A little more than a hundred years ago, gas-powered automobiles put a serious dent in the need for farriers. Expedia and other travel portals have made travel agents largely irrelevant. Amazon put many brick-and-mortar bookstores out of business, and digital downloads are quickly putting an end to music stores.
A big question looming for the insurance industry is will the independent insurance agent go the way of the dodo bird and be next in line for extinction?
Independent insurance agencies are in a struggle to stay relevant. Gone are the days when agents could assume a captive audience of friends, family, and fellow members of fraternal and business organizations. Today, agents face the twin challenges of heightened consumer expectations, as well as carriers adding direct purchase and self-service to their distribution channel strategies.
The Rising Tide of Expectations
The insurance industry, or rather the Madison Avenue ad firms hired by the insurance carriers, have created various icons to relay how friendly their call centers are, how quickly they pay claims in full, and how responsive their agents are, sometimes appearing through magic the moment they are needed. Closing the gap between the heightened level of expectation on the part of the consumers, and the actual ability of independent agents to service them, is one of the biggest challenges faced by the industry today.
This heightened expectation is not just the result of aggressive advertising campaigns. A newer generation of tech-savvy consumers expect immediate service through multiple channels. “Call Bob and see if we’re covered” is still a relevant option, but consumers also want to be able to check coverage on a mobile app.
According to Capgemini’s 2016 World Insurance Report, Gen Y customers – unlike previous generations – tend to embrace all channels, and show a higher tendency to engage through mobile and social media, and they interact on social media with their insurers up to 2.5 times more than other customers. The report shows a gap between consumer expectations, and what agents and insurers actually deliver. The data also shows that Gen Y’s high expectations, and strong preference for digital and social media channels, has led to gaps in service and less positive outcomes. This preference for non-traditional channels and online sales has become a reality with Gen Y customers, who are now more likely to bypass the agent entirely.
Other industries are already raising the bar. Banking and financial services for example, has embraced the digital age far more quickly than the insurance industry, with innovations in online/mobile banking, digital self-service, and a multi-channel customer experience that has made significant improvements over the days when you had to put on a suit and tie and go down to the bank to apply for a loan. As consumers have come to expect more and friendlier digital options from banks, airlines, bookstores, and everything else, they are now looking towards insurance agents to offer a more seamless, multichannel and frictionless experience.
Empathy and understanding the customer
Empathizing with your clients’ situations and knowing each one personally has always been the foundation of independent agents, who often built successful businesses out of serving those within their personal spheres of influence. You know your clients by name, you know when to send birthday cards, and you occasionally show up at their kids’ little league games and ballet recitals. The problem with that model is that there are only so many ballet recitals you can attend. It’s simply not scalable.
The imperative for a deeper and more meaningful relationship between client and agent is especially evident in younger, more mobile clients who are more accustomed to a steady diet of digital input. Digital solutions may offer a patchwork of cures, but by themselves may be inadequate, and agents need a more sophisticated digital solution that does more than simply deliver an online window for queries and payments.
Rather, the digital ecosystem needs to allow agents to listen to their customers across any media, uncover new insights into what they want and how they want it, and engage with them effectively through any channel.
The time to pivot is now
The increasing demand for digital interaction and online channels has resulted in a dramatic shift in what consumers expect – and what insurers and agents must do to respond.
While established companies steeped in traditional sales mechanisms are starting to embrace this new imperative, newer insuretech startups that embrace digital channels from day one pose both a threat, and a promise to fundamentally change the nature of customer experience, and how insurance agents add value.
While this transformation may be seen as a threat to agents who refuse to change, it offers a tremendous opportunity for forward-thinking agents to better service their existing customers, as well as to add new ones.
Despite widespread acceptance in the industry that the customer experience is an important factor in attracting and retaining customers, 71% of customers never or rarely interact with their principal insurance distributor, and nearly a third, at 31%, of non-life customers changed providers in the last five years.
Foremost in the agent’s basket of solutions is a basic realization that consumers are more connected than ever. They expect digital solutions as well as live hand-holding, and they expect to be able to connect with their agents through multiple platforms. In fact, customer engagement is the foundation of customer service in this industry, and retention and customer loyalty will come not just from engaging at the point of need – which is infrequent – but engaging with customers during the “silent period” between claims. This void – during which consumers may quickly put their insurers out of mind – will increasingly be filled in the future with more meaningful dialogue and useful content, for example, about how individual behaviors may impact policies and pricing.
Newer SaaS-based tools, delivered at the carrier level but used to create an end-to-end ecosystem that includes the agent layer, are delivering advantages to those agents by allowing for a richer, and more personalized experience for agents and their customers.
Traditional Agency Management Systems can only go so far in facilitating the type of scalable, but personalized connection and deeper understanding that consumers have come to expect. Even though the majority of agents do take advantage of an AMS, J.D. Power reports that “poor experience” is the leading reason customers shop for and switch policies, even more than premium increases.
In this changing landscape where switching is more prevalent, customer interaction is minimal, and customer experience drives behavior, agents must go beyond traditional customer engagement solutions. Think beyond individual tactics and tools to embrace customer experience orchestration to bring it all together. This means not only demonstrating knowledge of the client, but also interacting with them on their own terms, and on a personalized basis.
Agents can stay in the game when they go beyond traditional means of serving customers, and even go beyond newer single-point digital solutions and embrace the type of orchestration needed to truly meet the needs of today’s digitally aware consumers. This includes the ability to Listen, Learn, and Engage with customers on their own terms.As is the case with customer-facing agents in many industries, agents must innovate and change to remain successful, and that success is defined by two characteristics: greater value-added engagement, and greater value-added services that address individual customer needs and behaviors.
Paul Cole is president of inQuba Americas, a customer experience management and customer engagement SaaS provider. Based in Los Angeles, Cole has led customer management strategy, technology and operations practices at Ernst & Young, Mercer and Capgemini. He can be reached at [email protected].