Morgan Henson

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Three Trends Independent Insurance Agents and Brokers Need to Know

Posted by Morgan Henson on 2/24/15 12:17 PM

Nothing is impervious to change, including the insurance industry. And with change you have a choice. You can adapt, or you can dig in your heels and do what you’ve always done. 

We all know that choosing to move forward and adapt is the right choice for success, but how do we know where to go and what to do?  We’ve identified three trends in the insurance world that, quite honestly, seem a little scary for the independent insurance agent or broker. But we also have identified opportunities for adaptation—there are some silver linings.
So here are the trends. And surprise, surprise. They each have a common denominator: technology.
1. Consumers make purchasing decisions differently. 
Here’s what we know:
71% of consumers use the Internet to research insurance before they buy a policy, which can lead them into the welcoming arms (or clutches?) of the big carriers. But, if you look at customer satisfaction, we know that insurance customers prefer local agents who use “emerging technologies.” 
What does this mean for you, the independent insurance agent? 
It means that in an insurance market increasingly dominated by the big players, your potential customers want to stay local. You need to help them do just that.Give them a reason to use your services by implementing technologies that make your customers’ lives easier and give you credibility. And remind them that going the independent broker route means a personal relationship and more customized, friendly, responsive service.
2. Carrier Behavior Has Changed
Carriers are more willing to deal directly with consumers and cut out insurance agencies and brokers. And carriers are spending a lot of advertising dollars to reach consumers. We all recognize the deep, trust-inspiring voice of Allstate’s Dennis Haysbert and Progressive’s “Flo” with her white collared shirt, red hair, and flippant but confident manner. 
Because carriers are reaching out directly to consumers, independent insurance agents and brokers are losing market share. 
So how do you adapt? The answer is the same: You implement emerging technologies and you show your clients the benefits of a more local, personalized service.
3. Risk is Changing
Technology is moving us towards a world with less risk. Accident prevention technologies include:
    • Telematics
    • Automated Enforcement
    • Collision Avoidance Systems
    • Robot Cars
Obviously technologies that reduce risk will have an impact on the insurance industry. We’re an industry that exists because risk exists. 
So how do we adapt to this trend? That’s a tough one. We suggest exploring new ways to deliver great service to customers as efficiently as possible--but you’re probably trying to do that already. We also suggest that independent agents and brokers start looking at ways of diversifying. Perhaps not the most satisfying answer, but there you have it. 
Moving Forward
Two directors at Deloitte analyzed the financial statements of 25,000 companies, and found that the most successful companies have three things in common. Consider these as you decide where you take your business in this crazy, changing world:
1. Value versus price. Compete based on the value you provide to the customer more than price.
2. Revenue versus cost. Emphasize increasing revenues rather than decreasing business costs.
3. Repeat. Seriously. Focus on value and revenue, value and revenue, value and revenue. 
To provide value, you need to be innovative and to embrace new technologies. They make you look more legit and credible, and they make your clients’ lives easier. But having all this fancy, sexy technology does you no good if you don’t let people know. So you have to market. You need a personalized, easy-to-navigate website that gets you leads for your insurance agency. And if you want to grow, you need to look at automated marketing campaigns.
More on those in future posts.
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Topics: Insurance Brokers

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