FEATURE: Is Your Agency Refocusing to be Responsive to the Insurance Industry of Tomorrow?

Is Your Agency Refocusing to be Responsive to the Insurance Industry of Tomorrow?The insurance industry as we know it will look a lot different in the future- at least that's what many new and not-so-new entrants are hoping for as they revolutionize the sector. From the leveraging of big data by aggregators and tech companies, to peer-to-peer property/casualty insurer Lemonade and how insurance policies are being sold and purchased, to the road to autonomous cars and the impact it will have on auto insurance, these and other changes are making the business-as-usual approach obsolete. How well agents and brokers fare in the future will depend on the strategies they employ today to continue to maintain and strengthen their foothold in the insurance distribution system.

Source: Featuring Dan Epstein, CEO, ResourcePro | Published on February 24, 2016

We spoke with Dan Epstein, CEO of ResourcePro, about the changes taking place in our industry and howDan Epstein, ResourcePro he sees agents and brokers refocusing their business to be more responsive to these changes. Headquartered in New York, ResourcePro delivers insurance industry tools, technology and strategic services for profitable growth through operations excellence to agencies, brokerages, MGAs, and carriers. 

"We are beginning to see a number of trends pick up pace in our industry and, while some of them are still in the early stages, these trends portend how the insurance sector may look in the future," notes Dan. "For example, we have moved from paper to imaging processing to digital data in order to make straight-through processing more efficient. Digital data has also allowed us to track activity, which has become big data and given us a better understanding of the type of risks we write and the kind of performance those risks have. At the same time, there is a higher set of expectations from users regarding the customer experience, service levels and responsiveness. Companies like Amazon have shown us how big data can be used to provide a customer experience that is simple, user friendly and intuitive. Apply this to the insurance industry, and you see that when individuals call an agent or broker for information on their accounts, they will want the information immediately accessible and they will expect it to be correct. Ideally, they will also want it in the form of an app - where they can see and manage their account in real time without the need for someone to get involved. But, they also want a complex reality simplified for them, and I think that's a role an agent can play. Having trusted advisors sort through an abundance of information and guide you will still be a differentiator."

Indeed insurance vendors and carriers are developing new capabilities. "Everybody sees the shift to digital and the importance of data," says Dan. "Agency management systems are looking for partners, affinity groups to understand and evolve their capabilities in such a way that will be congruent with that digital environment. But, there are also others outside the industry entering the insurance space with offerings that look more like Amazon. You have Overstock.com, CoverHound and other comparison-providers for auto insurance, homeowners and even small commercial lines. The question is who will be in the ascendency, or put differently, who will dominate management of the data.  The system vendors have a part to play given their role in the distribution channels. But they will be competing with other service providers, carriers and agents and brokers themselves.  I don't think there is any kind of protective position for anyone.

"You also have tech companies looking for opportunities where they can leverage their expertise around data management and data analysis in order toDan Epstein on changes in insurance change how risks are perceived, how risks are quantified, valued and managed. As machines get smarter and do more of the work that people do, what will that mean? How do you build an efficient organization focused on taking care of clients?

Another set of challenges that Dan believes is much more profound revolves around the role insurance will play in the future. "In January, Volvo announced that its mission by 2020 is that there will be no serious injuries or fatalities in a Volvo sedan or SUV when driven in autonomous mode. Moreover, if you are driving your Volvo in autonomous mode and you get into an accident, Volvo will assume the liability," explains Dan. "Think about the significance of this. Volvo is saying you don't need to rely on your insurance policy if you're in an accident when driving its car in autonomous mode. Volvo will insure or reinsure the liability - it has that level of confidence in the safety of its car.

"This I believe is a canary in a coal mine with regard to many different areas of insurance. In the same way auto companies will get into the insurance business, imagine ADT or any other company focused on home monitoring also stepping into the home insurance space. These companies can go from providing a homeowner with a coverage policy in the event of a loss, to offering a subscription service whereby a home is being monitored in real time for owners to receive early warning alerts on pipes, wiring or in the event of a burglary, to help pre-empt the impact of a loss. Potentially, some of these companies can assume the liability for home property losses if you use their system and services."

Control over data will be critical as tech companies, auto manufacturers, aggregators, insurance carriers, agents, and others all jockey for position.

All of this is disruptive for the insurance industry, but Dan underscores that what agents have on their side is trust and relationships with their clients. "What is unclear is the extent to which a big tech company or automobile manufacturer will be trusted to represent the insurance needs or the risk needs of their clients as compared to insurance agents," says Dan. "Presently agents have the advantageous relationship, but they have to protect and build upon it if they are to secure a longer-term role in the mix."

Create Capacity for Innovation, Change

When asked how insurance agents and brokers secure their role in this now fast-changing environment, Dan emphasizes the need to continuouslylooking to insurance future improve the quality of their service, to understand the customer experience and how customer expectations are changing. "If you want to be in this business in the next 10 to 15 years, you need to understand where the business is heading, what role you will play for your clients...and that this role is going to change.

"Our view is that focusing on some of these more strategic issues and preparing for how insurance is going to be different in the future requires a lot of thoughtfulness and analysis. You need to establish a coherent business strategy aligned with your customer wants, needs and expectations. Once you have a clear business strategy, you must align your business processes to that strategy and make continuous improvements on how you deliver.

"But to get started in making those strategic changes, you need to create capacity, which most organizations are not equipped to undertake.  Their people are stretched too thin in terms of the work they're already performing, the competitive environment under which they work, and the need to keep up with increasing processing demands of carriers and regulators. But this can change.

"We know, for example, that 30% to 40% of people's time in an agency is spent on routine servicing, redundant activity and wasteful processing. By following the 4 S's: Segmentation (of accounts into different service levels), Streamlining workflows (triaging processes and eliminating redundant or error-prone steps), Standardizing (ad hoc tasks and procedures) and Sourcing (the right work to the right person), significant opportunity for capturing new capacity can be accessed. The time you save can be applied to writing more business more profitably, so that you have the resources to invest in digital channels, innovative services, customer intimacy and business agility. 

"Think of all the activities agency individuals are engaged in right now - from checking policies, marketing to several carriers, obtaining quotes, andsegmenting business putting together proposals, etc. If this work becomes dramatically streamlined and performed on a straight-through basis, the role of individuals in an agency can be more of a curator - solving and pulling together different solutions for complex risks. Again, the advantage for agents is that they have the relationship and the trust with their clients, figuring out how to enhance that relationship is key to their future."

Forward-thinking agencies and brokers are already generating the efficiencies necessary in their operations to refocus their resources on responding to the changes taking place in the insurance industry. Where do you fit in?

For more information about ResourcePro, please visit their website at www.resourcepro.com. You can also contact Dan at 212.297.3114 or via email at dan@resourcepro.com