Despite statistics indicating that consumers prefer to make insurance purchases online, carriers that distribute their products via the agent channel aren't abandoning their longtime partners. Rather, insurers are looking for ways to bring the online sales experience that Amazon- and iTunes-trained consumers prefer to their agents, with a goal of preserving the value proposition of the agent: personalized service and a long-lasting relationship.
"A lot of carriers that our agents represent are doing direct sales with consumers, but a lot are continuing with the agent representation because they see the value in it," says Kathleen Weinheimer, SVP of industry relations and education at DeWitt, N.Y.-based trade organization Independent Insurance Agents and Brokers of New York (IIABNY). "You can write all you want online, but you don't really know that policyholder. Companies know that they need to capture that market share but not give up the benefits of the agent representing them in that sale."
Building a strong agent relationship, however, requires significant investment. And while many insurance companies will see slightly larger IT budgets this year, the heavy allocation of resources for core system replacement projects means that tough decisions need to be made about what exactly to provide for agents.
Agencies comprise businesses of many shapes and sizes, with different needs and wants, notes Jim DeVito, marketing process manager for Mayfield Village, Ohio-based Progressive ($554.5 million in agent-written premium), so it can take time for new capabilities to see heavy uptake. For example, by March 2012, Progressive will enable its agents to quote new business both on Apple's iPad and on Android devices using a tablet version of the insurer's For Agents Only portal -- but the company doesn't expect every one of its partners to seize the opportunity immediately.
"When I go to national conventions and I sit in discussion groups, they tend to be with people from larger agencies, who walk around with iPads because they live a very mobile life," DeVito relates. "That doesn't mean that I have an expectation that the demand from the other agencies to do business on their iPads will go through the roof suddenly. The challenge becomes, as a carrier provider, when and how much, and using what form factor, do we deliver the capabilities to an agent?"
Tablet portals may be sexy, but there are other, less-high-profile ways to secure distributor loyalty. If your IT organization can get funding for only one or two agent-enablement projects this year, you have to choose your priorities wisely. Insurance & Technology has identified three technology initiatives that should be at the top of every insurer's list.
#1. Bring the Online Shopping Experience to Agents
It's no secret that direct insurance sales represent a threat to the insurance agency business, and as often is the case when a disruptive threat is introduced to the market, the initial reaction by the establishment is derision. But faced with the reality that consumers are often going to go to the Internet first to look for their next insurance policy, agents are looking for ways to stay relevant.
"Five or six years ago, we were regularly having agents tell us, 'We don't want anything to do with these customers online -- my customer won't be online; they want face-to-face,' " says Progressive's DeVito. "I hear very different from the same agents today. It's about: How can we help you help yourself, and how can we build infrastructure and processes that help you directly?"
Progressive has begun a pilot project in three states that places banner ads on agents' websites; when customers click on the ads, they are brought to Progressive's site to buy a policy. Any policy issued as a result, however, is assigned to the referring agent's book and not as a direct online sale through Progressive.com.
"We had a find-an-agent function and referral processes, but Internet time means, 'I'm shopping now,' not, 'I want a phone call three days from now,' " Devito says. "It's something we've talked about for a long time. We'll monitor it closely, evaluate it and tweak it, and see what the benefits are to the agency and to us."
Boston-based Plymouth Rock Assurance ($44 million in 2010 net income), a regional insurer writing P&C coverage in Massachusetts and Connecticut, offered a similar application, eSales, to its network of independent agents for most of 2011. While Keith Jensen, chief marketing officer, says the program led to a reasonable amount of success for the carrier -- 200 policies sold since its launch, "with minimal marketing effort" -- he explains that what agents really appreciate is that it's opening up new customers to the agent experience. "What's really compelling is that there are 1,000 people who have quoted on our eSales tool and visited an agent thereafter," Jensen says.
About half of those consumers ended up buying a policy from that agent, Jensen continues. But even if it wasn't a Plymouth Rock policy, there's still value in how the tool has changed consumer behavior, he insists. "Customers who are with direct insurers are twice as likely to be on our e-sales application and twice as likely to buy," Jensen reports. "We're driving traffic from the Internet to our agencies, and our agencies are able to sell them insurance -- it's customers moving from direct companies to agency companies."To bring direct sales to a larger number of agents, the IIABNY and its parent organization, the Independent Insurance Agents and Brokers Association, are working on an ambitious portal project with several insurers and agencies called Project CAP, according to Dick Poppa, president and CEO of the New York chapter. "This will be a place on the web where consumers will connect with independent insurance agents and their partner carriers on personal auto," Poppa says. "We really need to enable agents on the front end to look like a direct response carrier, but on the back end to act like an independent agent and bring the value that an independent agent brings."
#2. Drive Social Media Best Practices
Part of the appeal of direct insurance sales to consumers is brevity and ease of use. But agents can't just expect consumers to show up at their new portals, whether they build them on their own or in concert with their insurer partners. Progressive's DeVito and Plymouth Rock's Jensen both say their companies have provided tools for their agents to drive traffic to their own sites, including social media training. But for Farmers Insurance ($16 billion in gross premium income), helping its network of captive agents become adept users of these conversational platforms is a full-time job, according to Ryon Harms, the Los Angeles-based company's director of social media.