneous pricing for all contracted carriers. Customer information should only be entered once and flow between agent and company.
Why the resistance? I can’t be sure, but my best guess is cost. The financial impact would be significant and the folks in charge of the decision are afraid to make it. Their investors are not going to be happy with the impact to the bottom line and share prices. Questions may arise about why management waited so long to update and change their legacy systems.
They’re also not thrilled with the idea of a streamlined process that makes the process of carrier selection fast and efficient. But that’s what the marketplace demands.
Would it make more sense for some of them to work on developing a better system for providing their product direct, eliminating the agent? I’m sure having more control of marketing their products is attractive and has crossed the minds of some carriers. A major change like that would raise some serious questions. What would be the overall cost and impact of such a decision? How would they deal with the business they currently write that is owned by agents? Is the better solution to update the technology and aggressively market through independent agents?
It’s clear that the system between agents and carriers needs to be modernized to provide fast, efficient placement of coverage. Carriers cannot keep looking to agents for solutions. Agents have had to, and will continue to have to, invest in technology to meet the competition and stay competitive in the marketplace. However, no matter how much the agents do, the system will not be able to effectively compete until the agent-to-carrier piece is updated and fixed. This is not a new discussion as it’s been going on for years. Unfortunately, the time for talk is over and carriers need to make the changes necessary for our system to effectively compete in today’s marketplace.
