May 2013

I am very optimistic about the future prospects for independent insurance agents, despite all of the challenges all of us face. There are many reasons for my optimism, but let me focus on one: Conventional wisdom about agent disintermediation is all wrong.

If you pay attention to some industry pundits — which is always risky — you might think that customers increasingly want to buy insurance policies online. You might come to believe that younger customers really want to transact business online. You could assume that price is the prime motivating factor in insurance purchases. You might even be tempted to conclude that people value insurance agents less.

The trouble with all of that is all of it is wrong!

In just the past year, there have been several large surveys conducted that reveal that this so-called "conventional wisdom" is incorrect. One of these surveys was conducted by Ernst & Young. Another was conducted by Accenture. Another was conducted by PIA, through our company council, the PIA Partnership.

Ernst & Young found that consumers do not want to do all of their insurance shopping online, they care about more than just price and while some customers may research insurance online, many more express a desire for more personal interaction.

Accenture found that in personal lines, more that 76 percent of consumers express a preference for setting up their auto and home insurance policies in person with an agent. Nearly one-third of respondents aged 18 to 24 said they prefer to obtain a quote in person. And more than two-thirds (68 percent) of respondents aged 18 to 24 said they would be willing to pay more for personalized advice when purchasing an auto or home policy.

This means that our next crop of customers coming up is more inclined to do business with us and value what we offer! Add that to the huge number of baby boomers that are approaching retirement age and definitely need advice and counsel regarding their investment strategies, life insurance and retirement benefits.

The PIA Partnership found that price is not the most important factor. What's important is what agents are able to do for customers. From the customer's point of view, what's important to them is that agents deliver value.

So what is driving the misconception that customers do not value agents? Massive advertising by the direct writers. We need to get the truth out person by person, client by client. Warren Buffett can pay to put a billion geckos on our television screens, but a cartoon character or a disembodied voice will never be there after a Hurricane Katrina or a Superstorm Sandy, personally helping insureds put their lives back together.

Customers come to us for the personal relationship, advice and counsel that direct writers and captives are simply not equipped to deliver. We are the real good neighbor, not only at the time of sale but for each and every small challenge or family disaster. That's why when honest surveys are conducted, consumers always vote for the value that agents deliver.

Andrew C. Harris
President
PIA National