From the back office to the front office, insurers are investingheavily in technologies to bring efficiencies tooperations long overdue for an overhaul.

High on their list of priorities are digital platforms thatenable smoother servicing of producers’ day-to-day needs, fromaccount and event management to sales leads.

This was a chief takeaway of a Dec. 7 break-out session, “Agentsof the Future, Digitizing Distribution,” which took place atNational Underwriter’s 2016 Annual Insurance Executive Conference.Presented by Ernst & Young Executive Director MelanieHenderson, the session explored technology and channel initiativesunderway in the industry, producers’ view on them, and wherecarriers are coming up short.

The need for product innovation

The last, she said, extends to a core component of thecarrier-producer relationship: product.

“Producers are increasingly looking for customized products tomeet changing market demands,” said Henderson (pictured here at theconference). “What's interesting is how much product innovation will play in determining what theywant to sell. And right now, agents are telling carriers that whatthey have isn't as attractive as what they want to go to marketwith.”

That’s evident in research she detailed at length from a 2016report from Ernst & Young that polled property andcasualty/personal agents (58 percent of the survey’s respondents),life and retirement agents/advisors (15 percent) and smallcommercial lines producers (27 percent).

When asked how much product innovation will be a driving factorbehind the “producer of the future’s” expanding portfolio, nearlyhalf of the agents and brokers surveyed (45 percent) think thatinnovation significantly facilitates new business. Just over 50percent agree that developing “new and innovative products” shouldbe a key focus of carriers.

Many producers are also looking for improvement on theunderwriting front. Nearly half (50 percent) told Ernst &Young they want greater access to underwriters and favor usingthe same underwriter. More than one-third (35 percent) want to“formalize or improve the process” for reviewing or appealing anunderwriting decision.

The value that producers attach to social networks —Twitter, Facebook, Instagram and the like — is most pronouncedamong property and casualty/personal lines agents, the Ernst &Young survey finds. (Photo: Thinkstock)

Gauging the D-to-C threat

Direct-to-consumer initiatives and digital insurance models area mounting concern to a solid majority of agents, saidHenderson.

Among the life and property and casualty agents polled, morethan half perceive carriers’ direct-to-consumer and digitalendeavors as at least “somewhat” of a threat. Nearly 1 in 10 lifeproducers (8 percent) view them as a “full threat.”

Whereas carriers are exploring alternative distribution,producers believe they still add value. About three quarters of thesurvey respondents view the agent/advisor channels as “importantfor insurers.” Much smaller numbers are “neutral” as to the valueadded (22 percent) or “fail to see” their importance (3percent)

Conversely, producers have certain expectations as to theirinvolvement in carriers’ direct-to-consumer initiatives. Thelargest percentages — 40 percent and 52 percent, respectively, oflife and property and casualty agents selling personal/individuallines; 37 percent of commercial lines agents — say that insurersshould “work with me” and clients to resolve issues during thesales process. In most cases, between 20 percent and 25 percent ofagents across all lines expect that carriers will:

• Manage customer interactions but “keep me informed.”

• Facilitate a servicing or claims/benefits request, but defer tothe agent as the “sole point of contact” (among personal propertyand casualty agents, the figure is 17 percent).

Turning to how producers aim to balance new customer acquisitionand cross-selling initiatives, about half of producers (49 percentof life agents, 53 percent of property and casualty agents) prefera balanced approach to increasing “wallet share” and the number ofclients. One in four or fewer favor “more wallet share and fewercustomers” or “more customers with less wallet share.”

“What’s interesting is that the level of sales focus varies byproduct line,” said Henderson. “On the life insurance side,producers prefer to acquire more customers and let carriers handleservicing, which is understandable given the difficulty in sellingancillary products. But they do want to stay involved in existingrelationships.”

As to those customer connections, more agents are seeking toengage clients and prospects through social media, the researchindicates. The value they attach to social networks — Twitter,Facebook, Instagram and the like — is most pronounced amongproperty and casualty/personal lines agents (5.7 on a 7-pointscale, where 1 is the lowest score and 7 the highest). Amongcommercial lines and life agents, the values are 5.4 and 4.6,respectively.

Often, said Henderson, producers are uncertain as to whichsocial networks to use, and the messaging to convey over each, toachieve sales and client relationship objectives. Insurers thushave a role to play in communicating social media bestpractices.

Factors that producers consider in aligning with a carriersare the types and breadth of product; level of training andservices; ease of doing business; and digital channel support.(Photo: Thinkstock)

From one to many

As the survey’s respondents are mostly independent, one wouldexpect they’re interfacing with more than a single insurer. And,indeed, about 9 in 10 agents across all lines do business with twoor more carriers in some form.

At least 1 in 5 of them:

• Have from two to five “most favored carriers” but can placebusiness with others (25 percent of life agents vs. 20 percent ofproperty and casualty agents).

• Have one or two insurers they favor for each product (21 percentvs. 20 percent).

• Place business with many carriers (19 percent vs. 22percent).

Just 1 in 5 in or fewer agents have a “primary alliance carrier”but can place business with other insurers (from 12 percent to 20percent, depending on the line). And only about 1 in 10 (from 11 to13 percent) have a captive/exclusive relationship with a singleinsurer.

When deciding on insurers to align with, compensation is a keyfactor, but not necessarily the most important. Also considered byagents, said Henderson, are the types and breadth of product andrider options; level of training and services; ease of doingbusiness; and digital channel support.

To what extent are the quality of tools a factor in producers’decision to align with one or another carrier? On average, thesurvey’s respondents rank this factor high on Ernst & Young’sseven-point scale:

• 5.7 among property and casualty/personal lines agents.

• 5.6 among commercial lines agents.

• 5 among life insurance agents.

Especially in need of a revamp are “digital onboarding”(recruitment), digital account management, event management, saleslead and applications tools, said Ernst & Young ExecutiveDirector Melanie Henderson. (Photo: Thinkstock)

Where insurers are falling short

“What's noteworthy here is that the quality of tools is muchlower among life producers than P&C and commercial linesagents,” said Henderson. “Producers are not necessarily unhappywith the tools they have today. But the opportunity is to give themmore — tools that will help make them more productive and easier todo business with you, particularly in the life insurancespace.”

There is an opportunity, too, to assuage agents and brokers thattheir work will be enhanced — and not threatened — by digitalautomation and insurers’ direct-to-consumer sales initiatives.Henderson expressed confidence that agents and brokers willcontinue to play a role in providing customized advice for clientsneeding comprehensive, holistic planning. She noted also that Ernst& Young is developing interactive tools, including online videotutorials, to help facilitate producers’ conversations duringclient engagements.

She added that insurers must offer these and other sales supportfunctions to differentiate themselves and attract and retainindependent producers. Recent Ernst & Young research ondistribution management identified a range of capabilities andresources — customized marketing collateral material; contentmanagement and decision support systems; leads management andcustomer relationship management software; and email and workflowcommunications apps, among other tools — that producers want fromcarriers.

Requiring an overhaul, said Henderson, are digital platformsthat enable smoother operations and servicing of producers.Especially in need of a revamp are “digital onboarding”(recruitment), digital account management, event management, saleslead and applications tools.

“Insurers are now investing substantially in these areas becausethe need for improvement is significant,” said Henderson.“Producers need these tools so they can spend their time moreproductively and efficiently.”