The Evolution and Maturity of Digital Agencies in a Changing Insurance Landscape

By Katherine Jones
Communications Manager, Coterie

The insurance industry is changing and adapting to the modern age. Insurance agencies are embracing digitalization and morphing into digital insurance agencies.

As with other companies taking advantage of modern innovations, digital agencies are continually evolving and maturing, particularly as they respond to new trends and changing markets.

How does technology support the ongoing transformation of digital agencies, and how can you continue to nurture your agency’s evolution?

The industry, market, and technology support a shift toward digital agencies

Many insurance agencies were already transitioning to a more digital-centric mindset pre-2020, and the COVID-19 pandemic only emphasized the importance. Consumers and employees alike are coming to accept and expect the modern conveniences, ease, and accessibility afforded by digitalization as society reacts to the post-pandemic world.

It’s now the perfect time for those agencies that haven’t fully evolved or matured into digital agencies to put a strategy together for doing so.

The Applied Digital Agency Annual Report, which concluded just before the pandemic, found that 88 percent of U.S. insurance agencies recognized the importance of developing a digital strategy within the next five years.

Those that had already embraced digitalization included:

• 91 percent of large agencies ($25M+ in revenue)
• 68 percent of medium to large agencies ($10M to $25M in revenue)
• 49 percent of small agencies (less than $1.25M in revenue)

If anything, the pandemic only highlighted the necessity to build a digital agency.

Fortunately, technology is in the right place to support the evolution and maturation of digital agencies. The cloud, analytics tools, and partnerships with insurtechs allow agencies to leverage APIs to introduce automation, self-service, and improved connectivity.

By implementing such technologies, digital agencies may more easily respond to the market’s needs and expectations.

Digital agencies evolve by recognizing the value of technology

Digital agencies may evolve and mature by recognizing the values and benefits of doing so. According to McKinsey, digitalization impacts:

• Strategy
• Customer focus
• Business operations
• Organization
• Technology
• Analytics and decision-making

Adherence to a traditional strategy fails to account for rapid changes in the insurance industry. In contrast, adopting a digital strategy allows agencies to evolve alongside the industry as it changes, without requiring detrimental lead times.

This is evident in the modern ways customers engage with insurance companies. Customers expect the ability to interact with digital agencies online, connect with agencies how they see fit and have self-service functionality to access and manage their policies.

Through partnerships, APIs, and other tech innovations, digital agencies are well-positioned to respond to and alleviate their customers’ pain points, improving the experience at every step of the way.

For example, a contractor may purchase and bind a policy from a digital agency within a matter of minutes. From there, he or she may have instant access to policy documents, such as a certificate of insurance, to satisfy a client’s requirements and begin work instantly.

Digital agencies may also reduce operating costs. Automating certain processes and adopting digital underwriting may reduce operating expenses and improve employee efficiency.

Not only do digital agencies have access to heaps more data and information than their traditional counterparts, but they also possess the tools needed to analyze that data. From there, employees are empowered to make better-informed judgments and decisions, supported by the insights generated by digital tools.

As a result, it’s possible to reduce the likelihood the agency takes on customers outside their risk appetite or who are otherwise not a good fit.

Digital agencies mature by remaining flexible

Digital agencies are positioned to take advantage of industry trends as a catalyst for growth. They also have better standing to respond to the actions of competitors, providing the opportunity to maintain their market share.

Investors are attracted to digital agencies, providing a means through which digital agencies may consistently and exponentially grow. Digital agencies are also capable of responding immediately to customers’ needs, teaming up with vendors, retailers, and other companies to offer insurance to customers at the same time they purchase another product or service.

According to McKinsey, digital agency marketing teams may more resemble that of a retailer than a typical insurance company. That means sales and marketing teams are expected to cover a wider swathe of skills, including:

• Performance marketing
• UX design
• Conversion optimization
• Hyper-personalization

For example, marketing teams may hire data scientists to analyze customer data and develop personalized approaches for marketing products. This may include being receptive to changing trends in the insurance landscape, such as the need for customers to insure against business interruptions during a pandemic or ensure adequate coverage as a business transitions to a work-from-home setup.

Digital agencies may easily facilitate the collection of behavioral data through customers’ usage of smart devices, apps, and other APIs easily integrated into and deployed by the agency.

By improving flexibility, digital agencies may increase pricing accuracy and protect agency profitability.

Digital agencies improve the experiences of customers and employees

Agent for the Future’s 2020 Rise of the Digital Insurance Agency report found that digital agencies prioritized:

• Educating customers about new ways to work with the agency
• Growing an online marketing presence
• Expanding the team
• Connecting virtually with its community
• Implementing and improving digital tools and systems

Embracing these priorities allow digital agencies to improve the experiences of customers and employees.

Consider the impact something as simple as an online quoting tool may have on a market. Leads travel through the sales funnel at their convenience, then convert to customers on their own time, without requiring the guidance or one-on-one support of an agent.

In other words, customers may purchase insurance without engaging in a time-consuming phone call or scheduling an appointment days or weeks down the line. They’re empowered to purchase a policy that begins providing coverage as early as they require.

At the same time, agents may follow up to offer personalized guidance or assistance. In other situations, support may be offered through a partnership with a carrier or live chat with an AI chatbot.

Self-service may be encouraged and supported via an on-demand portal. By allowing customers to freely access and manage their policy and documents, customer service staff can focus on other concerns and issues, including fulfillment of a more “support”-type role.

The savings generated by implementing digital initiatives may be reinvested into other areas of the agency. According to the Rise of the Digital Insurance Agency report, high digital adopter agencies invested more in hiring, digital capabilities, marketing, and generating leads than low digital adopters.

The result is an enhanced customer and employee experience and increased agency growth.

Develop a strategy that encourages your digital agency to evolve and mature

Your agency can’t be expected to evolve overnight. Additionally, it’s not a process free from growing pains, mistakes, or mishaps.

What can be done to guide your agency through to continued maturity is to come up with a plan and set of goals. Start by understanding how far along your agency has digitized its systems, processes, and ecosystem.

Work with partners like Coterie to implement, trial, and deploy APIs, tools, and processes that create value, enhance your agency’s flexibility, and improve the customer and employee experiences. At each step of the way, assess where your agency lacks digitalization and identify what, if any, solutions are available to encourage further evolution.

Over time, continue to iterate and build upon successes, and use failures as learning experiences from which your agency may continue to mature.