Celent, a Boston-based global research and advisory firm focused on technology for financial institutions, recently released a study of insurance agents and what drives them to place business with insurers.
The report presents the results of an online survey of 225 independent insurance agents conducted in May 2021. The respondent sample was fairly evenly split between those who specialize in life and benefits, those who specialize in property casualty, and those who focus on both.
“Many forces are impacting the independent agency channel, causing agents to step back and reassess their business models and investments. Just as insurers continue to invest in innovation and digital transformation to deal with the changing external forces, agents are impacted by these very same forces”, said Karlyn Carnahan, head of Celent’s North American property casualty practice and author of the report. “We see a growing difference in need and attitude based on generational shifts. As the agency community continues to retire, new capabilities will be needed, both to enable a new generation that needs training and to appeal to a new generation of executives.”
Celent surveyed a group of agents to understand those areas most likely to make an insurer the agents’ top choice. Some of the key findings of the Optimizing the Independent Agency Experience report include:
- To drive growth, insurers need to make it easy for agents to place business. Seventy-six percent of agents said they would send more business to insurers if insurers improved their technology and made it easier.
- Agents select their insurer of choice by the insurer’s alignment to key capabilities that support them in promptly selling business. Not surprisingly, price was stated as the most important criterion, followed by ease of doing business and the relationship with the insurer. But although agents said price was the No. 1 determinant of where to place business, the data shows that relationship and ease of doing business beat price. Agents do not simply place business where the best price is. They place business where it is easy.
- Technology is increasingly important to agents. The threat of direct-to-consumer models is driving agents to place higher value on technology than ever before. Gen X and Millennial principals are much more likely to agree their agencies are on top of technology, with 81% agreeing compared to 68% of Baby Boomer principals. Those who actually use the technology daily, the CSRs and account executives, are least likely to agree that the agency is on top of technology.
- Most agents prefer using the insurer’s portal. When asked whether they preferred to work through an insurer’s portal or through their own agency management system, the majority of those responding, 64%, preferred working directly through the portal.
- Service centers remain important. Eighty-four percent stated the existence of a service center was a very important reason they choose the insurer. Sixty-three percent said they prefer to use an insurer’s service center instead of servicing the business themselves.
- Eighty percent agree that it is important to provide policyholders with self-service tools. Those who do not agree worry about disintermediation. Those who agree still have some reservations. Some are worried that the insured will shop for coverage without notifying the agent. Others are concerned about errors and omissions exposure.
Looking ahead, the industry is likely to continue to experience increasing channel complexity and increasing regulation, which means there are opportunities both to improve the agent experience and to reduce costs along the way.