So here we are again, another year come and gone, and while we look back on 2013 and review our successes and failures, my mind can't help but wander forward to 2014. What will change in the industry? How will these changes affect my agency and my agency force? What can we do to get out in front of the trends and set our agents and their agencies up for a successful 2014 and beyond? Since my crystal ball is still in the shop, I'll do my best to forecast what I see as the three biggest changes in the landscape. For those of you who remember Conan O'Brien's "In the year 2000" bits, just imagine that I am sitting in front of my computer doing that before each of these entries. Trust me, it'll be fun.
1. Insurance Technologies Become More Important Than Ever
I know, most agents think that technology and insurance are like oil and water, but trust me, if you aren't in front of this one it will be one of the fastest downfalls to your agency. Clients are increasingly being told that insurance is a commodity, and are being bombarded with commercials touting the ease of using smart phone apps for their setting up claims, getting ID cards, etc. Less and less people are interested in having an insurance agent sitting at their kitchen table, and more interested in a quick phone call and some email follow-ups. They are increasingly drawn to quick access solutions like smart phone apps and tablet access. Research shows that many people now consider a webpage "clunky" and "slow". Not having a good webpage is taking a backseat to not having a good mobile page.
Now think about this: smart phones didn't really start showing up in their current form until October 17, 2009 when Verizon launched the Motorola Droid. That is barely four years ago, and they were a novelty item for almost two years. This means that the touch screen smart phones we now see everyone glued to have really only been around in wide circulation for two years!
At LCIS, we have taken steps to launch new web and mobile sites complete with client portals, quick quote tools, and direct agent contacts. We have already launched a smart phone app with claims numbers, agent directories, and referral systems. Our management software is being updated with email marketing campaigns, drip campaigns, drag and drop document storage, and client file sharing capabilities.
Sure, this is a substantial investment on our part, and yes it's a lot of work on our leadership team to launch such an aggressive initiative, but if your agency isn't taking these steps your clients will be opting for agencies who do have these client comforts available.
2. Smarter Customers Demand Better, More Accurate, Service and Better Access
We increasingly see clients who are more informed of coverage options, deducible structure, and the availability of other products. Clients do much of their research online, and are less likely to "take our word for it", and while this may make our job as advisors seem less important, it is actually quite the opposite. It places more pressure on agents to be informed of product offerings across the market as well as coverage options. Clients still want to know what we recommend, but you can be sure they are going to do their research before they buy. Give them the wrong info, or blow smoke, and they will sniff you out and place you in the "slimy insurance salesperson" category faster than you can defend yourself. Bye-bye trust, and bye-bye client.
In addition to that added pressure on the agent, clients are also becoming accustom to 24 hour service and instant access. This lends itself back to my first point that technologies must be improved, but at it's core, those technologies must improve the customer experience, not just make client and prospect management easier for the agent. Making sure you have the tools for your clients to access their information quickly is key. Access to ID cards and other important documents is imperative.
3. The Agency Force Places Pressure on Dinosaur Business Models
We all know that the insurance industry is one of the slowest to react to change, but as the agency
force becomes younger and younger, it is my belief that agents will start making decisions that will change business models across the board. As a former captive agent (who's company, a major player, shall remain unnamed) I have seen both the captive and the independent model. I have seen the pros and the cons of both sides for both the agents and the customers of those companies, and while I couldn't be happier about my decision to leave the company I was contracted with, I do understand the market for those companies.
That said, my experience in the captive market showed me an old style business model filled with redundancies and more layers of management than I care to discuss. Managers of managers of managers of managers, et, with combined ratios showing overhead levels and management fees paid to the mothership that were mind boggling. On the independent side there is certainly management at the carriers, but not nearly to the level that I saw in the captive market.
So why hasn't that market fixed itself? Surely eliminating some of this bulk overhead would reduce combined ratios, which in turn would lessen the need for rate increases above the market, right?
The answer, while simple, is not so easy. Yes, it would in theory decrease the need to take rate as often, or as aggressively as some do, but in order to eliminate this bulk overhead management needs to start cutting their own jobs. I'll tell you what, you hold your breath and I'll wait for you to black out. Hopefully you'll forget this as an option once you wake up.
Now, I want to stress that this last prediction doesn't say that I think the pressure applied by the agency force will change anything. In fact, I think the actual result will be that the captive based companies will actually place even more pressure on their agents in an effort to drive out the veteran agents, and replace them with new blood that can be trained to do their bidding with new contracts that place extreme product pressure on this new agency force.
To sum up, I think 2014 will usher in the beginning of a more informed, smarter client who expects a higher level of service and access to services. Agencies who can operate lean and efficiently while offering these services to the clients will rise to the top. Agents who take these steps should see their agencies set up for future growth opportunities in these markets for years to come.
For further questions and assistance, or to find out how you can start your career in the insurance profession, please contact Lake Country Insurance at 612-285-3113 or office [at] lcisangency [dot] com.