By Matt Masiello, EVP & Chief Operating Officer
The sky is falling! Or maybe it’s just our industry evolving at a more rapid pace. Insurance is one of the last industries to become consumer-centric. Big change is coming, but I’m sorry to tell the doomsayers, it’s NOT happening tomorrow. Or even next year.
SIAA has a unique view into the lens of the insurance industry. We do business with many players in the insurance industry – including local agents all the way through the most senior executives of insurance companies. This gives us a perspective like no one else from Main Street to Wall Street.
There are ‘disruptors’ and ‘insurtech’- just what we needed, more buzz words. These things DO exist, and they are NOT the boogeyman. These concepts are looking to make our industry more consumer-friendly. Some people think they will make the agent obsolete. A recent article I read suggested that agents and brokers can make the insurance companies obsolete with ‘insurtech’. Change is coming, but let’s get out of the sci-fi movie and back to reality. Here’s where we are:
- Independent agents are NOT going away. True, some won’t make it. Maybe even some of you reading this piece (sorry). For years, we’ve been touting that you need to change to survive. That’s not new. The good news is that those of you who survive will have evolved to be better business owners.
- Captive agents are in deep…stuff. They are NOT doing well. They have ONE product to sell. Their carriers find their form of distribution VERY expensive. When opportunity knocks, you should probably answer the door! These agents, many of whom are local in your community, write 40% of personal insurance and 12% of small business. A bit later we’ll discuss what you can do about this…
- Insurance companies are not going to put YOU out of business by using multiple forms of distribution. In fact, they are more likely to level the playing field with product and pricing with all their forms of insurance distribution, which reduces their expenses by managing one platform. If insurance is sold online or directly, through a captive agent (with one product), or through an independent agent – who do you think wins? I’m betting on the home team (that’s you guys!). Also, it’s important to note that insurance carriers are losing large agents at an alarming rate through acquisition every day. This rapid consolidation has them looking at the local agents in a much more favorable light.
- Consumers, not companies, are forcing these changes. The agent of the future will be a new type of business, and a business development center for insurance companies. You will assist clients with the insurance purchase and make sure they have adequate protection, but service will move to a secondary position in your agency. Consumers want self-service, like they have in other parts of their life, and carriers will bring it to them in response to that demand. You will not be out of the loop, you’ll still be an advisor and advocate. The future client is not looking for a traditional insurance agent. Don’t get in their way – help them get what they want!
You’ll need to do a little work to help with your evolution and we’ll get to that – stay tuned for the 2nd part of The Sky is Falling where we discuss what SIAA is doing as the insurance industry evolves.