Independent insurance agencies are increasingly adopting digital technology to improve customers’ sales and service experience. However, they still have much room for improvement, and they are not as prepared as they should be for growing cybersecurity threats. These were the major takeaways from a recent survey by the Insurance Digital Revolution, an initiative to encourage independent agencies to adopt digital technologies.
The second Insurance Digital Transformation Survey gathered responses from almost 2,000 independent agencies during the winter of 2018, two years after the original study. Most of the agencies (61%) have one location, and 93% have fewer than six.
The results showed dramatic changes in agencies’ views about digital technology. While 58% of agencies viewed digital as important or very important in 2016, that number jumped to 95% in 2018. Roughly half had advanced or highly advanced technologies in place to improve internal efficiency, and 87% expected to make incremental or significant investments in 2018.
Agencies have invested heavily in technology to enhance efficiency. Almost half are using claims download to monitor claims and provide customer support. More than half are using cloud-based versions of their agency management systems, rather than installing the software on their own servers. One-third have upgraded their management systems in the last year, an astonishing figure given the challenges system upgrades normally present.
Most agencies seem pleased with the results of their investments, with 79% reporting that software such as eDocs and Messages have improved their internal efficiencies.
The emphasis on operational efficiency is beginning to shift toward a focus on improving the customer experience, however. In 2016 slightly more than half of agencies offered e-signature capabilities; in 2018 two-thirds of them did. The percentage of agencies offering web quoting more than doubled, from 20% to 41%. Three-quarters of agencies are using social media tools such as Facebook and LinkedIn, and 39% get sales leads that way.
Still, agencies can do more. Only 7% believe their own websites are excellent, and 76% do not provide any mobile applications for their customers’ or prospects’ use. This despite the well-known popularity of self-service applications in banking and other financial services.
Much of the room for improvement is in the customer service area. The number of agencies offering customer portals on their websites grew substantially but remains at only 39%. Only 19% offer portals where customers can access their claims information. Fewer than one in five offer 24 by 7 customer service, and only 7% have live chat capabilities on their sites. These are all features consumers have come to expect from other industries.
Cybersecurity issues are a dark cloud on agencies’ horizons. They know it’s a problem; 62% are concerned or very concerned about it. However, half do not have a good understanding of the threats or what they should do about them. Almost 20 years after enactment of the Gramm-Leach-Bliley Act, which requires financial services firms to have written information security plans, only 37% of agencies have them. Only 10% feel their cybersecurity protection is excellent, and just 45% rate it as good. A little over one-third conduct annual cybersecurity training for their employees.
The survey results show that agencies take seriously the need to adopt current technologies. They know that they cannot compete without them. Indeed, the increasing emphasis on improving point of sale and service experiences demonstrates this recognition.
However, they still have a long way to go before they will achieve true ease of doing business. Today’s consumers expect to be able to do business on their smartphones. Agencies who fail to offer mobile capabilities will eventually fall behind their competitors. The lack of self-service tools on agency websites will frustrate consumers accustomed to doing business at all hours of the day. Finally, disaster awaits agencies who do not take serious steps to address cybersecurity. Lawsuits, fines and penalties are just some of the forms of pain these agencies will feel.
Digital technology is likely to grow in importance over the next few years. Smart, strategic investments in those technologies should pay handsome rewards to agencies.
Looking to start an Agency? Get detailed information by reading our Guide to Starting an Insurance Agency