Consultants have been predicting the demise of the insurance coverage agent for some time now—virtually since I first entered this enterprise over 30 years in the past.
Whereas the direct channel has taken vital share over this time, brokers nonetheless personal the lion’s share of the market and stay indispensable for insurance coverage. Let’s look briefly at some Accenture knowledge on the non-public auto and home-owner marketplace for proof.
Direct share in auto insurance coverage has plateaued. Direct distribution gained 10 factors share within the final 20 years, rising from 20% market share to roughly 30% immediately. But it surely has gained just one level of share within the final seven years. In householders’ insurance coverage, the direct channel has gained 9 factors of share within the final 20 years, and solely two factors of share within the final seven years
The company channel noticed its auto market share decline 15 factors throughout this time, whereas its share of householders dropped 16 factors. Of notice, company share declined sooner than direct grew in each strains. The stability of share went to “different” distribution channels comparable to banks, different types of retail, and partnerships—lots of which contain an area distribution footprint.
Inside the company channel, impartial brokers have fared slightly higher than unique brokers, shedding solely six factors in auto whereas sustaining the identical share of householders (extra on this in a future weblog).
Information from Accenture’s biannual international monetary companies shopper examine additionally means that demand and satisfaction for brokers is powerful throughout insurance coverage. Customers’ prime three preferences for interactions are: 1) dwell phone, 2) on-line service, and three) in-person. Different types of interplay comparable to smartphone apps, instantaneous messaging and automatic cellphone channels path effectively behind.
Likewise, customers are usually happy with the service they obtain from brokers with 75% reporting they’re both happy or very happy in 2020, up from 73% in 2018.
If brokers are actually on the verge of extinction, somebody ought to inform insurance coverage customers.
The results of all that is that unique and impartial brokers nonetheless management about 80% of the home-owner market and 65% of the non-public auto market. Even the affect of COVID-19 doesn’t seem to have accelerated a shift into the direct channel, based mostly on early outcomes.
This raises an necessary query for understanding the trade immediately and its future course.
Why have brokers been so resilient within the face of all of the digital change and enterprise mannequin innovation fueling the predictions of a direct-dominated future?
The human contact in a digital world
All of it comes all the way down to shopper desire. Whereas the record of issues a hypothetical buyer would possibly worth in a services or products is of infinite theoretical size, you possibly can kind that record into three classes:
- Useful—what does it do for me?
- Emotional—how does it make me really feel?
- Private and social affect – What does it do to me and to society?
Direct distribution and digital innovation are each nice at delivering purposeful values comparable to saving time, saving cash, or making duties simpler. People and the company mannequin are higher on the others—notably the emotional values comparable to offering a way of security or safety.
Particularly, expertise tends to drive enchancment within the purposeful class. Higher tech saves us time, simplifies complexity, helps us keep away from problem, and lowers the trouble required to do a given process. It may even have some knock-on results that attain into the emotional class by way of decreasing our anxiousness and making us really feel rewarded.
However a lot of the emotional class, and all the non-public and social affect class, are the area of people. This isn’t to say that tech has no function in serving to people fulfill these shopper calls for, however the core of the expertise requires a human contact.
Moreover, and maybe most significantly, as prospects’ wants improve in complexity, they appear to favor the consolation of figuring out an agent is accessible close by within the occasion one thing goes fallacious, even when most of their interactions with the company are over the cellphone.
And that, in my opinion, is why brokers are nonetheless with us—and might be for the foreseeable future.
Which raises one other necessary query about the way forward for the trade: how can carriers ship customers the very best of each worlds?
We’ll discover this wealthy matter in my subsequent publish. Within the meantime, for those who’d like to speak in regards to the stunning endurance of the agent or any a part of the trade, I’d love to listen to from you.
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