Independent Agents See Carriers’ Online Sales As Major Threat: Accenture Survey

Independent insurance agents’ strengths in customer service and risk management could be challenged by changing consumer behaviors, new technologies and the evolving competitive landscape, according to a new report by Accenture.

The report is based on a survey of more than 1,100 U.S. independent property/ casualty (P/C) insurance agents, who were asked to rate the relative importance of a range of issues.

The agents who were surveyed see the increase in insurance carriers’ direct sales via the online channel as a serious competitive threat, with 39 percent of respondents citing such direct solutions as their greatest source of competition.

Nearly three-quarters (71 percent) of the agents said that threat takes the form of lower prices, while 48 percent see better brand recognition and more effective marketing as key elements of the competitive threat.

When asked about the most important digital capabilities, “web-based service and claims” were rated the highest by agents, followed by “web-based quoting.”

Survey respondents placed a relatively low priority on mobile and social media capabilities.

“Changing consumer behavior and the continued rise of the direct channel are threatening agents’ dominance of insurance distribution,” said Erik Sandquist, managing director for Accenture Distribution and Marketing Services in North America. “So are new insurance players – with new distribution models – that are making a determined effort to entice customers away from agents.”

New Business vs. Retention

The survey indicates that agents place a higher priority on keeping and servicing existing customers than on finding new business. When asked to rate the most critical operational competencies, agents put “retaining customers” at the top of the list, followed by “servicing customers;” “attracting new customers” was ranked only third.

In ranking the value of information available to them, the agents placed the highest value on insights into existing customers, while ranking qualified lead lists last.

However, when agents were asked what they would do with more staff, they rated finding new business highest among priorities, followed closely by cross-selling and up-selling new business.

Advice Services

Despite their strong focus on customers, agents downplay their ability to provide differentiated and superior advisory services as a competitive advantage. They viewed access to competitive products, improved customer experience and better brand recognition as more important sources of competitive advantage than the advisory services they could offer to customers.

Value of Alliances

The report also indicates that many independent agents join others in an association, alliance or cluster, but while small businesses in other industries may do this to bolster their limited resources or to network with peers, insurance agents’ goals are principally to enhance access to carriers and to increase their commission. Membership in these groups can give agents greater power to negotiate with carriers than they would have on their own, and the survey reveals that this is more important to them than support in operational areas such as marketing, agency management systems, technology and 24/7 call centers.

Accenture surveyed 1,158 independent agents in the U.S. in mid-2014. Accenture is a global management consulting, technology services and outsourcing company.