P&C agencies have upped their tech game, but consumers still want live agents.
Technology continues to disrupt the insurance industry, yet people still seek to do business with live agents. A recent survey conducted by Vertafore asked nearly 1,300 consumers about their insurance purchasing preferences and found a clear majority of 72% were hesitant to buy insurance through a chatbot. Even many tech-loving millennials expressed an aversion to securing a policy via a digital channel, with 49% of those aged 18 to 25 saying they’d prefer to buy from a human insurance agent.
Dampening consumers enthusiasm for digital insurance platforms are privacy concerns. Less than a third — 23% — said they would share personal data with an insurtech company if it meant obtaining a cheaper rate. “We’ve seen several insurtech startups enter the market, claiming to simplify the process for consumers, only to find they are out of touch with their preferences,” said Larry Hagerty, SVP and Head of Regulation at Vertafore, in a release. “While innovation is great for the industry at large, it must not come at the price of consumer privacy and trust.”
It appears technology will not usher in the demise of the P&C insurance agent after all. In the auto insurance industry particularly, consumers still favor dealing with a live person when buying a policy. Perhaps that’s why another Vertafore survey of P&C agents revealed an optimistic outlook for the coming years.
Tech-Fueled Growth Ahead
When asked about future plans, 84% of participants in Vertafore’s “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace” envisioned “moderate to aggressive” growth within the next three to five years. 36% harbored aggressive expansion plans, up from 29% in 2015. A sunnier disposition likely fueled those plans; 49% of respondents were “very optimistic” about the future success of their agencies — a significant leap from 29% in 2015.
Rather than viewing technology and the insurtech phenomenon as a threat, P&C agents have sped up adoption of technology to reinvigorate customer service. More than half (51%) reported higher IT budgets from a year earlier, and 63% intend to funnel more money into tech improvements within the next year. Replacing outdated hardware and software topped the IT to-do list for half of the agencies surveyed, but using technology to optimize the customer experience ranked high with respondents as well. 61% viewed digital customer relationship management (CRM) tools as “moderately or extremely important” in the drive to achieve sales goals. Accordingly, agencies have invested in CRM tech. Nearly half have already implemented a CRM tool to track and retain clients; 19% say they will do so this year.
P&C agencies regard mobile-enabled websites as another vehicle to attract new customers that are attached to their smartphones and tablets. Two-thirds of P&C agencies already sponsor mobile portals or plan to launch one — a jump from 40% in 2015.
Less Worried about Insurtech
P&C agencies now perceive insurtech startups as less of a threat to their business, according to the latest Vertafore survey, conducted in conjunction with Hanover Research. In the 2016 poll, 76% characterized insurtech as a “small threat or a not a threat,” a marked turnaround from 2015 when 54% considered these companies as a moderate to serious impediment to their growth.
This about-face came despite the more than $2.6 billion in venture capital poured into the insurtech industry in 2015. 62% of large P&C agencies predicted positive outcomes from other recent industry trends, such as mergers and acquisitions with smaller agencies and VC investment in insurance tech enterprises.
To combat the insurtech challenge, Bruce Winterburn, Vertafore VP of industry relations, said independent agents have upped their own investments in technology to enhance customer relationships and boost business. “It’s our belief that startups have helped revitalize innovation and infuse a sense of entrepreneurialism in one of the oldest and most established industries,” Winterburn said. “Where we saw an ‘innovate or die’ mentality last year, we’re now seeing an ‘implement and thrive’ outcome this year.”
Jumping on the Tech Bandwagon
P&C agencies have apparently adopted Winterburn’s advice. More are adopting technology to increase profits through streamlined processes and better customer service. “Research shows the investment is paying off,” he noted in the report.
Clearly, agencies benefit from an IT upgrade. But as Vertafore’s research also indicates, your clients and prospects also appreciate in-person assistance. To prosper, agents must balance the right tech tools with a human touch.