Insurance Agents and Brokers Must Adapt to Avoid Becoming Obsolete

by  Lianne Trantz  |  23 Feb 2017

We are currently living in the fastest period of technical advancement in human history. Diminishing barriers to entry have placed cutting-edge technology in the hands of almost anybody who wants it.

Unfortunately, many insurance agents seem to be sleepwalking into this period by insisting on remaining with arcane technology that was barely fit for purpose two decades ago.

Unfortunately, for many in the industry, this situation is simply untenable.

Advanced technology, that is also simple, flexible and customizable, is precisely what you need to leverage in order to minimize the risk of becoming obsolete. The rules of the game have changed; and you must, too, by adopting innovative technology built specifically for insurance agency/broker management.

Changing times call for new courses of action

The rise of trends such as social media, Artificial Intelligence (AI), and the Internet of Things (IoT), have fundamentally changed how consumers relate to technology.

The one-way didactic dynamic whereby companies used advertising to attempt to teach consumers what they want, or how best to access services, are well and truly over.

The present generation of digital natives has grown accustomed to researching information on the Internet for themselves and is unaccustomed to the concept of having to retain an external party merely to get advice. For Millennials, it is beyond obvious that airline tickets can be booked directly from the airline, rather than through a travel agent, and this logic tends to be extrapolated to every service provider – even insurance agents.

As a result, the middle-man businesses, like insurance agencies, are feeling almost universally threatened by these shifting paradigms.

When asked how they feel about the future, many insurance agents/brokers are open about their concerns. A poll carried out by an Australian brokerage last month found that 35% of those surveyed listed changing 'market conditions' as their number one concern for the year going forward.

But awareness of these rapid changes, alone, isn't enough.

Insurance agents and brokers must adapt to the following changes now in order to avoid being swept away by the changing tides and becoming obsolete:

  • Clients and employees will clamor for analytical tools and insights in the same ways that they are getting them in other industries.
  • Arcane processes that hide information from consumers and favor the agency will be replaced by real-time, transparent processes that favor the consumer, or else those consumers will take their business elsewhere.
  • 'Technology' will be delivered rapidly to the consumer, electronically, rather than at a snail's pace through archaic means.

Failing to deliver on these is simply not an option for those agents/brokers hoping to stay in business.

Legacy systems bleed cash and decrease productivity; the time to change is now

Insurance distribution, for many, remains dominated by technology that is barely an upgrade on the iconic cumbersome computer terminals of the past.

Unfortunately, the hardware and 'systems' currently in widespread use - such as manual data entry between disconnected data silos and guesswork-based 'dumb' purchasing estimates - not only bleed companies' coffers through lost business and inefficiency, but are also wholly incapable of meeting modern customers' expectations for hyper-connectivity (if they were ever fit for purpose at all).

Such expectations include the so-called 'internet of me' (highly personalized customer experiences), a refined concept of digital trust (which isn't necessarily earned easily anymore), and widespread adoption of intelligent automation on the part of businesses.

These shifted expectations about what technology should enable businesses to offer customers did not come about overnight, but in consumers' minds they have created a notion that everybody has entered a new 'digital age' together when, in fact, this is far from the truth.

This mind-shift is the result of the widespread adoption of sophisticated technology by industries that made what would have been inconceivable a few decades ago both normal and even unimpressive today. Consider the following examples:

  • Consumers are now able to purchase cars directly from the comfort of their home as vendors afford customers the ability to have the cars literally delivered straight to their door. This represents a major condensing of the traditional sales channel away from the model of customers physically visiting a garage, talking to a dealer, and taking the vehicle for a test drive.
  • Fly-by-wire systems, in which airplanes' flight surfaces are controlled by computer systems rather than hydraulics, have vastly changed the flight industry and improved both passenger safety and fuel efficiency. Although many passengers don't realize it, electronic systems are playing almost as large a role as the pilots in helping them reach their destination safely.
  • Crew-less 'drone' ships are expected to revolutionize the freight industry. Such ships would be safer, cheaper, and cause less pollution for the freight industry, which carries 90% of world trade, according to Rolls Royce.
  • One insurance company plans on giving its customers one dollar for hitting daily steps targets, as logged on their Fitbit devices. Insurers are already proving themselves willing to offer customers favorable insurance rates in exchange for 'safe' behavior, such as installing smoke alarms and carbon monoxide detectors.
  • The rise of driver-less, autonomous cars, which will constitute half of the US fleet between 2040 and 2050 according to one estimate, is expected to substantially diminish the cost of motor insurance.

Companies throughout many other verticals are advancing technologically and setting customers’ standards across all industries. You need to advance as well, in order to meet your customers’ expectations and stay in business.

With limited data, customer loyalty cannot be built

Modern customers now also expect customer-centric service and individually tailored advice - often made possible thanks to the data that they, themselves, have generated through their purchasing history and online behavioral patterns, which should be rapidly disseminated by the teams serving them.

Unfortunately for insurance distribution - an industry to which data is fundamental - the technological infrastructure to enable this to happen has largely not been made available, until recently.

The lack of data analytics creates a serious blind-spot in your ability to generate profits from your existing client-base and boost customer loyalty, as it hinders your ability to identify relevant upselling and cross-selling opportunities. And given the significant difference in costs for businesses between customer acquisition and retention (the latter costs a fraction of the former) this can have a tangible, negative impact on your bottom-line.

Without a 360-degree business view, blind-spots are inevitable

Without using advanced technology, you are both not maximizing productivity and have substantial 'data blind-spots' about the efficiency of your business. 

Concrete information that could improve business performance, such as tracking employee time-spend on accounts versus their worth and profitability to the overall business, is impossible without the use of an end-to-end agency management platform.

Deriving actionable insights from the pool of customer data is also only possible when using this type of platform.

By staying with legacy technology, you are diminishing your overall data and are unwittingly handicapping your performance potential in the market.

In conclusion

Change can be overwhelming, but it is necessary, as customer expectations have significantly changed from how they were just a few years ago.

The role of insurance agents is especially threatened by this change, and it is particularly important for businesses in the space to leverage new technologies, use data, and take on a more customer-centric approach in order to grow customer loyalty, increase productivity, and thrive in the market.

Not adapting to this change will cost you profits and waste your resources, but far worse, it will risk your business becoming obsolete.

Contact Novidea today to find out how you can upgrade your agency/brokerage, today.

 

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