Over the last year, Sounding Line critiqued carrier, association, and agency Web sites, reviewed vendor Internet-based software and information services, discussed technical and management issues relating to the creation and maintenance of successful agency Web sites, reviewed tools and content sources for Web sites, looked at Web marketing, sales, and service strategies, analyzed industry issues, offered advice, and so on.
We covered a great deal of ground, but we still have a long way to go. Before rushing along with the next chapter in a fascinating and frustrating story, it makes sense to pause, look around, and get our bearings. What follows is an informed, though idiosyncratic, view of the key Internet related issues facing independent property and casualty agents. Sounding Line has a single focus — increasing the success of independent agents through the appropriate use of the Internet and related technology. The purpose of Sounding Line is not to promote trade groups, associations, user groups, carriers, or vendors, except to the extent we believe they truly benefit independent agents relative to the Internet. In the paragraphs below, we criticize the inadequacies or recognize the limitations of one group or another. We’re not trying to pick on anyone. We want independent agents to realize their Internet potential.
The key concept
From a technology point of view, the Internet has enormous potential to strengthen or to weaken the independent agency distribution system. Neither outcome is certain. And at this point, it’s not obvious which tendency will prevail, though observations over the last year suggest that unless some patterns change fairly quickly, the Internet will substantially reduce the importance and economic viability of independent agents over the next ten years. Independent agents and their carrier partners can use the Internet to create a “golden age.” Or, they can miss the opportunity and watch others, who are more creative and more energetic, carry off a substantial share of the market.
Twenty years ago, prophets predicted that agents had to automate or they would lose out to their more progressive and efficient competitors. Perhaps the pattern of mergers and acquisitions that’s resulted in a smaller number of larger agencies is in part confirmation of those predictions.
Today the situation is both more promising and more troubling. For the most part, agency automation has been directed at increasing agency efficiency, not at changing the nature of insurance distribution. The Internet, on the other hand, has an as yet unrealized potential to change insurance distribution entirely, and, along the way, take independent agents out of the picture or at least minimize their importance. It’s true that the first attempts at disintermediation were clumsy and unsuccessful, but the second wave won’t be. Independent agents have an opportunity to preempt disintermediation by adopting and perfecting Internet methods that could be used against their challengers before they regroup and create more successful strategies.
We believe sound Internet strategies are not an option for agencies, but are a critical part of their business plans. Agencies that embrace the Internet will succeed. Agents who don’t will struggle and fade.
Out-facing services revolution;
in-facing services evolution
There are two important ways agencies can use the Internet to their advantage. They can use in-facing Web-based services; that is, those that serve the employees of the agency. And they can offer out-facing services to their customers and prospects; that is, Web-based marketing, sales, and service functions.
Today, agents seem more inclined to use in-facing services than offer out-facing services. That’s easy to understand. In-facing services are mostly a repackaging of what they’re already used to. But in-facing services have only limited impact on agencies. Like classic agency automation, they’re aimed at improving efficiency. Out-facing services, on the other hand, are where industry outsiders will challenge the status quo. Out-facing services are an element of the self-service revolution that characterized the last century. Out-facing services acknowledge and attempt to leverage the change from a seller’s market to a buyer’s market, a sea change of the last decade or so.
Out-facing services
Agents can use their Web sites to market their agency and services, sell policies and other products, and provide self-service to their customers. Agents can also use e-mail and other push functions to market, sell, and service. But to what extent do agents take advantage of out-facing services? Not much and not very well.
A year-long look at more than 2,000 agency Web sites revealed some patterns and they’re not encouraging. More than 90% of agency Web sites are nothing more than brochure sites, and most are poorly done from a technical and design perspective. Too many reflect the vanity of the owner or Webmaster rather than the interests of the visitors. Many sites overuse graphics, load slowly, and feature under construction dead ends and broken links. Copy is poorly written, replete with spelling and grammatical errors. E-mail links haven’t been maintained. In general, many sites appear neglected and ignored. Furthermore, it’s often difficult or impossible to find most sites through popular search engines or in ways the public would likely use. One has to wonder, what’s the point?
And that’s just what most agents probably feel. What’s the point in having a Web site? It’s just one more expense and something else to have to deal with. It’s a check-off item, but not really integrated into the business life of the agency. If agency Web sites are conceived of only as a way to present an electronic brochure, then we have to agree. They don’t warrant much effort.
Getting only as far as a brochure site is a clear case of Internet under achievement. Sounding Line has described in some detail how agency Web sites can do much more to support effective marketing, sales, and self-service efforts. A few agencies, sometimes small ones with limited resources, actually do provide rich, out-facing services. It’s not mysterious and it’s not expensive. Why so few takers?
Most agents simply don’t believe the Internet is worth the effort. They’re doing OK without it. Even though surveys provide strong evidence consumers seek out-facing services in insurance as they have with other financial services, agency customers, for the most part, aren’t vociferously demanding it. Compelling success stories are few and far between. And perhaps most importantly, leadership in the independent agency community is vague or tepid about the importance and value of out-facing services. Agents have been told to have Web sites and broadband connection to the Internet, but beyond that, they’re on their own.
Opportunity isn’t the only casualty of Web inaction. Agents risk being disintermediated by their business partner carriers. Even without a recurrence of challenges from outside the industry, agents are at risk. More and more carriers are providing the marketing, sales, and service functionality agents should be hosting. These carriers claim not to intend agent disintermediation, but in the face of agent passivity, they feel they need to act. Carriers are compelled to provide what agents don’t seem to want to bother with in order to compete successfully and to reduce expenses.
In-facing services
Though agents seem to be adopting and using in-facing services with more enthusiasm than out-facing services, the very success of in-facing services is already beginning to cause serious operational problems for agencies. Every in-facing service, whether provided by a carrier, vendor, or some other party is separate from every other service and from the agency’s core automation, its management system. Even when upload, download, and sideload are supported, the agency must learn and deal with an increasingly fragmented environment.
A chaos of signon/password procedures, screen layouts, work flows, and other service-to-service differences threaten to reverse the accomplishments of the last ten years in bringing standardization to agency workflow through the central position of the management system.
Further, agents want and need to take advantage of non-P&C business opportunities, in life and health, benefits, and even general business services. In-facing services are there to help them, but because they’re not integrated, they actually create even more strain on agency staff.
Who’s helping; who isn’t
It seems to me that agents and their customers can receive great benefit from out-facing services. Further-more, if out-facing services aren’t adopted, agents risk terminal disintermediation from their own carriers and outside industry challengers. In-facing services can be extremely useful, but the fragmented way they’re proliferating today has the potential to swamp agencies in operational chaos.
Promise and problems, success and survival are factors in today’s Internet picture. One would expect agents and their business partners and advocates to undertake a conscious analysis of the scene and move in the direction of a positive outcome, but that doesn’t seem to be happening. What appears more likely is that the Internet opportunity will be squandered. Why?
A small number of agents have done and will do their own research and move aggressively to take advantage of the Internet. But on their own, they don’t have the influence to cause vendors or carriers to support integration of Web services. And most agents are too busy or preoccupied with other concerns to focus much attention on the Internet. Agents need advocacy that supports their group interests. Agents need an Internet-enabled vision of the future and the motivation to aim at it. Advocacy, vision, motivation — all important, but in short supply today.
The organizations cited below could provide advocacy, vision, and motivation, but for the most part don’t. Agents won’t come to understand either the promise or threat of the Internet without leadership. Futhermore, they can’t accomplish needed common action on their own. The industry lacks a shared vision of the role emerging technology, especially the Internet, can play in their future. It lacks a shared vision because the groups that could create and popularize one aren’t. Consequently, carriers don’t have something they can aim at and cooperate with. And without an organizing vision for the future, agents hang on to the old, and increasingly, inappropriate vision created 20 years ago. The lack of vision and leadership means Internet potential won’t be realized and agents will become increasingly at risk. This is serious stuff, folks.
IIAA: One would expect the Big I to play a major role in the evolution of the industry into the Internet future. The Big I did a great deal in the past to help agents understand and undertake agency automation and was a tireless supporter of SEMCI, standards, and the concept of carrier/agency integration. Five years ago, the association was aggressive about bringing agents to the Internet by sponsoring agency site building and hosting and fielding an agency locator. Unfortunately, Big I efforts, except through ACT, have declined over the last few years. The Big I Web site leaves much to be desired and appears forgotten and abandoned. If the Big I is setting an example, it’s for agents to pay less attention to the Internet, rather than more.
Since the IIAA is the obvious candidate to provide agency leadership and advocacy relative to the Internet, their declining interest and influence is particularly troubling. Recent changes in management offered hope that the association would balance its preoccupation with lobbying with better help for agency automation, but that doesn’t seem to be happening. Perhaps some of the money spent on lobbying would have been better spent on resurrecting, perfecting, and promoting the IIAA Web agency locator.
ACT: Successful in a modest way, ACT, an IIAA initiative, serves as an industry forum for agents, carriers, and vendors and attempts to recognize common problems and address them through education. Unfortunately, ACT enjoys limited industry participation and isn’t, thus far, a major source of influence. Given its charter, it’s not obvious that ACT can or will be able to provide the kind of leadership the industry needs to focus on and take advantage of the Internet in a mutually advantageous way. On the other hand, in some ways it’s the only game in town. Were ACT to want to step up and become the agents’ Internet leader and advocate, my guess is that the industry would be responsive. The current core group could provide a foundation for a more comprehensive effort.
User Groups: Because they were formed around agency management systems, the user groups continue to be preoccupied with internal agency processes and pay only passing attention to out-facing services. Though they may have an interest in ASP versions of management systems, it appears unlikely that they’ll give the Internet its proper attention, unless their sponsoring vendors lead the way. If the AMS User Group national conference agenda for their March meeting is any indication of user groups in general, it is particularly disappointing. The Internet is virtually invisible in its 2002 program.
ACORD: If I remember correctly, ACORD was initially formed to help improve the efficiency of the independent agency distribution system first through the development of standard forms and then through the development of EDI and now XML standards. ACORD’s mission is now much broader and includes life and health, non-independent agency carriers, and the planet. Because of its broad constituency, it’s not obvious ACORD can advocate for or lead independent agents relative to the Internet. ACORD is very successful at convincing agents of the need for standards and good at publicizing its efforts.
But in blowing its own horn so loudly, ACORD has convinced agents that once standards are in place, the battle will be won, and that is absolutely untrue. Standards and standardization (as assistant editor Steve Brightbill points out from time to time) are completely different things. Neither implies the other. ACORD may produce thousands of standards and carriers may adopt them, but agents still end up without having the single-step, standardized, integrated workflow they need. In fact, the focus on standards (a neither necessary nor sufficient precondition of standardization) may have done independent agents a great deal of harm. Had the focus been on the end product rather than the supposed means, agents might be closer to the environment they need.
From timer to time I’ve suggested to Greg Maciag that ACORD sponsor industry symposia devoted to a thoughtful analysis of technology, the Internet, and the search for common ground. The industry is severely lacking in an organized process for systematic recognition of technology issues and the attempt to find mutually beneficial solutions. The annual ACORD conference is useful for networking and vendor presence, but not for shared depth of thought. And perhaps it can’t be. Perhaps another forum is needed. Perhaps ACT, not ACORD, would be the proper sponsor of public, persistent, dialog that could provide vision and lead to consensus.
AUGIE: When the user groups initially thought about getting together for the common good of their members, I was enormously encouraged. This group, it seemed to me, could be the platform to create a vision and then lead agents and carriers toward a very successful future using the Internet and other emerging technology. But AUGIE has been disappointing, not just to me, but to some in the organization.
Thus far, AUGIE has created an online survey to determine what agents want. The group will turn the results over to carriers, who will then have something objective to aim at, AUGIE believes. The survey may have limited value, but won’t serve to create a vision for the future that agents can rally around. AUGIE doesn’t provide industry leadership and may not want to. AUGIE, or the combined user groups in another venue, could have enormous influence, but that appears unlikely.
Carriers: AUGIE correctly recognizes that carriers are looking for a way to work successfully with their agents, especially with regard to the Internet. What carriers want is to see a vision of the future that their agency partners can subscribe to. Then carriers and agents can converge on the vision. But that vision won’t come from a survey. AUGIE needs to describe a world that most agents can’t yet see, and that’s something a survey cannot describe.
Perhaps we can’t expect carriers themselves to act together to create vision, motivation, and action. After all, they are competitors and they have to be careful about what could be viewed as collusion. On the other hand, at least one carrier, Safety, does have vision and has made attempts to bring other Massachusetts carriers into a shared environment that would result in economies of scale and a multi-carrier “portal” for independent agents. But it’s tough going. Ultimately, agents will probably need to take a leadership role in the process.
Vendors: Some new vendors have a vision for the future consistent with the opportunities of out-facing and in-facing services described in these pages. But they don’t have the resources or market penetration to make themselves heard. Incumbent vendors need to pay attention to existing revenue streams and satisfy existing customers, who ask only for evolutionary change and product tweaks.
Publications: Few publications have a comprehensive editorial point of view about the Internet and its meaning for independent agents. They print a random assortment of articles without an overarching conceptual structure to provide perspective. They are, I assume, attempting to be “objective” and perhaps inoffensive to their advertisers. In any case, they’re not likely to provide a vision for the future and any leadership to get there.
Recapitulation
The Internet has great promise for agencies in two areas — out-facing services and in-facing services. The former can re-intermediate agents and make them more money. The latter can make them more efficient. But agents aren’t moving to take advantage of these opportunities. Carriers are, but in doing so threaten to disintermediate agencies and make their operation significantly less efficient.
The problem isn’t the lack of good intentions; rather, it’s the lack of good ideas. Neither agents nor carriers have a shared vision for the future. Without that vision, they’ll do nothing or take their own path. Neither will result in the realization of the potential of the Internet.
A shared vision won’t happen by accident. It needs to be formed, probably best through a process of dialog among interested, informed parties. ACT has begun the work, but a more inclusive, rigorous process is needed. A vision is useless unless widely adopted. That requires leadership. There’s no sign of leadership in the industry with enough energy and focus to rally agents and companies around a vision.
Independent agents risk not merely the loss of opportunity (of what could be with the Internet), but the loss of their businesses. If they don’t act, others will — carriers and outsiders — and the insurance game will change permanently. Nothing says the independent agency system will persist indefinitely. The Internet can be its salvation or its demise. Vision and leadership can guarantee the former. Where will it come from?
© Copyright 2002 by Sound Internet Strategy. All rights reserved