Having heard tech evangelists promise imminent disintermediation of some group or other for more than 25 years now. I've learned to be skeptical.
There are still some 40,000 travel agents in the U.S., decades after Expedia and other travel sites were supposed to put them on permanent vacation. Some 80,000 bank branches still occupy street corners and strip malls around the country even though ATMs were supposed to have rendered them obsolete 40 years ago and even though wave after wave of online banks have made dire threats since the mid-1990s. Amazon was supposed to have swallowed all commerce by now, but, instead of putting all physical stores out of business, Amazon established a massive, nationwide presence by buying Whole Foods and has experimented with opening other types of stores.
With that history as backdrop, I never bought into the idea that insurtech would somehow put agents out of business. But that history also shows that roles have had to evolve. Travel agents tend to specialize in, say, putting the pieces together for fly-fishing vacations. Bank branch employees dispense advice, and not nearly so much cash. Whole Foods, in addition to being a store in its own right, now serves as a sort of warehouse for groceries that Amazon can deliver and as a drop-off point for those returning items they bought via Amazon.
So, even though agents aren't going away, their roles will evolve. The question is: How?
To explore that topic, I sat down (via Zoom, of course) with Mark Breading, who is a partner with Strategy Meets Action, a Resource Pro company, and who has been one of the smartest analysts I've come to know in my nine years involved with the insurance industry. He had published a piece with us at ITL titled, "From Agents First to Agents Last?" (which I've borrowed as the headline for this piece). The article made a lot of sense to me, so I asked Mark to elaborate.
While I encourage you to read the whole interview, I'll summarize briefly. He says agents will still have a key role in providing insurance, but it may no longer be at the front end of the buying process. People increasingly do a fair amount of research online before even approaching an agent. They also often are more educated about their insurance needs than in years past. They may even initiate an insurance purchase as part of the purchase of something else, such as a car or a home.
Whatever the "digital on ramp" -- to use Mark's term -- that brings them to an agent, they likely arrive later in the process than in the past, and agents will have to adapt.
They'll have to find new ways to get noticed, going beyond traditional networking in communities. Leads will be less and less likely to walk in the door. Instead, agents will have to position themselves to be found via whatever digital path a potential customer is following.
Agents will also have to specialize more -- a la the travel agent who knows just which guide to pair you with on your trip to the Little Big Horn in Montana. Agents will also have to focus more on advice and less on processing transactions.
Anyone who still thinks disintermediation is in the cards doesn't even have to look at history. Just look at how valuations for agencies have continued to strengthen in recent years, while they were supposed to be disappearing.
But that doesn't mean anybody can stand still. Customers are evolving, and agents have to adapt along with them.
Cheers,
Paul
P.S. Here are the six articles I'd like to highlight this month for agents and brokers:
From Agents First to Agents Last?
Even though agents are thriving, direct distribution will significantly increase, insurtech will play a big role in reshaping distribution and big tech companies will enter the space.
A Guide to Legacy Modernization
78% of digital transformation efforts fail to drive desired results due to poor planning. Here are some steps that will ensure success.
Policy Admin Systems Are Evolving
Modern solutions, including cloud-based options and lower-cost implementations, are redefining what constitutes a policy administration system.
Achieving Digital Balance in an Agency
Agencies are torn between the temptation to use too much technology and the tendency to stick too long with old, familiar processes.
Agencies Turn to Networks for Growth
Networks of agencies understand how important it is to provide expert guidance and resources throughout the digital journey.
3 Ways for Agencies to Improve Cybersecurity
By preparing agents to be the first line of defense against cybercrime, insurance agencies can change employees from risks to guardians.
