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Looking at Insurtech the Wrong Way

Insurtechs stimulate a lot of debate among agents about the extent to which they pose a threat and what should be done to address it. Some dismiss the threat by analyzing flaws in a particular venture or mocking past studies that predict the demise of the independent agent. Such criticism may provide some solace but misses the point of what’s driving the creation of insurtechs, and more importantly, what steps agents can take in response.

First, there is some confusion over the definition of an insurtech. The broadest definition involves the use of technology innovations designed to create cost savings and efficiency. Some, however, define it more narrowly to mean startups, such as Slice, Lemonade and Hippo, that target different customer segments, especially millennials, with push-button coverages.

The former is more accurate, but for the purposes of this column, let’s use the latter definition, then discuss what agents can do by using the broader description.

These startups all share one mission: To simplify all or part of the insurance process from marketing to underwriting to claims using technology and big data. Many of these startups may fail as so many skeptics point out. What’s also true, however, is the underlying conditions and opportunity to exploit them will remain, so eventually some of these insurtechs will succeed big. In response, carriers are addressing the need to streamline the insurance process, but agents must also do their part.

I don’t think ‘good’ agents are overly concerned about the startups, but agents who are little more than price quoters are or should be.

“I don’t think ‘good’ agents are overly concerned about the startups, but agents who are little more than price quoters are or should be,” says Bill Wilson, founder of Insurance Commentary.com and formerly the associate vice president of education and research for the Independent Insurance Agents & Brokers of America.

“Someone can always develop a policy or adopt claims practices that cover little and sell it cheap. But I also don’t think we should underestimate insurtech’s efforts to simplify the insurance process.”

Wilson does think the industry can and should question a startup’s approach.

“Underwriting accuracy and regulatory fairness are the issues,” he said. “There are serious questions about the accuracy, reliability and relevance of some of the data being used.”

Using the broader definition of insurtechs helps identify steps agents need to take to counter these startups.

“Insurance innovations fall into two categories: front-end innovations focus on improving the customer experience and satisfaction, while back-end innovations include technologies that are mainly designed to increase companies’ operational performance,” said Peter Teresi, chief executive officer of the ACORD Solutions Group, a subsidiary of ACORD that supports the implementation of standards.

“Agents must provide customers with friction-less communication — in other words, communication with no limits, like chatbot and automated replies, so customers may receive help whenever they need it, even if the agent is not available,” Teresi said. Most policyholders require many different types of insurance throughout their lives. “As a consequence, agents should utilize the multiple opportunities and develop customer life-time value that can be boosted by insurtechs — market prediction, customer acquisition, and insurance online distribution, among others,” he said.

Insurance technology can help agents with productivity post sales as well. “In some aspects, insurtech presents independent agents with one of their biggest opportunities if utilized in the right way by improving post-sale productivity and conversion rates,” Teresi added. “Agents will always have their own advantages, such as their industry expertise and being local, carrier-agnostic and dedicated to hands-on service.” Agents should also utilize the uprising insurance technologies to efficiently target customers and provide more transparent communication, he advised. “With the combined use of traditional skill sets and innovative technologies, agents can do much more.” Share this article with a colleague.

Tech Talk: How to Use Digital Body Language

“When the eyes say one thing, and the tongue another, a practiced man relies on the language of the first.” — Ralph Waldo Emerson

Agents pride themselves on their sales skills — to meet a prospect face-to-face, take their measure, and craft an insurance package to fit their needs. Many studies show today’s insurance buyers, including millennials, want a relationship with an insurance agent they know and trust. The problem, however, is that the vast majority of buyers start their journey online. In too many cases, a prospect will decide to move on and the agent never gets the chance to look them in the eye.

Aside from creating a compelling digital presence that attracts prospects to an agency website or social media, agents possess another powerful tool in their marketing kit – the data that can be derived from these sites. The fact is, prospects and clients send out a lot of signals about what they are looking for, are interested in and willing to take action on when they visit online. Call it “digital body language,” a phrase coined by Steve Woods and Paul Teshima, two of the co-founders of Eloqua and now of Nudge Software.

Digital body language comprises everything an online visitor does with an agency. For the agency website, this includes questions such as: How long does a visitor spend on the site and what do they look at? How does a visitor’s behavior change on the site? After the first 10 seconds, what clicks, scrolls, and mouse movements take place and over what period of time? What pages do visitors linger over most and what actions are more likely to produce a phone or email inquiry? To what extent does the agency’s social media activity drive traffic to the website? Taken together, these actions can guide agents in understanding how to frame their online messaging and adjust accordingly. Unfortunately, too many agents don’t take the time to access this information or if they do, to understand fully its implications and what actions to take.

Without this information, agents are “marketing in the dark,” according to Brian Bartosh, president of Top O’ Michigan Insurance Agency Inc. in Alpena.

Marc McNulty, vice president of Insurance Operations for The Uhl Agency in Dayton, Ohio, adds that he is not aware of any agency in his area that actively tracks website and social media activity.

So why don’t more agents access this information?

“I think business intelligence and use of it is new and ‘scary’ for many,” said Bartosh. “It appears that they have under-utilized technology and have not seen the value of data.” Bartosh says use data – it is searchable and mineable.

Another possible explanation: agency management systems generally do not access this data. Agents must collect it from other sources such as Google Analytics and then import to track the characteristics of prospects and clients.

“We don’t monitor this as closely as we probably should,” McNulty said. However, the data he collects is helpful. “I like to see the numbers regarding pages/session, average session duration, and what the most visited pages on our site are.”

Bartosh is an advocate for using data. “We want to know as much as we can so that we can pinpoint our marketing efforts,” he said. “This has taken our results from the traditional 1 percent to 2 percent response to double-digit response because we know more and can target our messages.”

It’s also important that the data be current to be useful, he added. “We are mining data monthly for various purposes including cross-sell, win-back and new prospecting efforts.”

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Tech Talk: Why Real-Time Binding Delivers Immediate Value

For independent agents, optimum use of technology delivers a multitude of benefits, including streamlined back-office operations and more effective marketing outreach. Yet one benefit, arguably the most powerful, is often overlooked — that of producing tangible and immediate value to the customer. An agency-branded mobile app that facilitates easier premium payments and claims filing is one example already in use. While not yet a reality, real-time binding is another innovation that produces value any buyer can appreciate.

The National Association of Professional Insurance Agents (PIA) has been a champion of real-time binding with its “Buy Button.”

“Our biggest challenge as agents is not the decision whether or not to go digital,” said Mike Becker, PIA executive vice president. “Our biggest problem is insurance sales, both online and off-line. The fact is, we need to be in a position to sell insurance in real-time.”

Becker says the Buy Button gives agents the ability to bind a policy in a “once and done fashion” using their agency systems for both clients and prospects who walk in the office, call on the phone or visit online. Agents could also bind outside the office using mobile technology.

“Real-time binding in the agent’s office can enhance the customer experience, improve conversion rates, and help with retention and cross-selling,” said Bill Pieroni, ACORD chairman and CEO.

Experts agree the technology is already available. However, deployment is complicated by how current systems are set up.

“Independent agents operate in a

multi-carrier environment in contrast to direct writers,” said Keith A. Savino, partner and chief operating officer for Warwick Resource Group and a PIA board member. “Directs operate with one system while each of our companies have their own systems. In the manual world, the best we can hope for is being in position to provide estimated annual premium to prospects. We need to be able to offer real-time, exact and findable quotes.”

Carriers will tell agents they can provide binding on their proprietary systems but what agents need is to be able to offer binding through their own agency management systems, Savino said. “Instantaneous binding puts more pressure on an agent to ask all the right questions in taking an application, however the payoff is huge. It can be a game-changer for independent agents.”

PIA’s Becker said there will always be agents who are “latecomers to the party.” But making the change to real-time binding in an agent’s office is critical to the future of our agency system. “We have the better products and pricing but this one piece is a huge impediment.”

As important as real-time binding is, Pieroni cautions that seeing technology as the only answer to addressing the current competitive climate misses the mark.

“Agents face three key challenges as it relates to digitization — leveraging technology to address emerging consumer demands, successfully incorporating digital technology into their office operations, and rethinking strategy and overall value proposition moving forward,” Pieroni said. Digitization of the value chain can, if done correctly, reduce costs and increase effectiveness for the agent, while strengthening the value proposition. “It requires a rethinking of the whole capability model — processes, organization, as well as technology. Solely focusing on technology will impair full realization.”

Digital challenges facing agents falls into three buckets — streamlining back office functions, mastering the use of customer-facing tools such as a website and social media and delivering as many services as possible to the policyholder in real-time without sacrificing quality. This last challenge is perhaps the toughest but is becoming an absolute necessity.

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2017 Marks Digital Tipping Point

2017 will mark the tipping point in agents’ efforts to adapt to the digital marketplace.  I base that conclusion on the fact that most agents are no longer talking about why they should become “digitally- savvy” but how best to do it.  Agents are also concentrating most on two areas of concern and the high stakes for ignoring them: customer experience and cyber coverages and security.

“Agents are recognizing that customer experience needs to be an integral part of their strategy,” says   Ron Berg, Executive Director of the Agents Council for Technology (ACT). “‘Relationship’ is still the name of the game, but now it’s taking different forms such as mobile, chat, guided conversation and real-time response.

Bruce Cochrane, President of the Renaissance Insurance Group is more blunt.

“Consumers have clearly indicated their strong preference for human interaction at the point of sale,” he says.  “They want to do business with those with whom they share values.  However, the catch is they will do so only with those who can provide the customer experience all us consumers now expect, meaning 24/7 access, ease of doing business and technologically pleasing.  The purchasing public is ours to lose.”

Cyber issues take two tracks: –agencies keeping up with latest threats to clients and the coverages to meet them and strengthening their own security systems.

“In 2017, agents will have more opportunities in the area of cyber security as additional carrier products and services enter the market”, says William Pieroni, President/CEO of ACORD.  Agents will also need to engage in a lifelong learning process around how cyber security protocols continually evolve with changes in technology and impact their value proposition.”

ACT’s Ron Berg adds that agents will also see a continued focus by carriers, vendors and agents & brokers on all things cyber, “not just coverages, but also tightening down agencies to prevent malware, phishing ransomware and other attacks.”

Now that agents are actively looking for digital solutions, there are many applications that will take hold this year.

“Agencies will begin to see real life practical applications of machine learning,” says Steve Anderson, longtime technology authority for agents.  “There’s been a lot of press around “chat bots” and how customers are obtaining information through an online digital conversation. Platforms are being developed that will allow the industry to add this to their repertoire of communication options.”

Voice interface will also play an increasing role according to Berg.

“I’m not talking just voice recognition,” he says.  “More companies are partnering to provide insurance-related resources for voice – Think Amazon’s Echo and Liberty Mutual Aviva, and now Grange creating ‘skills’ to search for an independent agent, compare carriers products & services.”

Marc McNulty, Vice President of Insurance Operations, The Uhl Agency and Chair of the NetVu Young Professionals Chapter wants to see additional automation on agency management systems.

“Wouldn’t it be nice if we could automate existing integration technology and have our management systems automatically quote personal lines accounts prior to their renewal?, he asks.  “Or, for carriers that support it, have similar technology set up for commercial lines small business accounts?”

Ted Besesparis, Senior Vice President, Communications, National Association of Professional Insurance Agents (PIA) wants to see the adoption of the concept of a Buy Button for independent insurance agents.

“The Buy Button is the technology capability for agents to bind coverage in real time from their own agency platforms, without the need to bridge to carriers’ systems,” he says.  “This functionality will enable the agent to bind coverage instantly when a prospect calls on the phone, walks into the agency, when the agent is offsite at a client’s physical location—or even when the customer goes to the agent’s website. It is an idea whose time has come.”

Of all the coming technology developments, artificial intelligence (AI) is the most intriguing and arguably the most challenging according to agency marketing legend George Nordhaus.

“AI will open the door to marketing systems that will pinpoint the insurance-buying of consumers, says Nordhaus,  chairman of Agenciesonline LLC and Monday Morning Markets. LLC.   “Think IBM’s “Watson”   How soon will it be before someone in our industry programs a Watson-type system that will automatically analyze consumers’ present and future Insurance needs.   It’s just a matter of time.  Perhaps the most important contribution to the insurance sale has been and still is the analysis of the prospects’ (personal or business) insurance needs. That task can be simple or highly complex. But either way, when an analysis can be created so rapidly and correctly, and when that fact is communicated via a “GEICO”-type advertising system, today’s major sales “asset” of the independent agent will have to change.  But change to what?  This is the $64 trillion dollar question.”

Welcome to a brave new world.

Digital Transformation 2.0

The just released Insurance Digital Transformation Study (available at http://www.insurancedigitalrevolution.org/) sheds a lot of light on why agents still struggle with adapting to digital technology. As we have discussed extensively in this column, agents must master digital tools to stay competitive, so we asked the study’s three sponsors to dig more deeply into the findings and pinpoint what steps agents need to take immediately.

Each of them agree that agents can no longer put off the process of upgrading their websites and adding mobile apps and 24/7 availability.  Just as important, they say, is that such actions must be based on a clear digital strategy that’s tailored to each agency.

ACORD’s new  president and CEO, William Pieroni, put it this way:

“Apart from the explicit findings, I think there is a critical implicit conclusion that agents now recognize that the time for digitalizing is now and that the focus needs to be on how to do it effectively,” he said. “The first step is to develop a true digital strategy, including objectives, measurable targets and the required resources.  Half-measures do not work well.    For example, just having a Facebook page is not a social media strategy.”

“The opportunities to use technology to serve customers are huge, however so are the consequences for not doing so,” says Ron Berg, Executive Director of the Agents Council for Technology (ACT).  “43% of agents told us they operate 24×7, but that leaves more than half who do not serve their clients any time of day.  The fact is, customers expect service when and how they want it and they get it now from banking, Amazon and many others.”

The results of the survey are encouraging but cautionary according to Mike Becker, Executive Vice President & CEO, National Association of Professional Insurance Agents (PIA).

“Independent agents want to embrace digital technology, however at the same time the survey demonstrates they need guidance, especially in implementation,” he said.  “One area greatly in need of improvement is agent websites. Only 8% of respondents rated their sites as excellent, and 60% of agents said their sites are average to poor.”

Becker added that independent agents “need to remain mindful of their value proposition that sets them apart from the direct writers.  Technology tools will help independent agents deliver their unique value.”

ACT’S Ron Berg believes agents do recognize the urgency of going digital, but for many smaller to mid-sized agents, the process appears so big and they don’t perceive a strong customer demand.

“The tools are out there – mobile apps, agency website quoting, live chat assistance and eSignature,” he says.  “Of more concern is the agent’s perception of the need.  More than 90% of agents said their customers are not asking for a client portal – but just because their customers aren’t proactively asking for a client portal does not mean they do not expect it.”

PIA’s Becker is equally forceful.

“Just because most agents say their clients are not asking for a client portal or a mobile app, that doesn’t mean they don’t want them,” he says. “ Agents can’t take the position that ‘no news is good news’ when it comes to their customers’ digital requirements, which will evolve and become more refined going forward. Consumer expectations are changing dramatically.  It’s critical that agents are able to have functional web sites, service their customers 24X7, and have the most up-to-date automation in place so that they are efficient.”

The bottom line is that agents cannot afford to put off their own “digital transformation.” The stakes are too high to do otherwise.