The Future of Insurance Agencies: Embracing Digital Transformation
Stay Ahead of the Curve by Adopting New Technologies and Meeting Changing Customer Expectations
The last three years may have forever changed the future of the insurance industry. Changes that had been taking place in an industry historically slow to adopt technology were forced to accelerate during the unexpected pandemic of 2020.
Consumers, carriers, and agents alike, were forced to think about insurance in an entirely different way, as our needs and wants as a society shifted virtually overnight.
So how are agents and carriers working together to make sure the future is brighter, and better prepared to adopt change moving forward? What does the agency of the future look like?
To survive in this changing industry, agents will need to be willing to learn new things and take steps to implement the changes consumers want to see in all industries across the board. Adopting digital technology tools to meet customer needs will help agencies be more efficient by streamlining processes and broadening their marketing reach.
Independent Agencies and Digital Adoption
In Safeco and Liberty Mutual’s “2022 Agency Growth Study” research report, they examined the adoption of digital technology in independent agencies over the last several years.
In the report, Liberty Mutual, found that the pace of digital adoption in independent agencies rapidly accelerated during the pandemic. They also noted that “According to Salesforce’s 2022 State of the Connected Customer report, 61% of customer interactions with companies in 2022 happened online, compared to 42% in 2019.”
Independent agencies, however, have continued to be slower to adopt digital options for customers compared to their captive and buy-direct counterparts. Some key statistics included in their report include:
- Highly digital agencies grow on average, 70% faster than other agencies.1
- In 2020, low digital adopters grew revenue an average of 7.4% while high digital adopters grew an average of 12% – equating to a more than 60% higher annual growth rate for highly digital agencies.1
- In 2021, highly digital agencies outpaced their less digital counterparts by even more than they did in 2020. Year-over-year, low and medium digital adopters grew revenue an average of 10% while high digital adopters grew 17% – equating to a 70% higher growth rate.1
The pandemic only accelerated this trend, as everyone was sent home into lockdown and forced to adapt to remote work overnight.
In a podcast interview with Tyler Asher, president of independent agent distribution at Liberty Mutual and Safeco, he told Smart Choice:
“There’s a chart that I always visualize – it's ten years of e-commerce sales and the adoption. We covered in two months, the prior ten years of adoption in e-commerce, when we saw people sent home and businesses closed. And while that will abate some, it's also true that customer expectations have shifted.”
–Tyler Asher
Making Things Easier on Consumers Helps Agencies Grow Faster
So how can agents and carriers work together to guide consumers through these changes? One important change we can make is by making the user experience more convenient, more streamlined, and easier to understand.
“For agencies thinking about ‘What's next for me?’ embracing digital, and really understanding what customers want, which is ease-of-use, will be crucial to your strategy. They want the ability to get their needs met on demand, 24/7. They want it to be easy to work with their agency, and really easy to work with their carrier,” said Asher.
But implementing those changes, especially if you’re a smaller retail location, can feel exceptionally challenging from a physical and financial perspective. So how can independent agents meet those expectations, and win in that environment?
The insurance industry is undergoing rapid change and evolution, largely driven by the digital transformation that has been accelerated by the COVID-19 pandemic. Independent agencies must be willing to adopt new digital technologies and tools to meet changing customer expectations, remain competitive, and grow their revenue.
To succeed in the future, agents must be willing to embrace change and continually adapt to the evolving needs and wants of their customers. Ultimately, the agency of the future will be one that is highly digital, customer-focused, and agile in its approach to meeting the demands of an ever-changing industry.
1https://www.agentforthefuture.com/stateofdigital/