With each new wave of technology over the past few decades, there have been many predictions that this is the end of agent distribution. You know the drill: “Technology can be so much more efficient and remove all that expense related to those human distributors.” I can remember back to the dawn of the internet, when there was all the discussion about disintermediation. I heard that term in all kinds of insurers’ strategy discussions. I never believed agents and brokers were going to be displaced then, and they certainly have not been displaced. In fact, as digital technologies have advanced in the intervening decades, agents and brokers are still dominant.
Now, we are in a pandemic. It has been world-changing. And it has accelerated the digital transformation of businesses, society and our industry. The inability to meet in person and the rapid shift to everything online has put pressure on the agent distribution model. So: Has the pandemic finally put the nail in the coffin of agent distribution (for all those folks out there who don't like agents or don't think they add value)?
The answer is a resounding “no.” I think this idea is a myth. For complex lines of insurance, mid- to large commercial line specialty insurance, high-net-worth on the personal side and other segments, agents will be necessary. There will always be a need for expert advice on risk management. And there will always be a need for intermediaries who deeply understand customer needs and can create that right combination of coverages linked to the right underwriters. These areas will benefit more and more from technology over time. But the agents and brokers are likely to be around for a very, very long time.
It could be a bit different for simpler lines like personal auto, homeowners, pet, travel, etc. and some of the new, on-demand or gig economy types of insurance. There are strong arguments that those lines will migrate more rapidly to direct digital distribution. But even then it's not going to happen overnight. There will be a slow evolution. My prediction is that there will still be agents selling all of those lines in 2030.
See also: 4 Predictions for Independent Agents
Are there people out there who think you should be able to just press a button and get your insurance, so why have human intermediaries? Yes, but they are oversimplifying, and I believe it's a myth to assume that agents are superfluous.
In that vein, this is your call to action: Strengthen the relationships you have with various distribution partners and with the technology companies that support you in the distribution space. Agent-carrier connectivity solutions, portals and self-service capabilities all enhance that connectivity. You must form strong bonds and leverage those technologies as much as possible to improve relationships and to provide more value. And, finally, we live in an omnichannel world with many different options. Customer journeys often involve the use of multiple channels, so agents need to be incorporated into the overall omni-channel strategy.
