1. Scrambling to Serve 21st Century Consumers
Independent Insurance Agents Profiler 2015
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2. Sustaining Growth and Maintaining Margins
According to Reagan Consulting’s 2015 Organic Growth and Profitability Survey, agent-broker organic growth was +4.6% during 2015, which is less than the 3 previous years’ 6.2% increases, but still considered solid.
Profit margins were 20.1%, compared to 2014’s 21.0%, but more than the four previous years. The growth of the three major insurance categories – commercial property-casualty, personal property- casualty and employee benefits – declined during
During Q1 2016, organic revenue growth was +5.1% at privately owned large and mid-sized insurance agencies. Although the Q profit margin was 28.5%, compared to 29.0% for Q1 2015, it’s forecast to be 20.0% for all of 2016.
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3. Property-Casualty Particulars
According to the Insurance Information Institute (III), net written premiums for property-casualty insurance totaled $514.0 billion for 2015, a 3.4% increase, compared to 2014’s 4.2% rate of increase.
The most current data (2014) from the Independent Insurance Agents & Brokers of America show a total of $555.2 billion in direct written premiums from each of the 4 primary industry sectors.
Independent agents wrote approximately 58% of all property-casualty premiums during 2014 as well as 35% of all personal line premiums and more than 80% of commercial insurance premiums.
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4. 2016: Sales Force and Premium Pressures
According to EY’s 2016 US Property-Casualty Insurance Outlook report, 2016 should be a good year for agents and brokers in commercial and personal lines; however, personal auto and workers’ compensation will challenge balance sheets.
Although the number of employed insurance sales agents is forecast to increase 9% from 2014 to 2024, the industry needs to attract younger agents. During 2014, 25% of all agents were 55+, compared to 18% in banking and 23% in securities.
The EY report also indicates that technology, as an external force, will have the highest impact (a score of 10 on a 10-point scale) on the US property-casualty market during 2016; followed by pricing, 9; customer expectations, 8; and the economy, 6.
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5. Evolving into an Advice-and-Results Business
Because seeking information and advice from multiple sources is central to Millennials’ consumer habits, agents/brokers are well positioned to become their trusted advisors as well as providing specialized auto coverage for those who are Uber et al drivers.
Another potentially lucrative market for agents/brokers is high net-worth individuals and families; however, their insurance needs can’t be based simply on their assets. Some may have domestic staffs while others are investing in high-valued collectibles.
The 2016 US Property Claims Satisfaction Study from J.D. Power found that consumer satisfaction with the entire settlement process decreased 5 points to (on a 1,000-point scale) from 2014, and primarily service interaction, which decreased 8 points.
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6. Technology Transformations
As with most every business, either B2C or B2B, adopting to new technologies and digital channels, and especially those that customers prefer to use, is also a major challenge for independent insurance agents – and with mobile at the top of the list.
A particular challenge for independents is that they led in only 1 of the 6 insurance industry technologies – comparative raters (rating engines) – as measured in Velocify’s 2015 survey of more than 1,000 insurance agencies.
Not surprising, directs (think GEICO, Progressive, etc.) led in 4 of the 6 technologies studied: lead management software, automated dialers, customer relationship management (CRM) software and agency management systems
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7. Engaging with Consumers Via Technologies
According to 10 years of Accenture global research about how consumers and their digital habits are disrupting the insurance industry, 78% of customers used one online channel to shop for insurance during 2010, which increased to 88% during 2014.
Because insurance products are being commoditized like so many others, consumers are less likely to perceive a difference in carrier products, as 21% of consumers said when responding to a 2014 Accenture survey.
The same survey found that 23% of consumers “would consider buying insurance from online service providers, 47% want more online interactions with their insurers and only 15% are satisfied with their providers’ digital experience.”
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8. Advertising Strategies
Some independent insurance agents/brokers may not have the budgets for regular TV advertising, but they should consider ads on your station’s weather and traffic Web pages, promoting auto insurance and added or updated coverage relating to weather events.
Agents/Brokers with the budgets for TV advertising may find it advantageous to use early morning news to engage with young adults and promote themselves as the best source of information about insurance and invite them to visit their Website and social media pages.
Agents/Brokers can promote a free “Empty Nesters/Downsizers Insurance Checkup,” emphasizing that this major change in lifestyle is the ideal time to review their insurance coverage and change/amend it, according to their new situation.
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9. New Media Strategies
It is clear from the contents of the Profiler that young adults seek many sources of information when buying insurance. Agents/Brokers can position themselves as the local expert through a weekly blog with emphasis on issues/concerns important to young adults.
Agents/Brokers can build awareness and generate goodwill and recognition by sponsoring/supporting community groups and activities and using their Website and social media to motivate people to volunteer and share visuals of the events.
The mobile channel can no longer be avoided and is critical not only to reach young adults, but also those older than 35. Brokers/Agents may want to share video stories of client situations a few times a week via mobile to help people avoid the same problems.
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