The reported demise of the independent insurance agency as a sales and distribution channel has been greatly exaggerated. Over a decade or more of forecasting the growth of direct-to-consumer models, independent agents continue to thrive and generate the lion’s share of revenue in the Life & Annuities (L&A) and Property and Casualty space (P&C) . In fact, the independent agency still places 50% of L&A policies and 62% of all P&C insurance in the United States, according to data from the Insurance Information Institute and the Big “I” Market Share Report.
While the resilience of the agency model in insurance should come as no surprise to industry stalwarts, the old relationship-driven agent/carrier business model presents operational challenges for carriers aspiring to modernize. Among these is the development of a more predictive and data-driven approach to relationship management.
Within their limits, operators have begun to break down data silos and look across the entire organization to identify emerging growth opportunities and mitigate underperforming assets. Whether integrating insights from aerial imagery technologies or using telematics and smart home technologies to improve underwriting accuracy or extracting insights from customer service interactions or track sales activity patterns to optimize customer experience. Insurers these days are becoming more and more sophisticated when it comes to data-driven transformation. Once the openness is widened to include the wildly unstructured world of local agency networks, things tend to get a little less precise.
Transform the historical carrier/agency relationship
In most cases, the agency relationship management model is very static, i.e. once a business partnership is formed and a specific agent, or team of agents , is assigned to the carrier, nothing really changes. Carriers may have a rough idea of who their top producers are, but they may also have dozens of agency contracts that generate very little value and remain largely underutilized.
This is a costly strategic knowledge gap that may exist. On average, a top performing independent agent can generate $500,000 or more per year in sales for a carrier. Add to that a universe of approximately 2.2 million agents across the United States and you’ll see why finding a better way to proactively manage agency relationships should be a priority.
The good news is that data-driven transformation doesn’t have to stop at support walls anymore. With today’s cloud analytics capabilities, operators can truly get a granular, 360-degree view of their agent relationships, and therefore those agent relationships with their customers, and use that information to manage proactively build strategic relationships.
Creation of a gold profile based on the data
For example, in a recent digital transformation project that EXL developed with one of the largest L&A carriers in the country, we were able to create a gold profile of all agency relationships, including individual agents and customers with regional demographic and economic information, which can be monitored, and enriched over time. By applying this consistent, rules-based framework, which tracks agent volumes, volume types, customer profiles, and market penetration, we were able to help the carrier identify customer segments. agents most likely to produce, which are below their potential. and those at risk.
Newly Developed Advisor Intelligence – Enables the carrier to personalize and nurture key relationships, rekindle underperforming ones, and optimize resources on inactive accounts. Most importantly, this capability enables clients to explore opportunities to maximize ROI through better targeting and marketing personalization. In the long term, the customer expects data-driven capabilities to drive economic benefits and customer experience and increase Net Promoter Score by 2-3%.
Insurance is one of those rare global, hyperlocal industries that requires a complete enterprise-wide view of key metrics and a highly personalized, customer-centric view of Main Street. Until recently, it was simply not possible to connect these dots centrally to better anticipate how a single customer event may impact the entire organization. Today is the key to unlocking new growth from old sources.
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