Vertafore’s Agency Survey Reveals Concern About Disruption Increasing
Staff Writer | October 21, 2015
Insurance agencies of all sizes are less optimistic about future growth is the key takeaway from the second annual Vertafore survey, conducted in partnership with the analyst firm Aite Group.
Based on year-over-year results, the biggest drop in sentiment comes from large agencies where only 33 percent claim to be “very optimistic” compared to 70 percent in 2014, according to the survey report, “How Independent P&C Insurance Agencies Thrive in 2015’s Competitive Marketplace.”
The primary culprits driving industry uncertainty are carrier adoption of predictive analytics (59 percent), Google’s entry into the insurance market (54 percent), and self-directed preferences of millennials (48 percent).
To negate market threats, the majority of large agencies reported an increase in technology budgets, specifically for self-service, cloud, and mobile technologies. Meanwhile, small agency technology budgets remained stagnant near 60 percent, and the group of “very optimistic” agents dropped from 25 percent to 11 percent.
Aite Group conducted the survey among 200 U.S.-based P&C independent insurance agencies during September 2015. The following survey findings uncover key factors impacting agency optimism year-over-year, in addition to strategies used to combat new market threats or disruptions.
Large Agency Optimism Nose Dives
The dramatic drop in overall optimism suggests that the ripple effect of the industry’s ongoing digital disruption has finally permeated the entire independent agent channel. The most notable shift in optimism and growth projections year-over-year was among large agency respondents, revealing a 53 percent decrease in the percentage of “very optimistic” respondents (from 70 percent last year to 33 percent this year).
In contrast, findings show only slight differences in sentiment among the total number of smaller agencies year-over-year (25 percent to 11 percent “very optimistic”), implying they’ve already been dealing with the disruption. Similarly, only 29 percent of all agencies, regardless of size, are now focusing on aggressive growth, compared to 42 perhaps in 2014. The focus of maintaining current sales levels jumped up to 12 percent, up from 5 percent last year.
Analytics, Google, Millennials Pose Biggest Threats
Of the dominant threats identified in the survey, agents of all sizes singled out predictive analytics as the biggest threat to the future of their business, with 59 percent moderately to seriously threatened by carriers integrating risk analytics solutions. The worry stems from carriers becoming more self-sufficient, further displacing the independent agent.
Another major threat expressed by respondents is the influx of new market entrants providing access to insurance products and information to consumers online. Examples include companies outside of the P&C industry providing competitive insurance products like Walmart and car dealerships, as well as new premium aggregator websites like Google Compare and Zenefits. More than half (54 percent) of agents surveyed now feel moderately to seriously threatened by these competitive newcomers.
The uptick in online insurance resources is driven by new digital demands from the next generation consumer. In fact, Vertafore’s survey found 48 percent of agents feel threatened by the self-directed preferences of Gen X and millennials as it relates to the agency’s ability to keep up with digital demands in the future.
Technology Investment Helping to Reverse Doom-and-Gloom
To address key threats, four out of five agencies reported increasing their IT budgets over the last 12 months. Midsize and large agencies are planning to invest in technology budgets to drive productivity and enhance customer engagement. This year’s survey identified advanced customer self-service capabilities (47 percent) including websites and IVR, as well as investments in cloud services and solutions (43 percent) as primary drivers for budget spend within the next 12 months. Investments in mobile (40 percent) in the form of mobile-friendly websites and apps also made the list of technology budget priorities.
Surprisingly, agents are welcoming the emergence of usage-based insurance policies such as Progressive’s Snapshot, through which consumers receive discounts for good driving behavior. Half of all agencies feel the introduction of usage-based insurance policies will have a positive impact on their business, with only 11 percent predicting it will have a negative impact. Agents likely view usage-based insurance policies as a value-add opportunity to more effectively meet customer demands and attract prospects. In fact, Vertafore’s survey found more than half (56 percent) of agents have already seen increases in customer inquiries for such policies, and 62 percent expect demand to increase.
“The insurance industry is on the verge of disruption in the way we work and do business,” says Guy Weismantel, vice president of marketing at Vertafore. “New self-service technologies are popping up daily, contributing to the evolving role and future of the insurance agent. Rather than shying away from change, our survey shows that agents are embracing and integrating technologies into their operations to enhance the customer experience. The future of insurance is not about displacing the agent; it’s about strengthening and reinvigorating agent services with technology.”
- 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
- Sapiens DECISION Recognized as a “Hot Vendor in Digital Business Platforms, 2017”
- DATAMATX Announces Prelude Software as New Solutions Partner
- Quadient Appoints Christian Hartigan President and General Manager of the Americas
- Gibraltar BSN Life Berhad Selects Majesco Distribution Management and Majesco Digital Solutions
- Desjardins General Insurance Group Deploys EIS Suite for Commercial Lines
- Acuity Modernizes Customer Communications Management with OpenText Exstream and ValueMomentum
- COUNTRY Financial Joins Roost’s Home Telematics Program
- Roost partners with The Weather Company
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 is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
It has become a common refrain over the past few years to view the practice of enterprise architecture (EA) as something that time has passed by, much... READ MORE
One important trend in society over the past decade is our increasing ability to create and consume a seemingly unlimited amount of digital content... READ MORE
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
Fraud detection has always been and will continue to be a critical component of claims management. Learning the lessons from current claims Straight... READ MORE
- Vendor Views