Mass. Agents Find Out What Their Auto Customers are Thinking

As Massachusetts independent agents enter a new era in auto insurance, they can’t help but be a bit anxious. After all, they have for years had a lock on more than 85 percent of the auto market under the previous fix-and-establish rate system. Changing to a competitive rating beginning April 1 is bound to raise worries about losing customers.

But according to a study from the Massachusetts Insurance Agents Association, they may not have a lot to worry about, just yet anyway. Sure, some customers will bolt an agency for a lower price but for the most part, customers feel they are in a relationship with their agents and would like to stay with them.

MAIA hired a firm to conduct focus groups with customers of independent agencies and direct writers in the state. MAIA President Frank Mancini says his group wanted to give agents an idea of what to expect in the brave new auto insurance world.

According to the final report, lessons learned included:

• Relationship-oriented: Most independent insurance agency clientele have used the same agent or agency for years – 15 to 18 years appears to be the average. They “vigorously” describe their dealings with their agent as a “relationship.” In return, consumers expect their agents to be loyal, knowledgeable and accommodating when they have a need. The choice of an agency is deeply rooted and it could be difficult to dislodge the relationship. Several use the same agent their wives used before they were married. Loyalty and convenience are cited as reasons for not looking to change agents.
• Customer service expectations: Customers expect their agent to be a representative between the customer and the insurer. Some say that only where a claim is not settled quickly and fairly, or if there were unresolved issues, would they be motivated to look for a new agent. One perceived advantage to the direct writer model is getting assistance 24/7.
• Lower premium: Most respondents — whether independent agent or direct writer customer – would change insurance agencies if the premium is significantly lower, with a 15 to 20 percent saving the threshold of significant. However, in all likelihood, a customer would first ask the existing agent for a quite before switching. Even with a significant premium differential, some express hesitancy over switching because of the long-term relationship along with the hassle of filing new paperwork.
• Direct writer disloyalty: Many of the direct writer customers, however, do not perceive any difficulty in switching. Several feel that with the 2008 changes, there will be an advantage in contacting an independent agent.

Clients of independent insurance agents claim that they will ask their agent to research other insurance companies’ premiums.

But the report strongly suggests that in the changing environment, “independent insurance agents need to be proactive. “Contact before being asked by the customer will go a long way in buttressing the relationship with a customer,” the report says.