It’s Just Better With an Insurance Agent

I was recently surfing the web, snooping on competitors, reading my favorite marketing resources, and looking for new finance and wealth management blogs. I ended up on a new finance blog, and I came upon an article about insurance agents. My attention was affirmatively grabbed.

After I was done being stumped that someone other than an insurance agent would write about my peeps, I was then floored that it was a positive article. Really! The author was, correctly I might add, arguing that buying insurance is better with an insurance agent.

Really. Not kidding.

Didn’t tech replace the insurance agent?

For all the discussions our industry has had about InsureTech and how slow we are to adapt to technological change, the reality is that the industry is rather sophisticated. What started as the ability to buy auto insurance online has morphed into something much bigger. Today you can buy nearly all lines of business online, everyone has a mobile app, and we’re all trying to get your attention on social media.

With the proliferation of online competition, the consumer has options that challenge the insurance agent paradigm. In some circles, the insurance agent is considered antiquated and is bound for the same fate as the travel agent.

Is the insurance agent a relic of the past?

In a perfect system, with all things being equal, a direct-to-consumer online sales model is less costly to the insurance company than an insurance agent. Frankly, this is true for any industry or product. Sales forces are expensive.

To an insurance company trying to make a profit, their expenses are important. The average agency commission is between 10% – 15% of the premium. However, advertising and operations expenses to sell through a website, app, or call center may only be 5% – 10%.

The sales function of any organization is being challenged by the changing trends of progress and technology.

Is this better for the consumer?

Here’s the rub, when a consumer buys an insurance policy they want coverage, service, and advice. This is the exchange for the premium paid for an insurance policy. The actual product being purchased is a promise that losses sustained will be covered by the insurance company. When you buy online or from an app or call center, how certain are you of that promise?

Think of this, the insurance policy is a contract. The actual policy is probably over 32 pages long and contains insuring agreements, definitions, exclusions, and sets forth when coverage applies. This contract is not standardized, each carrier has its own. Written by a team of smart lawyers. Meaning, there could be as many rules for when coverage applies as there are carriers. How will you know who offers more or less?

Most of the technology being developed is to help you buy the policy, not necessarily educate you on what you’ve bought. And it’s certainly not going to educate you on a competitor’s products.

The consumer may be able to do some research online and learn the basics of auto insurance coverage, general liability insurance, or cyber liability. Maybe you’re going to rent a car, want to know if you need to purchase the rental car provider insurance policy?

You know who has the answer to these, and many other more important coverage questions. Your insurance agent.

It’s better with an insurance agent

Working with an agent will make your buying, owning, and changing your insurance policy better. If it’s a good insurance agent, they will work to understand you, your family, and your financial goals. This will help them match your insurance protection to your goals and objectives.

Many agents also provide other services to assist you in making sure you remain covered. For insurance, from time to time good people simply forget to pay a bill. Maybe there was a change in bank accounts, you missed the bill, or you were away on travel. Mistakes happen. Many agents, make sure we give you extra notice and a nudge, beyond what the carrier may have sent.  You see, we take it very personally that each one of our clients receives the protection we have provided. It is very personal to an insurance agent that our clients get what they paid for.

The bottom line

We too recommend that you get your insurance through an insurance agent, preferably an independent insurance agent. Independent agents are allowed to work with many insurance carriers, so you can be provided alternatives and get the best match of protection and value. If you’re thinking of shopping for insurance, you can contact us, or start your insurance quote online.