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AGENT/BROKER Insurance agents may step up Web
initiatives as more carriers select alternative distribution channels to move their
product, according to an industry analyst.
Adam Klauber, a certified financial analyst who co-authored the Cochran, Caronia
Securities LLC insurance study, “Distribution: The Next Battleground,” believes
agents who provide additional services will have greater success retaining clients against
a growing movement to deliver insurance via agent-free channels.
“Non-insurance companies are going to have better capabilities to sell insurance due
to advancing technology,” Mr. Klauber said. In about five to 10 years, such companies
are expected to have the necessary tools to capture a significant share of the insurance market, he said.
Typically, non-traditional channels, implemented to penetrate complicated niche markets,
do not use the services of an insurance agent, but rather rely on special models, such as
Internet services, aimed at making direct contact with the consumer, according to Mr. Klauber.
“In general, the ability [for a policyholder] to access an account online is a key
factor, but it also can make it easy for non-agents to get at the consumers,” he
said, noting that methods such as data-mining technologies can help get at customers much faster.
Agents who incorporate similar services that speed up transactions, will be better positioned, he said.
“I think its is more of matter of keeping up as the bar is being raised. The ability to write
and bind policies faster, give out accurate and multiple quotes faster, will make the difference,” he said.
Asked if agents are indeed prepared to adopt technological changes in their daily
operations, he said he does not see agents going through a huge change, investing large
amounts of time and money on technology. But he believes change is inevitable.
“Five years ago, [several] agents didn’t even have computers,” he said.
Gary Eberhart, executive vice president at the National Association of Professional
Insurance Agents in Alexandria, Va., said the use of alternative distribution channels is
less of a threat against agents, but more of a tactical move by carriers looking to tap new markets.
“What the vast majority of carriers are doing is trying to capture a new market
segment. Not every consumer wants to work with an independent agent,” Mr. Eberhart said.
In response to Mr. Klauber’s findings that see non-insurance entities compromising agent’s
market share, Mr. Eberhart responded: “We have not seen it as major threat, but we continue to monitor
this and routinely talk to carriers. They are very up front about what they are doing.”
According to the Cochran, Caronia report, in spite of figures that suggest widening use of
alternative models, agent-carrier relationships will remain the dominant force in insurance distribution.
The agency force facilitates product sales, risk screening, account administration and
policy claims, the report said, noting that while the community may lose ground in
personal lines, agents in the commercial area are not expected to lose significant market
share. Indeed, commercial lines agents should retain 95 percent of the market, according to the report,
which noted the complexities involved in crafting a highly-customized commercial policy packages.
Still a movement is underway among the agent community to strengthen its competitive edge,
according to Mr. Eberhart, who said agents are adjusting their business models. “We
have seen more agents coming up with their own informational Web sites,” he said.
While non-traditional channels may lead agents to alter their own strategies, he stressed
the importance of the agent’s ability to establish strong customer relationships.
“The greatest advantage agents have is that they serve as…counselor[s] and are
educated in the niche[s] they serve,” he said.