Outlook for Disruptive Technology's Effect on Agency/Broker Industry?

[STC1991]

I am a new brokerage just getting off the ground and am going through a spell of discouragement. Recently I stumbled upon an ad for a company called Coverhound. From preliminary research, it appears that they have just made the quoting process more efficient in efforts to quickly and easily produce comparable quotes for commercial and personal lines. Some carriers they use are Lib Mutual, Chubb and Nationwide, to name a few.

If their process is actually efficient and works, is this the beginning of the end for the agency/broker industry? I know the more complex risks and businesses will still require broker/agent expertise but how will us independent guys compete on small biz with a platform like this?

More importantly, how do we as Indys disrupt these types of players and keep the ball in our courts?! Looking forward to the commentary!

Best,
STC

 

[myfakename]

IMHO that isnt "disruptive" they are using that same companies everyone else is.

An agent gives an added value of being someone you can see, know by name, and call.

People that use that in general would not be great clients anyway.

 

[todd02]

No you can ask a consumer if they know that they have only State min liability limits and their reply is: “no I have full coverage.” There will always be some sort of licensed agent. But there will be probably a 50% drop in agencies.

 

[Central Coast Agent]

Hi STC

Don't be discouraged. I've tried to read as much as I can on this issue and the general interpretation I get is that insuretech firms like Coverhound will not replace agents, they will be just one of several distribution methods for insurance policies. So, over time you can expect the percentage of business written by agents to decrease, but it won't be catastrophic, at least over the next 5 to 10 years.

Think about it. Which is a better distribution channel, waiting for someone to chance upon your website and sign up for a policy online or having an agent call in to your business and offer a quote shortly before your X date? One is more proactive than the other and will get better results. Websites and apps are passive. The distribution channels of the future will be Direct Marketing from Carriers, insuretech firms...and Agents. Notice that Commercial P&C carriers have not touched commissions like the health insurance or personal lines carriers have.

Some lines will be more effected by insurtech than others. Auto and homeowners would be most at risk, but still the need for a good agent that brings value to the table remains. Surplus Lines Commercial would be least at risk as these are much more complex in nature. The larger the business, the MORE need for an agent.

So STC, to you and the other agents out there who worry about disintermediation, our business is different than travel agents. Its not fun or easy to shop for insurance. There is a preference for someone to guide insureds through the process because the risk of getting it wrong can mean not a ruined vacation, but bankruptcy.

Our advantages are the fact that we are an ACTIVE marketing channel where we initiate the quoting process and not PASSIVE like an App. We add to that the TRUST factor that can't be replaced by an App or even a direct marketing agent from a carrier.

 

[OKCinsurance]

This is an interesting topic that every agent should think about but NOT dwell upon. Yes, "disruptive technology" is currently putting certain agents out of business even if they don't know it yet. You can also say this about any business out there. It is up to you to separate yourself from automation and the large companies trying to do this. People will always want to do business with somebody they trust and if you can accomplish that you will still be in business 10+ years from now. It will require more work and thought to generate leads than it did. Make sure to have a solid website and Facebook with a local feel to it...Get rid of the stock photos on your website and put a picture of you and your staff on the home page. That goes such a long way and is overlooked by almost every agent in my area. Agents that don't have any web presence at all will not last much longer in my opinion.

Also, have/did you hear of Google Compare? The article below should make every agent feel better about the "disruptive technology" scare to an agency. They couldn't accomplish selling insurance successfully and we all know how powerful and big they are...

Google plans to kill off its auto-insurance, credit card, and other comparison tools