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US Independent Agent Strategies Strive to Retake Personal LInes Business

There has been an erosion in personal line market share market share by independent agents and brokers in the US and Canada.  We commented recently on recommendations that the Independent Insurance Brokers of Ontario (IBAO) provided on the use of technology to reverse the trend.  The Independent Insurance Agents and Brokers of America (IIABA) has launched its own information campaign on the same track.

Jeff Yates, Executive Director of ACT (Agents Council for Technology), a division of IIABA,  has issued two position papers on the topic, both of which are available on the ACT website (IIABA.net/act).  One, Sales and Servicing Strategies to Grow Your Agency’s Business, focuses on causes.  The other, The Independent Agents’ Opportunity to Take Back Personal Lines, concentrates on strategies an independent agent can take.  We summarize some key findings below.  For  anyone interested in preserving the role an independent distributor plays in personal lines insurance, both reports in their entirety are worthy reads.

Yates summarizes 5 studies to get to the causes.  In essence, consumers are finding alternatives to independent agents and brokers that are more convenient and possibly less expensive.  Yates writes in ‘Sales and Servicing’:  “The top five reasons given by consumers for not using a local agent were:

  • I found it more convenient to use a website or 24 hour toll free number—29%
  • It was faster to purchase online or via a toll free number—28%
  • I got a quote online and decided to purchase online—26%
  • I prefer to use a website or toll free number—20%
  • It was cheaper to purchase online or via a toll free number—20%.

Yates contends that independents are positioned to use existing sales skills combined with existing technology to leverage these preferences in the direction of the independent’s office.  He notes that while a  “J. D. Power & Associates has reported that 2010 was the first time a majority of insurance shoppers (54%) initiated their policy purchase process by applying for a quote online,”  the same survey finds that “50% of these online quotes, however, still are closed by an agent or call center representative.”

Yates believes that independents  can benefit from the consumers’ preference to compare price by employing current technology.  In ‘Opportunity,’ he writes: “The technology has now become available to enable independent agents to enter the online shopping & quoting space effectively. … Independent agents can implement online consumer portals on their websites offered by several comparative rating vendors to provide consumers with online quotes from multiple carriers and should do so. Agencies using these tools are achieving a close ratio of 35% to more than 60% by promptly following up with consumers on quotes.”

But this isn’t a free ride for independents.  There needs to be consistent attention to technology as well as customer service.  Yates concludes:  “The bottom line here is that a lot of auto insurance business is currently in play for independent agents to attract and that most online shoppers still go offline to purchase. Agents, however, need to have a strong online presence so consumers can find them, along with the ability to offer quotes online.”

 

 

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