Accenture published a new survey this week about consumer preference on buying home and auto insurance. The headline of the press release was “U.S. Auto and Home Insurance Customers Turn to Digital Sources to Obtain Information and Quotes, but Prefer Using Agents to Buy Products.”
The first two bullets in the summary of findings were:
- Nearly three-quarters (76 percent) of consumers express a preference for setting up and paying for their auto and home insurance policies in person with an agent, and more than half (58 percent) indicate a preference for doing so via the Web.
- When asked where they prefer to obtain quotes, 43 percent of respondents choose websites, while 26 percent choose over the phone and 26 percent in person. A much smaller percentage (four percent) chooses mobile applications.
The first question seems to have allowed for multiple preferences. Despite the headline, this doesn’t look to me like a preference for agents. This looks like an openness to using agents, but a growing preference for online channels even to buy — more than 50% of consumers.
At The Life Insurance Conference this week in New Orleans, Rob McIsaac, Tom Benton and I had the opportunity to present on the topic of e-processing. The event, which is co-managed by LOMA, LIMRA, the Society of Actuaries, and the ACLI, had the largest number of carrier attendees we’ve seen in years. The topic proved popular with nearly a full house, which I found ironic since we’ve been discussing this topic for the last decade.
Our presentation focused on the “app through issuance” process, and approached the topic from three viewpoints—the high-level viewpoint of the analyst, a more narrowly focused view of bringing the theory down to reality, and the carrier’s viewpoint based on Tom Benton’s recent experience implementing a modern solution that included new business, underwriting, and issuance (among other areas). Topics included those three areas and how they can be improved through e-processing. We dived down into the implementation process and how to improve success rates through better implementation approaches and program structures, as well as developing models for execution and governance.
Additionally, we took a look at the common challenges carriers face when undertaking e-processing projects, as well as the potential pitfalls. We looked at the benefits that Tom expected from his implementation, as well as the benefits actually achieved. Overall, our joint conclusion was that these projects—though difficult—have a strong ROI and are a key aspect to staying competitive among increasingly tech savvy agents, brokers, and new distribution channels.
I’ve seen a number of blog posts and articles over the past year warning agents not to get too excited about social media, since insurance prospects still favor other sources of information over social media…like personal friends and family.
As if social media wasn’t one of the most important ways that personal friends and family communicate.
This reminded me of a general principle for insurance and financial services technology: Technology is not a “what,” it’s a “how.”
No company needs a web strategy, a mobile strategy, a cloud strategy, or a social media strategy. What they all need is an awareness of the roles that these technologies play (or will play) in how their customers want to do business and how their companies can operate most efficiently.
For example, our Social Media and Independent Distribution report this year showed that 25% of agents/brokers under the age of 40 use social media to communicate with their underwriters. But this doesn’t mean insurers need a social media strategy, it means they need to incorporate an understanding of social media into their distribution strategies.
Summaries of all reports are available for free downloads on our site. Some of our recent reports include…
Business and Technology Trends
- Business and Technology Trends: Commercial Lines. Commercial market pricing is showing a decided recovery, leading commercial lines carriers to invest in core systems replacement, agent portal functionality, and business intelligence and predictive analytics.
- Business and Technology Trends: Workers’ Compensation. A distressingly high combined ratio in written premiums for WC carriers is driving a strong interest in core claims systems replacement, business intelligence, PAS replacements, and document management upgrades.
(see full list of Business and Technology Trends Reports at http://www.novarica.com/sectorreports/)
CIO Surveys, Best Practices, and Case Studies
- US Insurer IT Budgets and Projects for 2013. Modest budget increases, core PAS replacement projects, business intelligence, agent portal enhancements, and mobile and social media pilots are all on the 2013 priority list for insurer CIOs.
- Best Practices Case Study Compendium 2012. These case studies, the fruit of the first annual Novarica Research Council Impact Awards, provide a useful set of examples of impactful IT projects. They offer insurer business and IT executives detailed examples across a broad range of diverse industry initiatives.
Novarica Market Navigators
- Property/Casualty Rating Solutions. Profiled vendors include: Accenture, AQS, Camilion, CGI, Decision Research Corporation, Instec, OneShield, Oracle, SISTRAN, StoneRiver, and ValueMomentum.
- Insurance Distribution Management Solutions. Profiled vendors include: Callidus, CSC, MajescoMastek, Navagate, Oracle, Outline Systems, SAP, SunGard, Trilogy Software, Varicent, Vertafore, and VUE.
Executive Briefs and Checklists
- Minimizing Project Risk Checklist. Insurers’ core missions are tied to managing risk in a cost effective and predictable manner. This brief illuminates common factors that contribute to IT project failure and offers a checklist to reduce project risk.
- Insurance IT Transformation Checklist. In order to survive and thrive in the future, CIOs need to facilitate and support business transformation efforts. This report provides a roadmap of things to consider for a transformational program.
Earlier this week, I gave a presentation about the Future of Insurance, which discussed potential disruptions from non-traditional players like Wal-Mart. My slide said:
- How many times do we have to hear about companies like Wal-Mart considering selling—and manufacturing—insurance before we believe it will happen?
- What are you doing to prepare?
- Think about it…
- In the Wal-Mart example, distribution would be completely upended with an agency in every store (they did it with optical care)
- They have a pharmacy in every store that could do life paramed exams
- They believe in taking out costs not for the sake of increasing profits but for lowering prices; imagine the impact
Then this morning, a friend sent this tweet of a display from Wal-Mart:
Sometimes, you don’t have to wait long for the future to arrive!
(Picture Courtesy of @tadeyoung)
Novarica’s latest research report, Insurer Social Media Strategies for Independent Agent Distribution, addresses the use of social media by insurers with independent distribution. Surveying insurers that write through independent agents as well as independent agents themselves, we looked at social media usage rates, the different rates for different uses, and the preferred platforms (especially Facebook, Twitter, and LinkedIn) for various uses.
We found that a striking majority—more than 70%–of the insurers we surveyed have some presence on Facebook, Twitter, or LinkedIn. However, 40% or more have no official social media policy in place—a fact that could create compliance risk and limit the company’s ability to capitalize on social media activity.
Additionally, about 30% of insurers responded that they use social media for one-to-one communication with both agents and policy holders. This suggests that some of the critical communication that used to take place via telephone or email is migrating to social media platforms. This data is notably split by age, as 25% of agents under 40 report using LinkedIn to communicate with specific underwriters at their insurers, double the percentage of those over 40. More communication may migrate to social media platforms, then, as baby boomers move into retirement and are replaced with GenX and Millenials.
The report concludes with a discussion of six ways insurers are supporting agents’ social media efforts, as well as four key recommendations to ensure insurers best leverage social media within their distribution strategies. Insurers that write through independent agents must understand that changes in communication platforms and behaviors will affect their most critical capability: their ability to manage relationships and communicate effectively with their distribution partners.
A free preview of the report is available here.
For the latest in our series of Novarica Market Navigator reports, we looked at ten solutions being used to provide agent portal capabilities for life and annuities insurers. Agent portals, a term which encompasses a range of capabilities like product illustrations, new business submission, account servicing, basic reporting, and now, straight-through processing capabilities, have become a significant and highly strategic technology assets for life and annuities insurers. The feature set is continuing to evolve, most recently with the emergence of electronic applications and straight through processing.
As insurers face an ever-growing market to select from when considering IT projects, the Novarica Market Navigator serves as a great guide for developing a shortlist of potential vendors. But when it comes to agency portals, it’s vital that insurers look at their decision in terms of their core systems strategy and overall e-business strategy. Likewise, it is critical that they understand the desires of the agency force and the growth and trends of the various distribution channels.
A preview of the report is available online here.
Good discussion on today’s webinar about mutli-channel communication with Generali. One of the biggest challenges for insurers is that unfortunately, new channels don’t necessarily displace old ones across the board. As this chart from our multi-channel survey report shows, agents gravitate towards the most convenient channel for each task.
My key takeaways for webinar attendees today:
- The nature of the insured/distributor/company relationship has changed due to the increased flow of information
- Distributors and customers expect rich information, speed and convenience, choice of channels with consistent experience
- There are no more acceptable excuses for delays, inaccurate, or inaccessible information.
- Insurance companies are investing to keep up with these increased expectations.
There was an interesting article in the New York Times on Friday about younger shoppers in department stores preferring to interact with iPad apps rather than salespeople to get additional information and guide their purchasing.
While this may be horrifying to traditionalists like the MIT professor in the article who claims “that shoppers lost something intrinsic to the human experience when they avoided salespeople,” the money quote is this one:
“There’s a tendency to believe that if you talk to somebody, they’re going to waste your time or sell you something you don’t need,” said Ricardo Quintero, global general manager of market development for Clinique, which uses touch screens at its counters. “It’s taking the pressure off.”
In the age of information scarcity, commissioned sales people were a valued information source for customers — because they were the only accessible information source. Now, in the age of information super-abundance, there are alternative ways for customers to get information, ways that are more responsive, and have more information available than the best informed salesperson. It turns out many customers prefer not to interact with a channel that has incentives to sell them something they may not really want or need.
The question for insurers is, how are they going to adapt their sales experience to attract these buyers?
Interesting press release from The PIA Partnership caught my eye this morning. The headline is “New Research by The PIA Partnership Shows Insurance Customers Want What Independent Agents Offer.”
I haven’t seen the actual report, but it was interesting that most of the findings cited in the press release mentioned “agent or company.” For example:
5. 79% of customers want to be contacted by their insurance agent or company when their policy renewal date is approaching.
6. 81% of customers want to be contacted when their insurance agent or company has a suggestion for how they could save money on their insurance.
7. 67% of customers would like to receive contact from their insurance company, agent or agency every 6 months or less to inquire if there are any changes in their life or circumstances which could create the need for change or adjustment in their insurance.
I agree with the headline that independent agents can offer these things to their customers and need to do so in order to be successful.
But to me, these survey results don’t say insurance customers want agents specifically. It says they want attention and value, but they don’t really care whether that comes from the agent or the company. Regarding the unique value of independent agents, the press release announced this finding:
2. The fact that agents are able to offer them a choice of companies (and coverages) is not the most important thing. What’s important is what agents are able to do for them. From the customer’s point of view, what’s important to them is agents deliver value.
This is huge. The ability to offer a choice of companies has long been positioned as the unique differentiating value of independent agents, and this survey is saying customers don’t think this is the most important thing and they are looking for another source of value.
All of this points to the point I made in my column at Insurance Networking last year — agents need to be able to compete on service and advice based on active customer engagement.