KEY TAKEAWAYS:
--To combat the misperception of insurance as a commodity, agents need to start by taking an active role in the buying process and educate customers about the nuances in policies.
--Agents must get customers to focus on the risks they face and the appropriate coverages, not on the price.
--Finally, agents need to individualize their sales approach -- focusing less on serving lots of clients and more on serving each client well.
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Although insurance was once governed by relationships, product knowledge and market access, it has evolved into an industry driven by price and the simplicity of the service provided. Many consumers now view insurance as a mere commodity. In fact, each policy and carrier is unique in the coverage they provide and in their underwriting and claims processes. But how can insurance agents challenge the perception of insurance as a commodity?
They must educate consumers, emphasizing the differences in policy coverages. Leveraging their product knowledge in tandem with technological developments, insurance agents can solidify the need for an expert-level resource in providing these complex product offerings to consumers.
Why Is Insurance Viewed as a Commodity?
Multiple factors have contributed to the perception of insurance as a commodity. For starters, digitization allows consumers to purchase coverage online directly from a carrier. Without a dedicated insurance agent consulting on which coverage is right, consumers naturally focus on price.
Additionally, the insurance industry itself has been pushing price as the sole distinguishing factor. Consider the advertising campaigns for Geico and Progressive, two industry titans with a combined market share of 25%. Geico’s tagline, “15 minutes can save you 15% or more on car insurance,” has been embedded into our brains through advertising. Progressive’s “name your price” advertising further cements the idea that insurance is a commodity.
How Can Agents Challenge the Perception of Insurance as a Commodity?
Having consumers view insurance as a commodity might be good for direct writers, but it doesn’t do much for independent agencies. Here's how agents can reshape the narrative:
Play an Active Role in the Buying Process
As an insurance agent, your customers rely on you. While it might be tempting to service as many customers as you can as quickly as possible, it is more beneficial for both your business and the consumer to craft a service approach personalized to each customer.
Your main selling points are your customer service and expertise. Lean into these attributes by guiding your customers through each step of the buying process, showing them why they made the right decision in using an agent rather than purchasing coverage online directly through a carrier.
Educate Your Customers
Educating your customers on the differences between policies is crucial. While big carriers have spent millions to convince consumers to focus on price, your job is to help your customers understand the additional factors at play. Your customers might think they know what they need, but a whopping 60% of consumers admit they don’t do any research before obtaining coverage.
What's the best way to provide context and information to your customers? Well, a conversation goes a long way toward understanding their specific needs and creating an opening for offering advice. Creating visual aids and providing easy-to-understand brochures on key policy differences can help.
See also: Selling Insurance in a Commoditized World
Focus on the Risks
67% of consumers are willing to purchase insurance from organizations other than insurers. This is a major problem, as consumers who purchase coverage online do not receive the same level of risk analysis as is provided by insurance agents. If an accident occurs, your customer will be grateful their agent spent the time ensuring their needs were met. By focusing on the risks facing your customers, you help them understand that insurance is not about getting the best deal but rather about obtaining the best coverage.
Individualize Your Sales Approach
21% of consumers say insurance providers do not tailor their customer experiences. Don’t solely rely on sales scripts or rehearsed talking points. Rather, get to know each customer on a personal level. Chances are new customers aren’t well-versed in the different policy coverages available, and you can provide expert advice that no algorithm could ever replicate.
What Does the Future Hold for the Insurance Industry?
People will always need insurance. It is what allows us to conduct business and engage in many aspects of our daily lives. And, no matter how much money carriers spend to advertise their low prices, one fact will never change; People need agents to help guide them through the intricacies of the insurance industry.
Your job as an insurance agent is very important. You ensure your customers are protected in the event of an accident. You ensure they make it out okay in whatever situation they are facing.
It may at times seem that the industry is trending toward further automation, but by providing expert-level product knowledge and engaging with customers you can leverage technology in a way that enhances the insurance purchasing experience rather than driving it to the lowest common denominator: price.
