How Digitally Empowered
Insurance Agents Will Succeed
By David Poole
Insights
Insurance has never
been more digital,
connected, mobile,
social, and measurable.
In the first half of 2016, over $1 billion of funding was invested in “insurtech”
and, with over eighty deals, it is on track to be 42 percent higher than in
2015.1 Yet the agent-driven business model has largely missed the benefits
of much of this innovation. Instead, direct-to-customer insurers have, so far,
been the biggest beneficiaries.
This is poised to change. Digital advances, many pioneered by the direct-tocustomer model, have the potential to enhance the agent’s value proposition
by enabling collaboration, personalization, and efficiencies in service.
CB Insights. Analyzing the Insurance Tech Investment Landscape. https://www.cbinsights.com/reports/Insurance-Tech-Whitepaper.pdf.
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Customers still need agents
Contrary to expectation, disintermediation has not proven
to be a global phenomenon, particularly in the United
States. When emerging “insurtech” and resulting new
business models are compared in terms of time and impact, price comparison sites have the shortest term and
highest impact, with mobile Internet transactions being
a close second. There will no doubt be longer-term, more
disruptive impact from telematics-based services, insurance for self-driving cars, or even peer-to-peer insurance.
Like banking or asset management, insurance is arguably
a “so that” industry – i.e., people buy insurance “so that”
when events occur, their losses are minimized. Despite
streamlining the process, direct-to-customer innovations
have not altered the nature of the commodity for sale,
nor removed the need for a trusted intermediary. Many
property and casualty (P&C) customers still need and
prefer the agent channel.
But price comparison sites, although entirely disruptive
to other industries like travel agents (When was the last
time you even said the word?), have not created similar
catastrophic results here. In fact, employment of insurance
sales agents is projected to grow 9 percent from 2014 to
2024, faster than the 7 percent average for all occupations.2 And, Forrester found that 84% of home insurance
buyers in the US state that they buy from an agent; 82%
do the same for their car insurance... and 99% of US
small business owners [surveyed] turn to an agency for at
least one of their personal and business insurance needs.3
A trend that weakens in markets such as the United
Kingdom, Sweden, and the Netherlands which are characterized by stronger online shopping behaviors.
Yet agents are the most digitally underserved stakeholder
in the industry.
Agents are the most
digitally underserved
stakeholder in the
industry.
Bureau of Labor Statistics, U.S. Department of Labor. Occupational Outlook Handbook, 2016-17 Edition.
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Forrester. Loyal Insurance Agents Drive Sales. February 2016. https://www.forrester.com/report/Loyal+Insurance+Agents+Drive+Sales/-/E-RES130302.
F I N A N C I A L S E RV I C E S : I N S U R A N C E
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But customer needs are changing. Individuals expect
self-service, immediate access to information, and the
ability to solve problems quickly. They increasingly
expect digital options for customizable, seamless, and instantaneous user experiences. And agents expect this too.
43 percent of independent agents operate their business
24/7, and 70% plan on implementing new technology to
improve their business that is increasingly always-on.4
Agent tolerance for working with digital laggards is
rapidly decreasing as they participate in digitally-native
user experiences across other industries and with other
brands. Not surprising then, when agents are asked to
rank the factors that drives their loyalty to a particular
carrier partner, the most valued factor is ‘easy to do
business with.’5
of agencies agree
their top insurers
make it easy to do
business with them7
of agencies plan
on implementing
new technology
to improve their
business8
This is the insurance transformation imperative: With
low yields and growing pressures to manage operating
costs, compounded by inefficient operating models seeing
only 65 cents per dollar going to the claim, insurers cannot afford to further ignore their most valuable asset in
distribution – the agent.6 The time has come for insurers
to align this enduring sales channel with the digital
transformation that is taking place around them.
Insurance Digital Revolution. Insurance Digital Transformation Study, August 2016. http://www.insurancedigitalrevolution.org/.
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Forrester. Loyal Insurance Agents Drive Sales. February 2016. https://www.forrester.com/report/Loyal+Insurance+Agents+Drive+Sales/-/E-RES130302.
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Dowling Hales. Disruptive Secular Trends Impacting P&C Insurance. April, 2016.
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Forrester. Loyal Insurance Agents Drive Sales. February 2016. https://www.forrester.com/report/Loyal+Insurance+Agents+Drive+Sales/-/E-RES130302.
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Insurance Digital Revolution. Insurance Digital Transformation Study, August 2016. http://www.insurancedigitalrevolution.org/.
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F I N A N C I A L S E RV I C E S : I N S U R A N C E
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Meet the future: Right solution, right beneficiary
Today, insurance is a complex customer journey to
manage. And there is a need for new digital ways to do
business. We have seen how experiences offered by digital transformation unlock the opportunity for insurers to
better protect customers at scale. But when applied strategically to the insurer’s agent channel, it becomes a case
of the right solution with the right beneficiary. Digital
integration will simplify agents’ customer-facing capabilities, while driving preference for a new generation of
agents searching for the easiest insurer to work with.
So what does this new way look like? Look no further
than the direct-to-consumer space for inspiration from
the most valuable, global players of the Fantasy Insurtech Team (see Figure 1).
From transparency to on-demand access, these new
entrants have innovated at various points in the
customer journey.
Figure 1
The Fantasy Insurtech Team
The following are the current best-in-class insurtech solutions from across the world. Together, they highlight the key digital
integrations that insurers must consider when offering solutions for today’s always-on world. The innovations brought on by new
entrants raise the bar for all insurers.
FANTASY INSURTECH TEAM
The Zebra
FinanceFox
Trov
Transparent:
Simple quote
comparison
Helpful:
AI pointing out
ways to save on
premiums
Helpful:
Track and insure
what you own
Insurify
Cover
Cuvva
Metromile
Conversation:
Quoting within a
messaging app
Visual:
Photo quotes
On Demand:
Pay-by-the-hour
Valuable:
Value in return for
customer data: Like
where you left
your car
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For example, Insurify’s virtual agent, Evia, caters to the
preference for messaging apps by offering quotes when
you text a picture of your license plate (see Figure 2).
An insurance bot such as this one can help agents
become more responsive.
Imagine the impact similar innovations will have at
scale if reimagined for independent agents shopping
for a customer. What if customers’ inventories, captured
by Trōv, were available to agents as part of their customer
relationship management? What if the simplicity of
the quote comparison app by The Zebra was applied to
an agent portal, thereby personalizing and simplifying
repetitive tasks? What loyalty level could be created if
agents presented value-added services like those offered
by Metromile?
What is going to motivate agents to use these new tools
when previous tools have been neglected? On the whole,
agents in the U.S. are in a lucrative business and are
complacent about the threat of disintermediation. Sales
and distribution meetings with agencies are often held
with printed material and binders, a far cry from the
digitally savvy e-commerce teams.
Given that regulators are currently applying pressure
on financial advisors who take 1 to 2 percent, it is just a
matter of time before their focus shifts from investment
to insurance (where agents take 13 percent).9
Figure 2
Insurify’s chat bot, Evia
This virtual agent allows Insurify to be more accessible and communicative on the platforms that users are most accustomed to.
Insurify
Hi, Jane! Is great to speak with
you today. Do you still park your
car at zip code 90028?
Yes, I’m looking for a new car
insurance quote. Can you
help me?
Based on your profile, I recommend
full coverage with $100/$300k
liability and a $1k deductible.
Here are your quotes:
Company 1
$72/mo
Company 2
$80/mo
Company 3
$85/mo
Send
Dowling Hales. Disruptive Secular Trends Impacting P&C Insurance. April, 2016.
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Add to that potential new entrants from the telco and
technology industries, and the urgency increases.Agents
will realize that they are in more than the policy sales
business, diversifying into new, complimentary services –
like a Metromile (see Figure 3).
This “blue sky” exercise clearly demonstrates possible
enhancements of agents’ everyday operations, but it is
the insured who will ultimately benefit from the reduced
friction enabled by personalization. It is the insured who
will receive more relevant services and products. Customers
will live and work more courageously knowing that their
individual circumstances are understood and their risks
are managed.
Figure 3
Metromile redefines value an insurer can provide
In addition to usage-based insurance, Metromile offers value in
return for customer data: Like where you left your car, how much
gas is left, and alerts around street sweeping, parking tickets, and
engine troubles.
But when reimagining these new ways of doing business,
we cannot ignore the challenges and obstacles that stand
in the way. Risk averse and slow to respond, the culture
of insurance remains the most limiting of all. In addition,
insurers are running on aging and fragmented technology infrastructures with aging workforces trained to run
them. While there is an appetite for innovation, integrating new platforms into incompatible and outdated
systems is also a challenge. And regulations and security remain real roadblocks to innovation and growth.
Meaningful collaboration will only be realized if agents
overcome their fear of disintermediation, and trust insurers with their customer data and insight.
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The digital transformation
imperative for insurers
Customers and agents expect better experiences, and insurtechs are showing that is possible by applying new technology and business models to not just protect customers, but redefine the value an insurer can bring. Agents are
digitally underserved. Yet it is the agents that are best positioned to apply these tools.
Recommendations
Insurers can start by removing friction points in the experience.
Be the easiest for agents to do business with.
Then rethink what value you offer beyond insurance.
How SapientNitro helps to enable agents digitally
SapientNitro is a trusted advisor to clients looking to imagine new business models, new services and new possibilities for the age of the customer – driven by the power of
technology. Our capabilities across brand and marketing;
sales and service; technology and operations and deep
industry expertise allows us to drive measurable business
impact for today’s leading brands by putting customer
experience at the heart of their organization.
F I N A N C I A L S E RV I C E S : I N S U R A N C E
Within the Insurance industry, our starting point is often
redesigning agent portals, but we prioritize capabilities
beyond the portal to build strategic roadmaps that look at
customers’ needs and how their agents can deliver ease,
effectiveness, and emotional connection.
To learn more, contact David Poole at [email protected].
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About the author
David Poole
Financial Services Center of Excellence,
SapientNitro Boston
[email protected]
David Poole leads SapientNitro’s Financial Services Center of Excellence which supports
a global network of insurance and banking clients in thought leadership, innovation,
and customer insight. A change agent with over twenty years’ experience, David shares
his passion for making it fun to be financially healthy.
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allows us to drive measurable business impact for today’s leading brands by putting customer experience at the heart of their organization. For more information, visit
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F I N A N C I A L S E RV I C E S : I N S U R A N C E
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