by Maxwell Schmitz
Online quotes, responsive pre-screen, drop-ticket applications, express underwriting, e-delivery. As a millennial, it's music to my ears as we aggressively retrofit our operations to a cloud-based business. It's a lot of change in just a little time and the wind is at our back. However, the accumulation of differences are scaring some of our key partners and, briefly, I thought I miscalculated our flight pattern.
I was recently asked the following, “If every process—info, quote, and app—is online, why would a carrier need to pay a GA, let alone an agent?” I have to admit I was completely caught off-guard and was going to write a quick reply about how you can easily bypass our modern systems and keep doing things the old way, but the question was so provocative that I typed out the following in one sitting:
1) This is certainly not limited to the insurance world, but far too many people are attached to their job instead of their goal, which is to create value for their company and/or customer. Concern over our existing role cannot eclipse the concern to create value for our clients: the check-writers. Commodification lives in the transactional approach. So, unless your excitement for spreadsheet comparison and paper pushing is greater than your enthusiasm for meaningful consultation and furthering our industry, you're totally safe. But if we let our complacency dictate the future then we are pouring sugar in our growth engine. Every year (or month!) we wait, we exponentially lose the opportunity to compete in the next wave. If we don't start putting the check-writer's needs first, then the opportunity for the future will pass us by.
2) You’re right—there's a significant chance that carriers will go direct-to-consumer and cut out the agent and GA. Again, that's a good thing for the consumer IF they know what carrier they want to buy from. Why would they need a GA in that instance? However, that's not how complex markets work. Rarely do people pick a company without at least shopping a few others (unless they are enamored with a particular marketing strategy). Brokers, in theory, are independent evaluators who make recommendations for solutions based on product/market fit. There is no one-size-fits-all solution. I'll repeat that again. There is no one-size-fits-all solution for insurance. But most people don't want to shop 12 different options. A broker is tasked with filtering all that information and presenting the best solution for that client. Most brokers are generalists and provide multiple lines of coverage. A GA is just a specialized broker who has earned a greater compensation agreement with the carriers. The generalist comes to the specialist if they are serious about providing value for their client.
3) The bogeyman is already out there. Carrier A may be an outlier that relies on wholesale distribution, but we also sell a lot of Carrier B and they have captive agencies across the country. We also sell Carrier C; they are direct-to-consumer, too. Don't buy into the fear about the trend toward digital DI because carriers are already going D2C in other ways. And yes, I concede it's mildly annoying for specialists like us to run into competition with an amateur DI salesperson at Carrier C, but I invite those conversations! It's usually an opportunity to expose their blind-spots and double-down on our expertise in this field. Imagine if you had the chance to sell against a one-size-fits-all algorithm! Digital D2C is not stopping anyone because most carriers already have a direct-to-consumer approach.
4) Finally, as we lean more and more into an efficient digital marketplace, overhead comes down and we can cut pricing on products (look at term life as an example), which increases the chance of wider adoption (term is doing this as we speak). In other words, if we can make DI as efficient as possible, leading to less administrative waste, cutting the cost of doing business, allowing for lower pricing or greater risk, then the client wins with either greater access or greater affordability--or both!
Does all this mean that our business model will look different? Almost 100% certain that will be the case. The old way of doing things usually doesn't last beyond one generation, and here we've had two or three in the DI space. Change is long overdue and we are actually in a better position if we drive it forward instead of inhibiting it within our own walls. The industry is evolving whether we like it or not; we don't intend to be left behind.