Look Who Is Betting on the Agency System
According to some pundits, buyers should all be online and the agency system should be dead by now. However, it appears not everyone got that memo. Here are some recent examples of companies, techies and investors betting on agents and brokers.
Last spring, giant Nationwide announced its intention to shift to an independent agency distribution model over the next two years. The Columbus, Ohio-based carrier, which provides a range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance, currently sells products through both exclusive and independent agents. The company said the plan is to shift entirely to the independent agency distribution model by July 1, 2020. Roughly 2,000 existing agents operating under the Nationwide brand will have the opportunity to transition to an independent agency model between now and then.
Giant Google’s investment arm has purchased a minority stake in Applied Systems, a provider of insurance technology and cloud-based software for independent agencies. Applied Systems wasted no time in reassuring its clients, independent insurance agents, that they should welcome, not fear, Google’s involvement with the firm.
In return for the investment, Applied Systems gains access to Google expertise in areas including artificial intelligence, machine learning and digital marketing, according to the company. Applied Systems CEO Reid French promised that Google would not tap into any of Applied Systems’ insurance data residing in the cloud or within various customer applications. The agency software company said this as a good opportunity for agents. “There are many agents that have wanted to have greater access to high technology. The vast majority will view this, with the facts, as super-duper positive for Applied and for the industry,” French said. He added that the company looks forward “to bringing some of the world’s leading experts at Google and Alphabet [together] to drive innovation within the global insurance ecosystem.”
CoverWallet, a technology company that has been on a mission to “reinvent insurance for small business” customers, is now offering its platform for insurance agencies. With 16 agencies already using the platform, another 100 are on a waiting list to jump on board, according to chief executive officer Inaki Berenguer. He said that demand from agents to have the same simple and efficient way to access quotes from multiple carriers, and ultimately bind policies “in real-time” prompted Berenguer’s team to design CoverWallet for Agents. “In the U.S., there are 40,000 agencies, and half a million agents that unfortunately don’t have access to the same tools that we have. And they don’t have the resources to invest in technology.” Registering with CoverWallet for Agents can change that. “We give you a login and password, and then every time that you talk to a customer, you can use our platform to sell faster, simpler, quicker,” he says.
Chubb Marketplace, which first went live in November, 2017, is a digital platform for Chubb agents to write small business accounts quickly, easily and profitably. On any given business day from 900 to 1,000 Chubb agents now log onto Marketplace. Chubb’s small business strategy chiefly relies on traditional agents and brokers, not insurtechs or direct-to-buyer methods. Chubb Marketplace is “digitizing the agent experience” in underwriting and selling small business products. Agents can get quotes on all coverages for a risk in minutes by answering just two questions. Policies can be emailed within 30 seconds of acceptance. About 85 percent BOPs are now handled without any human intervention on Chubb’s part. Chubb keeps adding industries and coverages. Chubb is even helping its agencies develop their own digital experience for their small business owners that lets customers go to the agency’s website to get a Chubb quote and policy without human intervention.
Last February, The Hartford agreed to acquire Foremost Insurance branded small commercial lines business from Farmers. The Hartford bought the renewal rights on $200 million in small commercial lines premium sold through about 5,000 independent agents and brokers. The business consists of the three primary lines of business underwritten by Foremost Insurance Group: business owner’s policy for property, general liability and umbrella; commercial auto; and workers’ compensation. Foremost, founded in 1952 and headquartered in Grand Rapids, Mich., is a leader in specialty insurance for mobile homes, motor homes, travel trailers and specialty dwellings. “This renewal rights agreement further strengthens The Hartford’s market-leading position in small business, and also provides an opportunity to deepen and broaden our distribution network,” said Stephanie Bush, The Hartford’s head of Small Commercial and Personal Lines. The book of business is nationwide and aligns with its small-business appetite and growth strategy, The Hartford said. The insurer said there is significant overlap in the agency forces but that it welcomes those agents that do not currently have a contract with The Hartford.
Not all insurtechs are out to replace agents. Openly is a digitally-sophisticated upmarket homeowners insurer catering to independent agents. According to Ty Harris, founder and CEO, Openly will launch in early 2019 in a yet-to-be-announced large inland state. “We’re going after mainland America homeowners insurance,” says Harris, a former Liberty Mutual executive turned entrepreneur. Openly’s simplified system asks agents to answer only three questions to obtain a quote for a customer and makes it easy to click to add and price coverage for second homes, flood, contents, landlords or other options. Harris says Openly plans to add ACT Customer Experience.
The Agents Council for Technology (ACT) has launched a Customer Experience Planning Website designed to help agents improve the customer experience lifecycle through technology. The site explains the six phases of the consumer buying experience — discover, evaluate, purchase, experience, renew and refer — and breaks down the technology touchpoints agents should focus on during each phase. Tools such as a responsive agency website, online reviews, eSignature, online chat and mobile account management all have a role to play as consumers move from being aware they need insurance all the way through the in-policy experience. The site provides descriptions for each phase and touchpoint, along with resources for agents to use to get started improving their agency’s customer experience. Ron Berg, ACT executive director, said the website will help agents determine which recommendations to implement based on a customer’s core needs.
Jacksonville, Fla.-based insurance agency franchisor Brightway Insurance has unveiled a no-upfront cost program for independent insurance agents that offers a path to ownership of their own Brightway agency. It also offers a way for existing independent agents to open additional locations. CEO Michael Miller says the new distribution model is designed for agents who have dreamed of owning their own agency but don’t have the financial resources to get there. The commission-based agent program, called “Independent Agent,” gives producers access to the Brightway system, resources and support so they can start selling insurance while simultaneously qualifying for franchise ownership. The model works on a 50/50 commission share. Agents can do business out of a home office or other location without staff. After one year — or sooner if agents meet the Brightway sales goals — they qualify for a fully-financed, lower-cost entry fee into Brightway’s new “office location” franchise model.