PLEASANTON, Calif. —The future of independent property and casualty insurance agencies looks bright, according to a recent survey of agency principals and producers conducted by Hanover Research.
The study, “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace,” reports that nearly half (49%) of agency respondents were “very optimistic” about the future success of their agencies.1
Agents are increasingly turning to technology to find new ways to engage with customers and increase their competitive edge. Two-thirds of surveyed agencies either use or plan to invest in mobile-enabled websites to help attract new customers, up from 40% in 2015. Almost half (47%) of agencies say they are experimenting with new marketing tactics, and 36% say that they, like the carriers, are increasing customer self-service capabilities.
A substantial number (31%) have noticed an increase in customer inquiries for usage-based products such as pay-as-you-drive car insurance. While this is a relatively low-margin product, agents — particularly those working with CRM programs — regard these inquiries as an opportunity to grow their customer base.
The study, released Nov. 7, shows a steady year-over-year increase in technology budgets and the adoption of business software applications, such as mobile interfaces and customer relationship management (CRM) — both of which are credited with helping the independent agent channel remain competitive.
Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers, said, “Like practically every other industry, insurance at the agency level has been disrupted to some extent by digital technology.”
Highly interactive websites make it easier and more cost-effective for carriers to deal directly with individual policyholders. Younger and more technology-savvy insurance customers, and especially Millennials, prefer this approach for certain products — particularly auto insurance, which is now essentially a cost-differentiated commodity.
Agencies are reevaluating their relationships with the carriers whose products they handle. Factors such as compensation plans and marketing support for carriers, which in the past have been quite important to agencies, are no longer as relevant as they once were. Industry observers warn that carriers who continue to do business as usual will find that agencies have moved on to those carriers that “get it” and are willing to meet the agencies’ evolving needs.3
Overall, the findings of “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace” indicate a strong understanding of the importance of technology to help drive revenue growth, and an equally strong desire for technological support from the carriers with whom they work. While agencies are determined to deliver better service, they are aware that the level of service they can provide is highly dependent upon the carriers.
“They want information,” said Macauley, “and they want it quickly. Response time is hugely important to the agencies. They also want the information delivered in a form that enables them to use it to make good business decisions.”
Macauley said Quadrant is working to help carriers provide such information through the development of Periscope, a business intelligence tool that provides a written, qualitative, plain-English summary of complex data comparisons. Macauley added that Periscope is designed to help a carrier understand — quickly and clearly — what the competition is doing and what they, themselves, can do better. In addition to being a top management tool for carriers, it’s a terrific way for the carrier to provide strategic support to its agencies.
About Quadrant Information Services:Quadrant Information Services, headquartered in Pleasanton, Calif., provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry’s first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, please visit www.quadinfo.com.
1- “Independent agencies report optimism rebounding,” IFAwebnews, October 18, 2016. http://ifawebnews.com/2016/10/18/independent-agencies-report-optimism-rebounding/.
2- “Buying Insurance: Evolving Distribution Channels,” Insurance Information Institute, August 2016. http://www.iii.org/issue-update/buying-insurance-evolving-distribution-channels.
3- “Carriers & Agencies: A Changing Relationship,” Vertafore, January 2013. http://www.vertafore.com/~/media/Vertafore-Media-Library/Resources-Liabrary/White-Papers/Carriers-and-Agencies_A-Changing-Relationship.ashx.
- 2016 FMO Executive Outlook, Part I: The M&A climate, planning for the DOL Fiduciary Rule, other key challenges
- Prudential restructures U.S. life and annuity business in effort to expand customer value proposition
- What it takes to be an ‘Agent for the Future’
- Next wave of fee-based FIAs hit the market
- 4 Real Life Stories: Life Happens honors agents for exhibiting outstanding client service
- Optional benefits: Changing a ‘no’ to a ‘yes’
- U.S. life and health direct premiums expected to decline for the first time in 4 years
- New study provides insight into benefits challenges facing HR professionals