Vertafore, Hanover Research Find Optimism Among Independent Agencies for 2017
Staff Writer | October 14, 2016
Vertafore released new research evaluating growth and optimism among independent property and casualty insurance agents in today’s evolving insurtech landscape. The third-annual survey conducted by independent analyst firm, Hanover Research, reveals nearly half of agency respondents (49 percent) are “very optimistic” about the future success of their agency.
The 2016 findings represent an uptick from 2015 survey, which witnessed a 22 percentage point drop in optimism from the year before (from 51 percent in 2014 to 29 percent in 2015). Also recovering are agency growth plans. This year’s survey found 84 percent of agencies planning moderate to aggressive growth over the next three to five years, with 36 percent planning aggressive growth (up from 29 percent in 2015).
The year-over-year comparisons show a steady increase in technology budgets and adoption of business software such as mobile and customer relationship management tools, both of which, are credited for helping the independent agent channel remain competitive against industry threats such as new market entrants, Generation X & Y, and the commoditization of auto insurance.
The report, titled “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace,” can be downloaded here. In its third year, Hanover evaluated the state of agency growth and optimism in 2016 compared to previous years, as well as technology trends used to combat new market threats or disruptions. Vertafore sponsored the survey but in no way influenced the results.
Tech Budgets Continue to Increase with Mobile as a Top Priority
Over half of surveyed agencies (51 percent) say their technology budget has increased over the past 12 months and another 63 percent anticipate additional increases in the next year. In much the same way as other industries, roughly half of IT budgets are allocated toward essential maintenance-based activities like replacing outdated hardware or software updates, but agencies are also prioritizing investment in new technologies.
The areas agencies are most likely to expect increases in investment are tools to help agents grow their books of business (36 percent) and mobile smart devices (35 percent). Currently, 74 percent of agents rely on their smartphones for work and at least 40 percent of agencies say they conduct business outside or away from the office more than once per week. Additionally, two-thirds of agencies either currently use or plan to invest in mobile-enabled websites to attract new customers, which is up from 40 percent in 2015.
CRM Systems are Now Instrumental in Achieving Sales Goals
In the last 12 months, the majority of agencies of all sizes reported revenue growth in both personal and commercial lines of business. Year-over-year survey findings show agencies consistently prioritize customer service and engagement and credit revenue growth to ongoing investment in these technologies. Specifically, agencies believe adoption of customer portals (65 percent), CRM technologies (61 percent), and marketing analytics (58 percent) are moderately or extremely important to achieving sales goals. Today, nearly half of agencies currently use a CRM tool to track and retain clients and another 19 percent of agencies plan to adopt a system in 2017.
Agencies Turn Threats into Opportunities
The digital disruption of the insurance industry has been driven by several factors and perceived threats to the independent insurance agent including, Generation X and Y’s desire to interact directly with insurance agencies (40 percent serious or moderate threat), the commoditization of personal auto insurance (39 percent), and insurance carriers’ use of predictive analytics that enable them to be more self-sufficient (38 percent).
Rather than giving in, agents are increasingly turning to technology to explore new ways to engage with customers and increase their competitive edge. Nearly half (47 percent) of agencies claim to be experimenting with new marketing tactics, as well as increasing customer self-service capabilities (36 percent). Additionally, almost one-third of agencies (31 percent) saw an increase in customer inquiries on usage-based products last year, but view usage-based insurance as an opportunity to grow their customer base.
Surprisingly, fewer agents perceive new venture capital (VC) backed insurtech startups to be threatening their agencies. In 2015, more than half (54 percent) of agents surveyed felt moderately to seriously threatened by these competitive newcomers. Fast-forward 12 months, this year’s study found 76 percent of agencies view these entrants as a small threat or not a threat, even despite VC funding expected to triple to $2.6 billion in 2015. In fact, large agencies are more likely to see positive impacts of certain recent industry developments, like mergers and acquisitions of smaller agencies (62 percent positive impact) and VC investment in insurance technology startups (also 62 percent).
“Independent agents are acutely aware of the disruption facing the industry and their businesses, but they’re not letting it impact their spirits,” says Bruce Winterburn, VP of industry relations at Vertafore. “By doubling down on technology that bolsters customer relationships and continuing to integrate mobile technology into the whole of the business, the research shows the investment in paying off. Growth is in fact happening and at an accelerated pace. If agents continue mixing technology tools with their customer-first mindset, the future of the independent channel is bright.”
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- ProSight Direct Offers “Effortless Insurance for Today’s Professional”
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Unique partnership between VMSolution and FRISS enables fast claims process
- Roost Joins the IoT Insurance Observatory
- Appalachian Underwriters launches world-class billing and payments offering (through Input 1)
- National Life Transforms Customer Experience Program with Cognizant
- Insurers Driving Real, Measurable Value from Digital Investments
- Insurers Embracing Digital Claims Payments, Says Novarica
- Majesco and DataRobot Partner to Bring Integrated AI/Machine Learning with Majesco Solutions to Customers and the Insurance Industry
- Stonetrust Commercial Insurance Selects Insurity’s Cloud-hosted ‘Workers’ CompXPress Suite’ to Improve Operations and Customer Experience
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2019
The tide is up! It's time to register for ITA LIVE 2019, our annual educational and networking conference! Our theme is "The InsurTech Revolution: Cutting Through the Hype." and we'll be bringing in a torrent of industry thought leaders, amazing insight and wonderful perspectives on the world of insurtech and its impact on the insurance landscape.
ITA LIVE 2019 will present real-life examples of true startup technologies that are helping insurers gain real advantage -- and a competitive edge -- in the marketplace. We’ll highlight the more successful InsurTech partnerships, while offering case studies that demonstrate exciting innovation and cutting-edge techniques impacting all aspects of the insurance ecosystem.
Ride the wave to LIVE 2019. Sign up today! We look forward to seeing you in May, 2019!
BLOGS AND COLUMNS
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE