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Who is the agent in the mirror?

2 Jun 2023 11:26 AM | National Office (Administrator)

Remember when the entry of banks and credit unions into the insurance business was going to put agents out of business? And then it was this new thing called the internet, which later spawned Insurtech, that would mark the demise of agents. Yet there are 881,500 licensed agencies and brokers working in the US currently, with an expected growth rate of 6% for agents in the next ten years (www.agentmethods.com/insurance-agent-trends-and-statistics). As one of the 881,500, you may have been battle-scarred by these threats, but you are still standing. However, now is not the time to coast in complacency. What is the next threat looming around the corner? Embedded? Commission cuts? And are you prepared?

“So agencies need to be on offense. I think they need to come out swinging. I think they need to be looking at themselves through the mirror. And sometimes that’s a little tough.”

Matt Masiello, President and CEO of SAN CEO of SIAA

So how do agents pursue Masiello’s stern advice?

Clearly identify what factors are under your control. Studies on coping behaviors in stressful settings, have revealed that during difficulties, people are more resilient when they focus on actions they can accomplish to move forward, instead of focusing on circumstances that bind them.

Focus on actions you can implement that will improve your situation. In The Future of Insurance Podcast – Matt Masiello (www.future-of-insurance.com/podcast/mattmasiello/), Masiello urges agents to know their segment, but recognize that it is continually evolving. Therefore, agents need to continually pivot the way they interact with their segment. Specifically, Masiello recommends identifying the price-sensitive, monoline shopper and minimizing your interaction with this segment, because they do not value agent advice. The prolific segment has multiline protection needs and values the guidance and support that an agent can provide.

Masiello also points out that the start of the insurance buying journey does not begin with the client walking into the agency and the agent greets them with: “Let me give you a quote.” 70- 80% of the insurance buying public starts the journey online obtaining basic information. First, agents need to digitally modernize to provide this information that the public seeks. Second, agents need to be able to drive potential clients to seek human interaction. This opens the opportunity for agents to guide clients on a more expansive insurance journey beyond the initial single policy.

In this consumer-dictated, tech-driven climate, agents need to be on the offense. Even though digitalization plays a major role in the insurance selling process, it is human optimized. Masiello explains that technology does not replace agents in this process but, rather, optimizes them. The extent to which technology can cross-sell products is not much beyond Amazon’s “customers also bought” section. To effectively cross-sell insurance, agents need to shift from the order-taking, or renewal-complacent mindset to a selling perspective. Clients who need auto and homeowner’s insurance will “order” it. With the client providing the data from these policies, agents can pivot with a life quote.

Furthermore, Masiello advises agencies to facilitate a business development culture. This goes beyond just looking at your role as an agency owner – review your staff. Could you implement changes in which your staff is also on the offensive and seeking business opportunities? For instance, train your staff to be versatile and capable of making sales calls in addition to servicing policies.

What does the offense look like for a captive agent facing commission cuts? Agents need to look beyond commissions. This means to look beyond the transaction. This is where Masiello’s offense of focusing on the proper segment comes into play. Survival mode for agents is targeting the appropriate class of business or niche. Also, cross selling is an apt battle cry in the campaign against commission cuts. However, it is not Excalibur and will not absolutely protect your job security.

Agents can feel like lady justice holding a beam balance scale, because they have to facilitate the balance between carriers and clients. There is no mistaken that agents work for two, often opposing, clienteles: carriers and policyholders. And they have to offer value to both parties.

Agents should always be mindful that carriers are like any other corporation. They, too, evolve not just to survive, but to be profitable. This does not entail condoning some of the decisions they make such as commission cuts; mitigating the growth of their captive agents; shifting to direct channels; layoffs.

Even in this climate of swirling threats, especially from direct channels, SIAA is opening new independent agencies and experiencing tremendous growth. Their distributions are expanding in part to agents moving away from captive. Rouge Risk, powered by SIAA, offers a “No Ceiling” insurance career which offers options to former captive agents who do not want to own their own agency (www.roguerisk.com/siaa).

Agents are still relevant, but they must evolve with the changing landscape of the industry and communicate their value in the modernized process. It is no longer about taking policy orders and pushing papers. It is about expertise. An agent’s value is directly linked to the value they provide to clients in the policy buying journey as risk advisors.


     
                      
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United Farmers Agents Association

Address:
110 Horizon Drive, Suite 210
Raleigh, NC 27615
Phone: 919-459-2079
Email: office@ufaa.com
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