Nathan Golla at InsuranceTech has some tips on helping insurance agents compete in today’s direct sales market.
With direct sales gaining in popularity, it’s not easy to be an insurance agent. But carriers can help their distribution partners with these easy solutions.
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.”
HELPING AGENTS COMPETE
- Bring the Online Shopping Experience to Agents
- Drive Social Media Best Practices
- Support Electronic Signatures
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.
“When I first started, I thought I was going to have to do much more evangelizing than I did,” Harms recalls. “When you break it down for agents and make them realize there are 800 million people on Facebook, there was a lot of pent-up demand. They were pleasantly surprised that Farmers was putting together a formal social media program that would support them.”
Farmers provides content for its agents to share with clients and prospective clients via Facebook, Twitter, YouTube and other social networks using Hearsay (San Francisco), a platform for distributing items such as Facebook posts, Tweets and LinkedIn status updates to local field personnel. But the support isn’t just a top-down dictation of what agents can and can’t do. Harms says he keeps an ongoing dialog with agents, ranging from “power users” of social media to those just getting started.
“When we started this, I didn’t want to pretend like the marketing department has all the answers,” Harms says. “I had some best practices to get us going, but the agents were doing a really good job. I monitor the community and see ideas come out of it that I wouldn’t have thought of. The agents that do well on Facebook are the sharing type.”
Social media offers a great opportunity for agents and agent-distribution carriers looking to differentiate themselves from the direct-writing competition, Harms adds. “For the first 10 years of the web, a human element had been taken out of the process and it was easy to go with the lowest price,” he says. “But social media is bringing the human element back into the online buying process. It helps amplify the things they do really well.”
#3. Support Electronic Signatures
Insurance carriers aren’t the only ones that want to reduce their dependence on paper. Agencies also are looking for ways to instantaneously validate important documents — especially when it comes to binding new policies.
“We pursued it as a value-add for all parties involved,” Nathan Brown, AVP of new business solutions for Lincoln Financial Group ($155 million in Q3 2011 life insurance sales) in Radnor, Pa., says of electronic signature capabilities. “For the agent, you look at the reduced cost of paper, supplies and postage. For us, it completes a broader straight-through processing [initiative]. But you can’t deliver policies electronically because you have to have the signature.”
Both Lincoln Financial and truck insurance provider 1st Guard use San Francisco-based DocuSign’s system to allow customers to complete and sign insurance applications online or using a smartphone. Venice, Fla.-based 1st Guard rolled out the e-signature tool when it introduced a new product aimed at the most itinerant segments of its customer base.
1st Guard (15,000 policyholders) initially tried to develop a proprietary e-signature platform. As it learned more about the process, the company decided to work with a third party because it felt that it would add credibility to the practice, according to Dan Ribar, the insurer’s CIO. “Imagine a judge saying, ‘Prove that Mr. Jones signed it, and prove that 1st Guard didn’t doctor the data,’ ” he explains. “Now the externally signed document is stored in our system.”
Interestingly, 1st Guard’s agents didn’t request that the company embrace e-signatures, Ribar notes. But the business benefits were immediately apparent both to the carrier and its distribution partners, he adds. “There aren’t too many technologies that have helped a business process as much as electronic signatures,” Ribar says. “Beyond the process itself, truckers typically tell their peers how easy the process was, which is a direct marketing benefit for us.”
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk