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Insurance Agents: Prepare for Direct Buyers to Return

The Hanover says commissioned research found a significant amount of direct buyers of insurance eventually returned to agents. Will that trend hold?

Direct selling of insurance is a fact of life in the digital age. Deloitte reported in its 2013 outlook that both P&C and life carriers rank it among their top priorities, and some agent-based companies, have acquired smaller, direct distributors with an eye toward learning the ropes of that channel -- like American Family did last year.

But despite all those headwinds, The Hanover Insurance Group (Worcester, Mass.) remains committed to the independent agent channel, says Jim Griesing, VP of marketing distribution and sales. In fact, research the company commissioned recently found that direct buyers tend to turn back to agents for more complex policies later in life.

The Hanover commissioned an online survey -- "we felt that given that they're in a direct channel, that's part of the way they communicate and interact," Griesing explained -- of people who had purchased their first insurance policies 10 years ago or more in some kind of direct channel. Sixty percent of the 1,000 surveyed reported that they had switched back to an agent for later insurance policies in the time since they bought their first one.

Griesing says there were two main reasons why customers returned to the agent channel after buying direct (most often for their first auto policies):

  • Having one point of contact to handle insurance needs/questions: "They were often buying multiple policies, and wanted to have a live person guide them thru options and give them advice," Griesing explained.

  • Cost efficiencies: "The two areas that came up often there was the idea of an account credit if you have your home and auto with one carrier or one agency," he says. "The other was consolidating billing onto one statement."

Despite these discoveries, The Hanover knows that it and its agent force will have to adopt to a changing world of customer expectations. Agents have to be ready to handle complex cases that can't be taken care of as easily via phone to a contact center or computer. They also have to show that they understand the digital experience.

"We've digitized all our marketing collateral tools and make it available for our agencies as part of our relationship with them and built it so they can be co-branded," he says. "Agencies having a web presence with strong search engine optimization and strong branding as part of the model is something we encourage.

For agencies and insurers, Griesing concludes, it's about accenting what the web does best and what agents do best.

"We want our agencies to have a strong web presence to allow them to interact for information and transactionally as well -- so consumers can go in and pay their bills online," he says.

"There is often the impetus to start the search and look for more value after a life event" like a marriage, birth or home purchase, he continues. "Independent agents give unique value that the other channels cannot give because they have a relationship with you for years to come. As the consumer takes on more policies and more complexity, we believe independent agencies are the best source."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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