Are Insurance Agents Still Relevant?
There is a lot of talk about the future of insurance agents. A few misguided individuals think that the public sees no need for insurance agents and that they face an uncertain future. Let’s explore the arguments around the future of insurance agents.
We get a lot of questions from people asking about a career in insurance through our website, www.itaamerica.com. We are a pre-license insurance training school, and we find that people are curious about the opportunities that an insurance career provides.
First, there is the argument that anything insurance related can be completed without the services of an insurance agent. Insurance quotes/sales, change of coverage, deductible changes, etc. can be done online. Why use an agent if you can accomplish the same task online and save money? There are several insurance companies that now offer online services only.
Secondly, insurance agents receive a commission for their sales. Why pay commissions to someone if you can get the task completed online and avoid paying a commission?
Thirdly, most insurance products (auto, home, boats, renters’ insurance, etc.) have common contract language among insurance companies and must meet the state requirements for minimum coverages. If insurance is required and my company meets the state requirements, why should I use an insurance agent?
Next is the fact that online insurance companies have expanded their portfolio of products. At one time, no online insurance company would even discuss commercial insurance. Now it is common for online companies to offer Business Owner Policies (BOPs), Floater policies, Umbrella policies, and much more. Health insurance is now commonly sold via of online sales.
Finally, I have heard many times that it is difficult to talk to an insurance agent. Many tell me that they leave a message and may get a call back and maybe not. They also say it is seldom likely that they will get to speak to their insurance agent because a team member will respond.
All of these are pretty good reasons to avoid dealing with an insurance agent. Why should I go through the pain if I can get everything I need online and quickly?
Now let’s deal with the real world.
Let’s start with coverages and limits of liability. How does anyone know whether they need $100,000 liability insurance or $500,000 without answering some questions regarding their assets? How does anyone know whether a $100 deductible is appropriate or a $500 deductible? Is my $30,000 diamond ring covered by my homeowners insurance? I live in a high-risk flood area; do I need flood insurance? How about earthquake insurance?
If you know what questions to ask you may be able to get your answers from the telephone representative or through a chat room at an online insurance company but what if you do not know what questions to ask?
Many customers simply fill out an online form that will help determine their insurance needs. The insurance representative on the phone will then discuss optional coverages with the customer. The reality is that most people simply will not fill out the form because they are not user friendly.
So, who should be using online insurance companies? There are three types that could be going online only for their insurance needs. Number 1 is the person who cares about the bottom line only. Price is their only consideration. Don’t talk about coverage or needs just give me the price. These people may find online insurance is cheaper for them. Typically, these people buy insurance because their state requires auto insurance, or their mortgage company requires home insurance. Number 2 is the person who is already aware of their insurance needs and are simply looking for the best value. They are aware of their liability needs, their deductible options, and other factors. In other words, these people do not need an insurance agent. Number 3 are the people who will phone call an insurance agent, quiz them about their coverage needs, and then shop their insurance program by trying to find the cheapest company. It is interesting that these people find a need for an insurance agent but not willing to let them handle their own insurance.
Why is having an insurance agent so important? The real bottom line is that most insurance agents really do care about their customers. Their goal is to provide the best protection at the lowest possible price. Insurance agents have little control over the pricing of the insurance company’s products. Insurance agents have expertise in many areas. There are specialists in auto/home, commercial, health, workers compensation and many other important areas. An effective agent will take the time to get to know their customers. They are knowledgeable in how to protect certain risks. They will advise on flood insurance, earthquake protection, and coverage for that diamond ring.
Insurance agents in every state had to pass a rigorous state insurance examination to offer insurance products and recommendations. Many of these agents received their training through Insurance Training Associates, LLC (www.itaamerica.com) and were able to pass the examination on their very first try.
Most state insurance departments recommend that the insurance buying public shop their insurance at least every other year. This is bad advice as they assume that all insurance is the same and all agents are the same and the only consideration would be the cost of the insurance. In addition, this minimizes the relationship that has been developed between the agent and the customer.
If someone needs an attorney, they will pay for their services. If someone needs a CPA, they will pay for their services. If someone needs to discuss the cost of insuring their daughter, they will call their insurance agent. The agent will offer advice and will not charge for their services. In addition, that agent may have another policyholder who is an attorney or a CPA and could be a great referral source for the policyholder.
Our blog intro was: Are Insurance Agents Over? It is the opinion of many that insurance agents are needed even more in the current environment. People are suing each other for ridiculous reasons, and it is critical that the coverages be available. There are many more products in the insurance marketplace and the public needs a knowledgeable and trusted individual to explain them.
Are Insurance Agents Over? No, not even close.