A reliance on relationship building and value-added services has continued to serve independent agents in the face of changing consumer preferences, but the new insurance shopping environment still has many rattled, new survey results from
Accenture reveal.
Nearly 40% of independents surveyed say they view direct online insurance sales by carriers as a “serious competitive threat.” In fact, direct sales were labeled the biggest source of competition to the agent/broker channel in the survey, which asked 1,100 US producers their opinion on a range of issues.
So just what is it about direct sales that has independents concerned?
More than three-quarters say it’s lower prices. A full 71% of survey respondents blamed an allegiance to the bottom line as the basis for their fears over direct sales, followed by 48% who blame better brand recognition and more effective marketing.
Erik Sandquist, managing director for Accenture Distribution and Marketing Services in North America, believes producers are right to be worried.
“Changing consumer behavior and the continued rise of the direct channel are threating agents’ dominance of insurance distribution,” he said. “So are new insurance players—with new distribution models—that are making a determined effort to entice customers away from agents.”
Sandquist added that another Accenture survey of insurance consumers shows carrier websites and search engines have surpassed independents as consumers’ preferred source of information about insurance products and prices.
To help combat these challenges, producers are increasingly turning to networks, alliances and cluster groups. Membership in these groups allows them greater power to negotiate with carriers and therefore score more reasonable rates for consumers and higher commission for themselves. It also expands access to carrier groups and products.
This could be key in ensuring the future success of the channel, said Michael Lyman, Accenture’s global senior managing director for insurance.
“Agents need additional capabilities to compete in the future as confirmed by our survey,” Lyman said. “By sharing investments, independent agents can benefit from economies of scale and cost-efficiently access a broad set of core operational capabilities such as agency management systems, customer management solutions and digital technologies, which could help them both improve efficiencies and take share from online competitors with more effective digital channels of their own.”
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