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Are online direct sales channels a threat to independents?

John Tiene

Reid French

Clint Anders




There’s no question that people are using the Internet as a tool to become better educated about insurance, but ANE member agents don’t see the direct market as a threat. If anything, the online direct sales channel is often the best sales tool for independent agents. It takes just one bad experience with an online policy to bring someone into an office looking for a more trustworthy and professional alternative. Bottom line: Insurance is complicated, and people will continue to seek advice from trained professional risk managers – independent insurance agents – when considering the best protection for themselves, their families and their businesses.

Online direct sales channels are not a threat to independent agencies that invest in the proper technology. The Internet is open to all, and agency-focused technology is currently available to enable independent agencies to thrive in this new digital environment. Today’s consumer demands, and frankly also expects, immediate and ubiquitous access to information. This customer experience is associated with direct writers and other online sellers, yet it is also available and provided by independent agencies that invest in the proper technology ... like online client self-service portals, web-based rating tools, mobile apps, and cloud-based management systems.

Online channels for direct insurance sales are more of a threat to the insured seeking coverage than to the independent agent. A scary statistic on insureds who purchase insurance directly through the Internet … is that 75% of the time, [the policy] is written incorrectly. Primarily these errors occur in applying the proper liability limits. The number one thing independent insurance agents bring to the table is relationships. Insurance agents see their clients in the best of times, when they purchase that new car or home, and the worst of times, when that car or home has been damaged or destroyed. Having a local agent in your corner is invaluable.

THE DEBATE OVER DIRECT SALES CHANNELS There’s at least some evidence that changing consumer behaviors, new technologies and the evolving competitive landscape might be disrupting independent agents’ traditional strengths in customer service and risk management. Almost 40% of 1,100 US independent property and casualty insurance agents surveyed for a recent Accenture report said they saw the increase of direct sales via the online channel as a serious competitive threat. Nearly three-quarters (71%) of the agents said that threat took the form of lower prices, while 48% thought the threat lay in better brand recognition and more effective marketing on the part of the direct channels.


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13/03/2015 6:03:02 AM

Insurance Business America issue 3.02  

The magazine for America’s insurance broking and advice community.

Insurance Business America issue 3.02  

The magazine for America’s insurance broking and advice community.