Draft for Discussion
February 10, 2012

The agent participants on this work group have had several meetings to discuss how agents see consumers changing five years from now and how we see agencies needing to change as a result. We then drilled down deeper to discuss specifically how we see business prospects and clients changing in the future and how we expect agencies to evolve to accommodate those changes in their business clients. We hope the following draft will give you a good overview of the work group’s discussions to-date and that it will provoke additional ideas and insights from the full work group and overall ACT membership.

After looking at the changes we see coming for consumers, businesses and agencies, the agent participants on the work group sought to identify and define the key attributes independent agencies and brokers will need to possess to be successful in the future. We then identified practical steps agencies could take to achieve those attributes for success. We are releasing an additional discussion draft focusing on these attributes for agency success which we hope once again will provoke additional ideas and insights from the industry. 

I. How We See Consumers Changing

• We need to look at the expectations of consumers just coming on board today—they will be a major segment of consumers five years from now.
• Consumers will communicate with agents based using the method they choose; not the method we choose.
• Consumers want things when they want it.
• Consumers want the freedom to do research and other actions online themselves when they want to and to consult with the agent when they want to. The personal relationship with one person is important. How do agents continue to add value in this new environment?
• Many consumers will still want a relationship, a personal connection, based upon the consultative sale and ongoing advice and counsel when needed. That is the important thing, not the transactions performed or the information provided. All of that is readily available on the Internet.
• Clients want someone who will listen, to whom they can share their story.
• Consumers still want the same level of personal communications from agents, but in ways that are easy and convenient for them—email, text, Skype. They are busy; many want less time across the table.
• Some cultures want to do business more face to face than others, such as Hispanic and Asian cultures. Part of the reason for this may be language barriers.
• Consumers are bombarded with too much choice and information. Many are looking for a trusted advisor—someone who can overcome consumers’ basic distrust of institutions today.

II. How We See Agencies Changing: General

• Over the next 10 years, 50% of current agency workers will have retired.
• We are likely to see very local, more distributed agency offices in the future—convenient to clients—bound together by technology. These “uber-local” offices may have just one individual. Big call centers may be on the way out. Consumers like to have a personal contact they communicate with each time.
• Agency role will evolve to more of the trusted advisor. Processes will need to be sufficiently automated so that agents can focus on their advisory role. Agencies will need to focus on the items on the top of value pyramid—knowledge and wisdom. (Data and information at the lower levels will be less important.)
• The agency that is high touch and high relationship will do well with the changing consumer, as compared to the agency that is primarily transactional (which often occurs when agencies become very large at least with regard to personal and small commercial business). The agency that is high touch/high relationship faces two challenges: (1) the cost of staff and (2) continuing pressure from carriers to provide more and more volume in order to get the best incentives (profit sharing, etc.).
• Agencies continue to form clusters or affiliate with agency aggregators in order to qualify for the top incentives from carriers so that they will have the resources necessary to provide the high touch, high relationships that consumers are seeking. Carriers should consider re-aligning their requirements for top agency status and incentives in light of these trends: (1) increasing consumer expectations for high touch, personal relationships from their agents and (2) the availability of technology that makes it efficient for carriers to do business with smaller agencies. The group felt that overall premium volume should mean less, and steady growth and high touch client relationships should mean more in evaluating agencies.
• We are seeing an increase in the formation of new agencies coming from other distribution systems or breaking off from existing agencies.
• Agencies will need niches—even in personal lines. They need to know what their clients want and target those clients who want the trusted advisor.
• Agencies may need closer relationships with third-party service providers, whom they can refer their clients as necessary.
• Agencies will operate in a more virtual environment, with more flexible employee relationships and more outsourcing of functions to third parties. Backroom may be outsourced to new services that spring up (both domestic and foreign), or employ CSRs located several states away. Many producers are likely to be totally mobile, on the road, able to access the office from their tablets, using the agency office only for its conference facilities.
• Agencies will need better business intelligence tools to manage effectively in this new agency environment, as well as to understand their clients better and anticipate their needs.
• Agencies are likely to have expanding hours and be available on weekends and at night.
• One agent looks at each blog post as a salesperson out there for him.
• Agency strategic planning has become more important today as agencies have more options with regard to how they will operate in the future. How can an agency take advantage of these additional options to gain competitive advantage and focus its attention on what it really needs to do and potentially outsource the rest? How does the agency enhance its sales focus and service focus to gain advantage?
• What are the attributes of the successful agency of the future: leadership skills (managing a business, not just an insurance technician), strategic thinking, anticipatory, agile, knowledgeable, social, know your consumer, good sales skills, people management skills, communications plan (clear brand positioning), efficient processes, financial management and effective business intelligence tools.

III. How We See Business Prospects/Clients Changing

• Businesses are increasingly looking for value-added services from their insurance providers in addition to insurance. They want business partners who will help solve problems by helping them understand and manage their risks and give them more for their insurance dollars. They want information on the loss trends in their industry, how competitors are managing their risks, and developments in the insurance industry.
• Businesses expect their agents to help them with new exposures such as their cyber liability risks and security and privacy risks.
• Businesses are benefiting from those agencies that provide specific value-added services such as loss control, claims, human resources manuals and services, regular newsletters focused on their industry, certificates management, contract reviews, even payroll services.
• Businesses have less time to spend with their agency and are looking for shortened meetings, virtual meetings and other efficient forms of communication from their agent throughout the year.
• Payroll services companies are increasingly offering businesses insurance services, including workers comp, disability income, health insurance—and even liability coverages. These firms are selling the convenience of rolling up the premiums for these coverages into their regular payroll payments. Because of their volume of business, some carriers are willing to write certain risky classes (e.g., roofers) for these payroll companies that they may not be willing to write for their independent agents.
• Businesses are increasingly forming closer relationships with their business partners to mutually support one another in their communities using social media, referrals, etc.
• Business decision-makers are transitioning to new generations and have increasing expectations as to the technology their insurance agents provide. These decision-makers increasingly will not deal with an agency that does not have a clean digital presence and the capability to communicate with them in the mobile world in which they operate.
• Business decision-makers are increasingly diverse and have different expectations from their agents. For example, managers from some ethnic groups work longer hours than has been typically the case with traditional managers.

IV. How We See Agencies Changing to Respond to Business Clients

• Agencies will increasingly assume a consultative role with their business clients and be their solution provider with respect to their insurance and risk management needs. Agencies will provide these value-added services to their clients throughout the year, not just at renewal time.
• Agencies will specialize in particular niches, so they are able to fully understand the exposures and loss experience of particular industries and are able to recount the type of issues others in the industry are experiencing. These agencies will provide industry specific newsletters, websites and blogs to demonstrate the agency’s expertise in the particular industry.
• Agencies will provide specific additional services to attract and retain business clients, such as employee benefits, loss control, claims, human resources, certificates management, contract reviews, payroll service, etc. The challenge for agencies is whether to charge for these additional services, and if they don’t, how their agencies will continue to absorb the costs to provide them, especially as they become more commonly provided by agencies and expected by clients.
• Agencies will do more preparatory work in the office to enable shorter client meetings to accommodate clients’ press for time. In addition, agents will use virtual meetings to reach particularly busy clients and mobile clients.
• Agencies will be even more involved in their communities and civic organizations and find ways to mutually support their business clients using social media, referrals, etc., in order to further the concept of “buying local.”
• Agencies will use available technologies to create newsletters, a professional web presence, blogs, mobile apps, etc. so that their increasingly mobile and tech savvy business clients can communicate with them in the manner and at the time most convenient for them.
• Many agencies will develop a more diverse employee and producer force to be able to reach an increasingly diverse group of business leaders.