Industry reps slam claim that agencies are going extinct

Industry reps slam claim that agencies are going extinct

Industry reps slam claim that agencies are going extinct Insurance industry representatives say concerns over Google’s presence in the market are ill-founded, particularly as they relate to the threat Google and other alternate distribution channels represent to independent agents.

“The reality is this isn’t anything new,” said John Tiene, CEO of the Agency Network Exchange. “What we’re seeing on the front lines as a network of independent agents is that yes, people are using the Internet as a tool to become better educated, but we’re not seeing this flight to the direct market.”

Tiene is responding to a Sunday New York Times piece suggesting insurance agents are “one more [job] threatened by the Internet.” The article referenced the recent entrance of Google into the auto insurance market, as well as ventures from Walmart and Overstock.com.

“There are 40,000 agencies in the US, and you could absolutely imagine them shrinking by a quarter, and the ones that are left will deal with more complicated needs and more affluent customers,” Ellen Carney, an insurance analyst with Forrester Research, told the Times.

Tap deeper into the insurance industry, though, and a different sentiment prevails.

Brian S. Cohen, operating partner at Altamont Capital Partners, points out a statistic commonly used in defense of the independent channel—that while 70% of insurance shoppers begin their research on the web, the vast majority still end up in front of an agent.

“I know these comparison shopping sites seem to be all the rage, but if you look at their production—the number of policies they’re actually issuing—it’s miniscule,” Cohen said. “What’s happening is that individuals are visiting these sites to get a sense of a reasonable price, but they still want to go to a professional to figure out what’s best for them.”

Demographics also play a large role in determining who buys online and who visits an independent agent. While the accepted narrative is that young people are more accustomed to submitting vast amounts of personal information and making purchasing decisions online, Tiene points out that as consumers age, their shopping preferences shift.

“As people mature, they have a different set of concerns and issues to deal with,” he said. “Because they now have a house as well as a car, and children with risks of their own, we find they move back to the independent channel.

“The internet can only take you so far.”
 
 
3 Comments
  • Laura 1/21/2015 11:37:09 AM
    When the ACA was first signed into law, I thought that perhaps it was going to be such a concise and easy shopping experience that the independent broker would eventually disappear. But, as time went on, I could see that this was far from the truth. My customers want the guidance from someone they trust. If there are fewer experienced brokers in the industry, that's because of the cut in commissions.
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  • Tammi 1/21/2015 12:38:26 PM
    I agree with Laura. Buying online was going to be the next greatest thing, but it is not. People want a face they know and trust to help in times of crisis/need or just the same friendly voice to help them with a change. Yes the companies need to stop cutting our commissions since we do much more work and spend more on resources ie:sending policies online so we have to print a copy, quoting almost everything online ourselves. There will always be a need for agencies, agents and CSR's.
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  • William Castro 1/22/2015 1:48:37 PM
    I agreed with Laura and Tammi.
    Younger customers want inmediate results and inexpensive but as the time passes they inevitably end up in from of an agent/broker and bring their policies for review.
    What I have noted is that specially the Automobile policies are in some instancess inexpensive
    My experience
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