Direct to consumer "pseudo" agent portals
Posted by David Gallagher on Fri, Sep 03, 2010 @ 02:06 PM
Earlier this week we had a meeting with a firm that analyses the P&C Insurance market and we discussed the trend (there was some discussion as to the timing of this trend) for Property and Casualty carriers that use an independent broker network to also consider a direct-to-consumer channel to counter the rise of the direct writers such as Progressive and Geiko (to name just a couple.)
These carriers face a big dilemma. A direct to consumer portal, and supporting customer service staff will cannibalize their independent agent channel, and the ill will such an effort would generate may force agents to move business to other carriers, and ultimately severely cripple the carrier and the agent.
They face the challenge – If faced by such threats, how do we behave more like direct carriers in reaching out to customers without alienating independent agents?
Several paths can be taken. One extreme is to move full speed ahead, regardless of the consequences, and develop direct-to-consumer capabilities on line or through call centers. For a carrier that feels its independent agent channel is not performing, or for one with a huge threat from other direct writers this may be the path to choose. The other extreme is to do nothing, maintain the status quo, shut your eyes, and hope the threat does not get worse. This may involve carriers in smaller geographic centers, or with niche products that feel competition will not affect them as directly.
At present I suspect few would choose either of these routes. Instead most will be looking at two tactics.
1) Reinforce their agent integration to create an environment in which their independent agent channel has similar technology tools to the direct writers, and can deal with increased competition, and changing consumer preferences for self-serve, and internet portal use.
2) Develop a direct to consumer portal/call center that meets direct to consumer needs, but is also tied to agents, so that agents continue to maintain customer relationships. For those acting in this manner that use a portal, the direct to consumer capabilities can generate quotes or submissions but involve agents through lead-forwarding or the use of a branded agent web site. In the latter case the consumer uses a portal developed by the carrier, but branded as an agent site. Consumers can access direct services/inquiries, while dealing with a “real-live, local representative”, and benefit from using carrier technology, interacting with local agents.
iter8 can meet either of these scenarios, as iter8 portal and connectivity products were designed to help carriers interact with independent agents, but have been designed so that the interface layer and user interface are so flexible that a direct-to-consumer portals can be created.
So, for iter8, we are “ok” with this trend. But are independent agents? Are carriers who have built up skills to deal directly with agents able to switch gears, and deal with such formidable competitors as Progressive and Geiko? Can both groups handle such change? Do carriers have a sense of urgency to act, or is it “sometime in the future”?
In the “commoditized” product lines such as personal lines auto, this trend is much stronger, and faster than with commercial lines, particularly larger commercial lines, and all carriers that operate in this space should consider the answers, and develop strategies before they are forced too.
And last, I ask why agents and carriers are not openly working on answers, instead of focusing on disagreements, and why are they looking at the trees, not the forest.