According to the Insurance Journal, the future is bright for agents, especially independent agents. Up until recently, carriers dominated in the carrier-agent relationship, but now it seems that agents have a more important role than ever. They also command more in their new roles as the all-mighty distributors of their respective brand(s).
Already, the delineation between captive vs independent agents is blurring. Slowly, the brick-and-mortar shops of the big carriers are also shutting down. In their places, you have virtual locations (websites; Facebook, Twitter and Instagram pages) filling that void. So branding is still important, maybe even more than before. It’s just … different.
What Do Agents Need to Do?
One thing is for sure: the individual agent needs to shine with personality, determination and caring more than ever before. Customers and carriers will depend on them more than ever too. It’s almost as if the underwriter has suddenly taken the backseat to the agent. Carriers place more importance than ever to the role of the agent, who controls the actions of the consumer more than anyone else in the chain of command. The agent today also makes 10 to 20% more per transaction than the underwriter, who used to be king and used to make more.
Yes, things are changing, and according to Dennis Chookaszian, University of Chicago professor and former CEO of CNA, “Carriers have got to pay more in commissions.” They have no other choice, really. In his discussion with Carrier Management, Chookaszian explained that all carriers do all day long is seek out new business. They need agents, whereas in the past, agents were lucky to find a carrier to represent. All this impacts the independent agent the most. Once the bastard child of the industry, the freedom and flexibility of this suddenly mighty role fits the needs of carriers who’d rather not expand their captives.
In fact, carriers who formerly only hired captive agents are hiring independent ones, so there’s little reason left to want to become a captive agent. Being fed leads by the carrier remains the #1 reason the old model even exists still. However, with the rise of lead generation companies, independent agents are buying leads from sources like SmartFinancial and are still faring better in terms of ROI. Digging into one’s own pockets and investing in an income has replaced the old model of canvassing entire areas. It’s the same job but done with different means. Instead of hotel rooms in a new and unknown location, the agent is spending money on leads from the Internet -- and they are saving time doing business this way.
Will My Job Be Taken Over By a Chatbot?
So will everything be all Internet, all the time? Will carriers find a trick to cut out all agents (independent and captive both) and bind online, making the middleman-agent obsolete? For now, it seems that as long as agents are truly giving their clients a service beyond reminder calls about renewals, this scenario is highly unlikely. As Artificial Intelligence (AI) improves and the chatbots we know today seem laughable in comparison to advancements, then this scenario could come to life. It’s hard to predict to what level of sophistication technology will advance in the next 5 to 10 years. Anything is possible, but for now, agents are king.
People Still Want to Buy Locally and Give to Charity
This may seem like a contradiction after what you just read about the virtual marketplace replacing the brick-and-mortar model, but it’s not. Even when buying online, the consumer still prefers to buy within the community when possible, with the effect of building and improving one’s own community. And if there are competitors, the consumer is more likely to buy from the more altruistic of the two brands. This idea of being a good citizen is even more important to the Millennial shopper than the generations that came prior.
The new generation wants to see the money they spend, even when it’s for staples of life, like milk, bread and even insurance go to a positive place. Agents that seem involved in giving back either locally or globally will be preferred over ones deemed self-serving, unethical or greedy. They are much more politically questioning than their predecessors because they are a more educated group.
How Technology Will Paint the Landscape
It’s hard to say how Internet disruptors, the ad-tech industry, will affect the insurance industry but they already have -- and probably for the best for agents rather than carriers. For one thing, they’ve made it possible for any new agent to begin working to grow their business without having to figure out how to generating insurance leads in the first place. Sure, carriers are also buying insurance leads from companies like SmartFinancial, but they also have enormous manpower in fully developed marketing teams that generate leads on top of the ones they buy. So, the disruption was what Millennials would call “a good thing.” Companies like SmartFinancial have prevented already huge insurance companies from becoming behemoth monopolies.