P&C: Agents of Change?

By on March 11th, 2013

negotiation timeThere nearly 1 million insurance agents and brokers employed in the U.S. and you would think that they would be fiercely competitive with each other. You’d be wrong.  In fact, more and more, agencies are merging, consolidating and forming agency networks to compete with the real enemy – Direct Writers. Many large carriers with captive agency forces or who sell insurance directly online or over the phone, “Direct Writers,” spend as much as $200 to $700 million per year on advertising, particularly in the home and auto insurance market. According to estimates from Independent Insurance Agents & Brokers of America and A.M. Best Co. direct writers dominated the overall personal lines market in 2010 writing over 53 percent of total premium. Independent agents are fighting back and asserting their value to insurance customers.

“Personal touch is what will keep independent agents alive in the future,” says Christopher Misterka, Marketing Coordinator with the Kaplansky Insurance Agency which has offices in 11 locations and has experienced 13% growth in each of the past 2 years. Misterka says that client correspondence used to be primarily letters but, “now it’s primarily email, social media and a monthly online newsletter that offers customer education on timely issues like potential tax scams during tax season.” While Kaplansky has moved most of their personal lines marketing online due to the size of the household audience they want to reach, they continue to prospect for commercial clients using direct mail. To keep content fresh and campaigns timely, Misterka engaged an insurance specialty organization called Agency Revolution with professional writers, an existing library of content and a digital marketing platform that enables quick generation of marketing campaigns.

Angelyn Treutel, President of SouthGroup Insurance agrees that providing educational content is critical in positioning an agency well with customers and that consistency of communication with the customer builds trust. Her organization leverages the Trusted Choice solution available through the IA&B however; their direct marketing is all managed in-house. “We use a multi-channel, multi-touch approach recognizing that it may take 2 or 3 or 4 touches before a customer takes action,” says Treutel. “We need multi-channel because different customers are in all different places,” relative to their acceptance of online versus print communications. SouthGroup has had particular success with personalized direct mail that includes pictures of agents as part of the mailing. Personalization, careful segmentation of campaigns and ensuring that the customer never gets the exact same message twice are important in crafting an effective campaign according to Treutel.

Differentiation between segments of the P&C business such as commercial versus personal lines is one simple method, but many agencies are looking deeper at markets, customers and the communication preferences of individuals. For example, the High-Net-Worth Personal Lines market is more often served by independent agents than direct writers as the agencies give affluent customers the specialized services they have come to expect. In this market, agencies can create campaigns to educate customers on the superior products, pricing, loss prevention services and risk management services that are available through carriers that specialize in the HNW market versus more generic solutions from direct writers. Since many HNW clients are also business owners or senior executives, there are great opportunities to cross sell HNW personal lines insurance to commercial clients and vice versa. Independent agents currently sell the lion’s share of premium in the commercial market and can strengthen that position by building trusted personal relationships with business owners and managers.

Creating innovative communications has historically not been a core competency of insurance agencies but most recognize that this needs to change. As the demand for more effective and consistent customer touches continues to grow, agencies are looking for partners to help them execute regular, cost effective communications programs with their customers. If you are a service provider with a truly robust multi-channel offer and the strategic services to become an agent of change in the P&C industry – opportunities abound. If your offering is not quite as developed, don’t despair, there are still opportunities to pursue business from the “Agency Agencies” that are primarily focused on providing marketing content and digital distribution, but typically outsource printing and mailing services. As agencies cooperate and grow larger, the opportunities to serve them grow larger as well.

Elizabeth GoodingElizabeth Gooding is the President of Gooding Communications Group and editor of the Insight Forums blog. She writes and speaks and provides training on trends and opportunities for business communications professionals within regulated vertical industries.

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3 Responses to “P&C: Agents of Change?”

  1. Jodie MacLellan Says:

    Elizabeth – thanks for the industry insights. I wanted to mention that Angelyn Truetel (quoted in your post) is also going to be presenting her perspectives on agency marketing during an upcoming webinar hosted by the Canon PressGo! program on March 19 from 2:00 to 2:30. The topic is “Insurance Pays: Uncovering the Print Opportunity” and will feature another contributor to TheDigitalNirvana, Richard Losch who will be presenting the insurance carrier perspective. I hope you can join us.
    You can register from this link.
    http://tinyurl.com/cd55kgx

  2. Scott Bannor Says:

    Elizabeth: Another great article! I think sometimes we lose site of the importance of effective communications. It’s important to keep this front & center – especially regarding operations (like insurance agencies) that seem a bit obscure.

    I’m wondering if anyone out there remembers anything about the use of Vydec word processing systems (I know this dates me) by State Farm agents way back when.

  3. Elizabeth Gooding Says:

    Thanks Scott. I had to look Vydec up on http://www.computinghistory.org but they have the whole spec sheet listed there for you if you want to reminisce about the ’80′s.

    Insurance agencies may have been obscure in the past but they are a force to be reckoned with now. The top 10 US agencies each sold between $800 million and $9 Billion in premium. Even smaller agencies are joining networks to gain clout and generate economies with their communications. And they don’t use Vydec anymore! Maybe that was the first step…