By: Luis Pino, CEO of Agentero
Amazon distributes e-books on iPads. Samsung supplies smartphone screens to Apple. “Coopetition” is nothing new in the business world. In fact, new partnerships are constantly forming that ultimately end up being beneficial to both parties. So, it should be no surprise that digital insurance carriers – that were initially thought to signal the disruption of agents – are now seeing benefits from distributing through the independent agent channel. Even those not currently partnering with agents are taking another look at agents as a critical last mile to important consumer and business segments.
The numbers tell the story. Despite forecasts that predicted the end of independent agents, this distribution channel has remained resilient. Agents sell over 50% of overall premiums – a higher share than ever before – and this share continues to grow. Why? Because insurance is a complex product. Customers need help understanding their risk profiles and running through all of the hypothetical situations that could impact them. Agents act as trusted advisors who are experienced in risk and insurance products and can direct the consumer down the right path.
Creating a Win-Win Situation
Utilizing the independent agent distribution channel can create a win-win situation. Digital carriers get access to a larger client base. For example, consumers who own high-end homes are unlikely to purchase homeowners’ insurance directly from a carrier. They want a trusted advisor to guide them through this process. But digital carriers focused on high-net worth individuals can compete for these customers by working with agents.
The agent channel can also increase acceptance and help raise the profile of newer digital carrier brands. Some older insurance customers might be hesitant to choose a carrier with a name they don’t recognize – especially if that name is not always associated with insurance. Agents can become the digital carrier’s biggest promoter.
And it works both ways. The benefits digital carriers bring to agents are clear. Based on a survey we recently conducted among our agency customers, agents cited how easy digital carriers are to work with as a key benefit. They also noted that partnering with digital carriers enables them to serve new clients, especially millennials and those who want a more digital experience. Most independent agents are used to working with insurers that have multichannel distribution strategies and are not turned off because of the coopetition.
Getting the Most Out of the Partnership
Not all partnerships are created equal. Digital carriers will want to make sure they consider these four areas when partnering with agencies.
Find the change agents. Not everyone likes change and convincing an agency to get out of its comfort zone with the carriers they know, and embrace a new insurer with new products can be tricky. While agencies don’t have to have all the tech in place, they should be ready to embrace digital capabilities and promote the ease of the end-to-end digital experience to their customers. Digital carriers should promote their support capabilities and be prepared to help them get familiar with your company. Also highlight how they can improve their customer experience by working with you. A major selling point for agencies: how your products and capabilities can help the agency attract new business.
Make it a bi-directional partnership. Explore ways to help agents make your products more competitive with other carriers. For example, many digital carriers only offer a single line. This can sometimes make it difficult for an agent to sell coverage if other carriers have more lines, enabling policy bundling and ultimately discounts for the customer. Even if you don’t offer multiple lines, consider discounts if the customer buys all of their policies through the same agent – even if some coverage is from a different carrier.
In the data—build trust. Ensure there are no trust issues between you and the agent. Make sure your agents understand that they own their data and customers. If working with outside third parties such as a quoting solution or aggregator, ensure they have the same standards for protecting the agency’s data. Make it clear what information from these solutions will be shared with you and what stays with the agency.
Tap into ready-made agent networks. Look for partnerships that can get your products in front of more agents. For example, there are emerging solutions and companies that have created solutions specifically for agents looking to increase their digital capabilities that are eager to work with tech forward carriers. These solutions can connect you with these agents and help identify which of your products can serve their customers. Take advantage of the data these solutions provide. While they won’t be able to share agency-owned data they can still offer great insights, such as conversion rates as well as what agents do and do not like about your products.
Many of the digitally native carriers started with direct-to-consumer strategies, acquiring customers largely through search engines and on social media. Not surprisingly, these channels are quickly getting saturated and customer acquisition costs are increasing. Many of these carriers are turning to agent distribution channels for the next stage of profitable growth. Partnerships between agents and digital carriers offer great benefits to both–including opportunities for growth.