Abram Interstate Insurance Services, Inc., CMGA

Helping Independent Insurance Agents Since 1996

Why the independent insurance agent is still needed (Part 2)

Published on June 24, 2014

Recently  Walmart and Overstock.com have announced their entrance into the insurance game. This has brought to light a question that’s been nagging at the corner of many people’s minds for some time now: Does this mean the independent insurance agent will become obsolete?

PART 2

When you look at how the younger generations are increasingly turning to direct sales companies with online offerings, it’s easy to jump on board the negative theories about the insurance industry dying for the independent agent. But while understandable, it’s not necessary, and also doesn’t seem to have to be that way. Here are some tips for you on how to continue to make yourself a more relevant and clearly beneficial asset to the public who has lost sight of the value of a personal relationship with an independent insurance agent.

 Here is an excerpt from a recent MyNewMarkets article by Amy O’Connor 

 In a poll conducted by Insurance Journal, 64 percent of 148 respondents aged 25-44 said they do not currently have a relationship with an independent agent, with 36 percent citing as a reason that they don’t see the need or benefit of using one and 19 percent saying it is easier to buy directly online. Close to 11 percent of respondents said it would make their insurance more expensive and 26 percent cited all of the aforementioned reasons.

However, only 28.2 percent said they wouldn’t consider using an agent in the future, while 27.9 percent of respondents said they would consider using an agent, and 28.2 percent said they didn’t know – suggesting there is plenty of untapped market potential in this demographic. Nearly fifty percent of respondents had never experienced a claim.

Baldwin, Krystyn, Sherman Partners’ Sherman says the young consumers’ attitude changes as their lives become more complicated and their assets become more important to protect.

“Young people are very price conscious and are not interested in being educated on insurance versus price,” she says. “[When they are younger] they have to buy auto insurance and are looking for the lowest price. But then they buy a house, have children and they want to protect that nest egg. One bad car accident with inadequate coverage limits can deteriorate that asset base.”

However, Sherman says agents have to change the way they operate if they want to capture this segment of business.

“It is crucial for us to reinvent ourselves,” she says. “Agents should absolutely be increasing their digital presence and meet clients where they want to find our products. You need to be flexible with how you communicate – whether it’s a text, call or e-mail. And deliver a deeper experience so you make sure clients see your value.”

One of the reasons direct writers like Progressive and Geico have captured so much of the personal lines market share, says Thousand Islands Agency’s Higgins, is because they have optimized the online experience for customers.

“Agents that are selling online need to realize that going online has to have its own characteristics: it must be fast, it must be easy and it has to be fun,” he says. “Those who have been successful have captured those three things.”

Higgins has worked extensively on educating agents about why they need an online presence and how they can reach the online consumers. He is a member of the Big “I”’s Virtual University staff and also a past chairman for the Agent Council for Technology, as well as former state president for the Big “I.” He says his message to agents has been that merely being online is not an effective marketing tool, and neither is the old way of selling insurance.

“Agents need to be more and more aware of the fact that the purchasing experience is changing and we need to change the experience consumers have – give them more ways to access us; make sure websites are mobile; and be available 24/7 – provide those hooks that are available through the other sites,” he says. “Agents need to recognize that the world is not going to stay the same and opening up your front door and selling insurance is not the way it is anymore.”

Higgins says he is optimistic that as the industry evolves, those customers who have assets to protect will recognize what insurance agents have to offer.

“It is not about the price of coverage but making sure you have the right coverage,” he says.

Sherman agrees that technology is crucial to the future existence of the industry, but that it is not all that matters, particularly in certain segments like high net worth where clients have more at stake. She says focusing on a niche and building a brand of service will be vital to the independent agent’s survival.

“We have to evolve as an industry and those who don’t will become extinct. I think that behind the technology we have to make sure we have the people there to provide the great counsel and education,” she says. “It’s a very powerful combination – more so than the direct writers and call centers of the world.”

We believe strongly that people really do benefit from the help of independent insurance agents like you to make sure that they and the people and things that make up their lives are covered far before the time of need. You insurance agents, you help people. And we’re here to help you do just that.

Abram Interstate Insurance Services, Inc. is a California wholesale insurance broker (CMGA) that has licensing and expertise to place business in both admitted and non-admitted markets in California and surrounding areas. Quote Online Today.