The Digital Transformation of Insurance
2016 Best Practices Study – What the Latest Report Says About the Industry
November 30, 2016
Since 1993, Reagan Consulting and the IIABA, “Big I,” have conducted the Best Practices Study to identify the top performing agencies in the United States. Conducted on a three-year cycle, the study measures the operational performance of nominated agencies against critical industry and business benchmarks. As the Best Practices program has grown, being nominated and taking part in the study has become a prestigious recognition of the superior accomplishments of the top insurance agencies in the country. In 2016, the beginning of the current three-year study cycle, over 1,000 independent agencies through the U.S. were nominated to take part in the Best Practices Study, with 255 of the nominated agencies ultimately designated as Best Practices agencies.
4 Key Challenges Facing the Insurance Industry
Year-over-year, the study evaluates new challenges facing the insurance industry. Let’s take a look at the four key challenges spotlighted in this year’s study, what each challenge means for your business and the opportunities technology can provide to enable you to succeed in today’s digital era.
Growth is slowing
What this means: The velocity of agency growth is slowing but remains strong. In the competitive landscape, consider the following:
- Who is your target customer?
- In what ways can your agency deliver a unique value prop to that target client?
- How do you reach the target client?
Specializing your business in a crowded marketplace can focus your internal resources on target growth opportunities.
How technology can support: Identifying target customers and finding the right markets for their risks can be complicated. Consider an agency management system that provides a complete view of your total business – both clients and prospects – to identify growth areas within your current book of business and trends within your prospect base to target specifically. Once your business has identified new – and potentially hard-to-place – risks, leverage appetite search tools to quickly find the best markets for your risks.
Consolidation is occurring at a record pace
What this means: On a daily basis, there is a news story on the latest M&A deal happening in the industry. The pace of consolidation continues to steadily increase, with more than 469 announced transactions in 2015 alone (source: SNL financial). This trend presents two opportunities – either beat them or join them. Make changes of your own internally to compete in a more specialized market and maintain customer retention.
How technology can support: Increasingly, firms being evaluated for M&A are considering what technology systems are being used. Between account management, customer service, employee benefits communications, workers comp mods, rating systems, websites and more, using a variety of different tech hardware and software could be a nightmare during or after a consolidation. For that reason, although the transition period could last anywhere between one and two years, having the same tech is highly beneficial in easing the transition and bringing employees on-board.
The workforce is aging
What this means: The average age of the employees at most agencies has increased significantly, and the Millennials are here. Succession planning and recruitment are critical during this time. Developing the next generation of leaders – at an early enough stage – is critical to maintain your position as an industry leading firm.
How technology can support: Training and on-boarding employees as you develop your staff can be time consuming. Leverage an agency management system that has pre-defined workflows built in to reduce time spent on training. Additionally, your agency should consider opportunities to embrace cloud-based and mobile technologies to empower your young staff to work when and where they prefer. By creating a mobile work culture, you can increase operational efficiencies, extend customer service opportunities beyond the office and meet today’s employees demands for flexible working environments.
New technologies threaten the traditional broker model
What this means: Technology has a profound impact on every aspect of individuals’ lives. The expectation for technology and connectivity has seeped into people’s customer service and workplace expectations. Technology startups in the industry are targeting consumers who are increasingly willing to purchase nearly everything, including insurance, on the internet. It is important for agencies to meet this consumer demand for online quoting and self-service to remain competitive against direct insurance providers.
How technology can support: Agencies must embrace digital transformation to enhance their competitive value while protecting their core trusted advisor role. Provide online customer self-service portals and mobile apps for your customers to access their insurance information anywhere, anytime at their own convenience. Automate quoting processes through enhanced insurer connectivity to provide timelier service while ensuring the best coverage.
Interested in learning more from the 2016 Best Practices Study?