For decades Insurance Agents were synonymous with good financial planning. Your parents’ parents told them who to see for life insurance, auto insurance, home insurance, health insurance, or any other insurance product you can drum up for purposes of this article insert it where it fits. It was like a never-ending flow of people and insurance agents could rely on new generational business every decade to start rolling in and more policies to be written, serviced, and inevitably a sizable raise every year for doing it.
Those days are dwindling down, but it’s not because of technology or some other factors related to millennials not wanting an agent but instead, the agents are firing themselves.
I have been in this industry since 2010, needless to say, I have seen its growth, contraction, and changes along the way. Like anything, there is an art and science behind being an insurance agent. The art is building a relationship, gaining trust, and making people feel appreciated as they should be. The science is in the knowledge and honing your craft through continued education and a deeper understanding of insurance contracts and nuances.
Today’s agent is somewhat good at the art. They can make you feel good and make you want to say yes but they are horrendous at the science of things.
We live in a day where MOST agents do not add value at all. They sell they have better service, but we all have access to 24/7 claims and service from any A-rated carrier so that’s of no additional value that they provide. They claim they have the lowest rates in town and maybe for a share of customers they do but we all quote insurance so we can all have a lower rate. They claim they have the best claims satisfaction but I would argue anyone with the proper amount of coverage and no gaps in their policy has great claims satisfaction because things get covered instead of held up examining if there is coverage available in their gap-riddled coverage. And arguably, at least on personal lines, all polices follow the same general ISO templated format with a few changes from the individual carrier’s legal team to use recycled parts instead of new parts, to allow for tow coverage up to 500 miles instead of 100 miles, etc., etc.
The real reason they are firing all of us is that new age agents do not call their clients for reviews, check in often to see how they are, take them to lunch, go play golf with them. Instead they hide behind their computer, hope you never call so they can continue to make money on you without dealing with anything, and then when you do call take days to respond, never give out their cell phone because Lord forbid they take a call on a weekend, holiday, or at night to help a client get off the lot or get a claim filed. They send you a $ 1.00 card wishing you happy holidays or happy birthday and have the audacity to ask for referrals in the same card that was supposed to be all about relationship and celebrating you and your family. There is zero selflessness in the insurance world at this point. Don’t even get me started on the agents who are just slanging policies and removing coverages without the insured knowing so they can get a more competitive rate then shoving paperwork down their throat asking for 15 signatures and sneaking the one signature that signs the insured’s rights away to vital coverage they already have on their current policy then some years later a GOOD agent comes along and talks coverages and the insured had no idea they weren’t covered right.
Now, don’t get me wrong some of the agents reading this are great agents. They genuinely care, actually do give a higher level of service to their community and insureds, and are in insurance because they want to protect people and save them from the disaster that they likely have experienced themselves and is the motivator for doing so despite a messed up marketplace flooded with sleazy salespeople.
That being said, the agents who are not doing anything for their clients are firing themselves and firing the rest of us as well.
The general mentality now is to commoditize insurance and that anyone can pick their own coverage and that an agent isn’t necessary and its largely due to about $3 billion a year in marketing spend between Geico and Progressive but also because everything they are saying is seemingly true when most agents aren’t actually doing anything. Maybe you really don’t need an agent? At least half of all insurance consumers are low income, low asset, nothing to lose type insureds that probably could pick their own coverage because state minimum is likely sufficient for their situation. The other 50% are affluent or at least middle market clients who might be educated enough to pick coverages but should have an agent to discuss insurance strategy and provide knowledge of complex situations they likely face. The problem is that even the 50% that should have an agent are starting to go to the other side of things because their agent doesn’t call, doesn’t write, and is asleep at the wheel.
I have said it before that I believe Personal Lines insurance agents will be out of business in the next 5 years. Those of us doing commercial insurance and personal lines will likely see a fall in personal lines revenue but continue to do business in commercial but key players like Allstate and State Farm are already testing out ways to remove service from their agents to call centers which inevitably will result in a decrease in commissions to the agent to offset the costs put on the carrier for service, reduce customer service experience because a local agent will no longer do the service so you now can’t even walk in to talk to someone you gotta call the number, furthermore it will reduce the overall income for being an insurance agent and will attract less talent and insurance agents will continue to snowball in the direction of the already big issue in our industry until the consumers’ view is that I am just going to have to call the carrier anyways, why not get rid of the agent altogether.
Every major carrier is experiencing heavy expense ratios because of losses so I see this happening quickly and we have written our own tombstones.
Now, for the share of you that are calling me negative, don’t believe me, or don’t want to believe me, I will just say the writing is on the walls. The agents on older contracts have cush jobs with no growth requirements and double the commission rates. We have seen lower and lower commission rates as time goes on and higher and higher demand for production year over year to maintain the already low commissions. It’s only a matter of time before they find the perfect model for distribution that makes it seem like they still have agents but also have a call center and those agents in those buildings will not be making the type of coin an agent from the ’80s and ’90s is making for sure. Likely not even getting servicing commissions anymore because they won’t be servicing anything. I would speculate that the agent of the future is paid salary to sit in an office for 60-70k a year and field those walk-in clients that demand a local agent which are dying off because of old age and eventually we will be left with all millennials who want an app or online portal and have not ever seen value from an agent because the agent has never given them reason to believe and with that we will be out of personal lines. Couple this with reduced premiums as autonomous driving cars and accident avoidance systems become better and better and eventually reduces the likelihood of claim and results in less claims being paid so premiums can be reduced and now your agent is making less commission on less premium and the ones who have been in it making 6 figures now make 70k and leave to pursue other ventures where they can make 6 figures again.
This is all just my opinion so take it for what its worth (probably not much to most of you LOL!) but I have been in meetings where you can see indirectly what is happening behind closed doors and the carriers are ALL thinking about this and if you think they aren’t you are being naive or you are truly so new that you can plead ignorance, but it’s coming.