Consumer wants more than digital convenience from insurance agencies
What part have agencies and aggregators played in shaping how consumers perceive insurance?
According to most standard definitions, a product becomes a commodity when consumers aren’t able to differentiate among competing offerings. However, when it comes to the insurance industry, it wouldn’t be a stretch to suggest that the real problem began when insurance agencies started to view clients as commodities.
This prioritization of profit over people on the part of large, corporate insurers has lead to a decline in personalized client care. Building relationships with people takes time and touchpoints. You can automate price comparisons and claims filing, but you can’t automate relationships. You can’t program personal interactions.
Those very important elements require human agents, and human agents reduce profits. That makes aggregators and other transactional technologies a much more profitable way to conduct insurance business. On the flip side, by making the industry more profitable, the industry itself has engineered its own commoditization. It’s a vicious cycle for independent agencies attempting to break out of the mold and offer clients tailored risk management.
The real problem with the commoditization of insurance
It’s impossible to build a loyal client base if your clients can’t distinguish between your offerings and those of your competitors. If an agency’s only differentiator is price, it’s on the fast track to bankruptcy.
Insurance isn’t like fashion or soda or fast cars or any of the products that rank high in brand loyalty. It’s considered by most consumers to be a “necessary evil,” and this perception creates a conundrum for independent agencies. On the one hand, most insurance clients don’t want to deal with their insurance providers until they need to deal with their insurance providers. On the other, insurance clients give the industry low marks for personalization and quality interactions.
In other words, other industries have trained your clients to want more from your even if they don’t really want more from you. So how can forward-thinking independent insurance agencies solve this peculiar problem?
How to de-commoditize your agency’s offerings
If you want clients to perceive your insurance products as more than commodities, offer them more. A 2017 Bain and Company report entitled Customer Behavior and Loyalty in Insurance showed that agencies can build loyalty by expanding their offerings to include an entire ecosystem of support services. According to the report:
Companies that succeed in ecosystem services will be those that redeﬁne their missions. In an ecosystem, automotive insurers don’t just cover motorists when they have an accident, they help prevent crashes from occurring in the ﬁrst place, with telematic sensors that monitor vehicles and motorists.
One way that AgenciesOnline clients have begun to de-commoditize is by supplementing their services with relevant client problem-solving products. Our partnership with the innovative startup BeneTechs empowers independent agencies to more fully support clients when they’re facing their most trying times. From aiding in the aftermath of a security breach to championing caregivers through challenging transitions, BeneTechs is a cost-effective and transformative way to build out your agency’s ecosystem.
Insurance is considered a commodity by most consumers because price seems to be the only thing that distinguishes one insurance product from another. It’s safe to say that the nature of the industry itself allowed this perspective to take root, and it’s in the hands of savvy independent agencies to de-commoditize insurance.