Why independent agents and their business partners need to support this process
Imagine you went to Rocket Electronics to purchase that big screen of your dreams for a Super Bowl party, saw a row of TVs on the shelf, but were told: “You can’t buy this today; after we do a credit check I’ll call you and tell you when you can come back and pick it up.”
Just down the street is a competitor, Top-Notch Tech, where you show the sales associate what you want, wait a minute while she rings up the sale, and in moments are showing a husky kid where your vehicle is parked so he can load the TV into it.
Store location, selection, and price being equal, where will you go when you’re ready to buy that feature-loaded TV?
For just about everyone, the choice is obvious. Why would you wait a week and be forced to make a second trip to Rocket Electronics when you can go to Top-Notch Tech and within minutes be driving home with your new TV?
That’s a question that, for years, has been the subject of intense debate and discussion in the independent agent community. A recognized thought leader on the topic is Keith Savino, CPIA, a managing partner of Warwick Resource Group LLC, who is a former ACORD board member, current past chairman of NetVU (Network of Vertafore Users), and New Jersey state director for the National Association of Professional Insurance Agents (PIA). He also sits on the AUGIE (Associations & User Groups Information Exchange) Leaders Council and is active in other industry groups. At his core, though, Savino is an insurance producer.
With this impressive background in insurance technology, it’s no surprise that Savino is keenly focused on solving a problem that is causing independent agents to lose business to competitors, particularly in personal lines. Many agents have become tech savvy and comfortable with office automation and social networking, he says, but they’re at a distinct disadvantage when it comes to binding.
The agent’s dilemma
“The dilemma we face is we operate in a multi-carrier environment, where an independent agent has to begin and end the conversation with the client, but can no longer end the conversation by closing the deal,” Savino explains. “When I wrote personal lines in the late 1980s and ’90s, agents generally knew which companies wrote what kind of business. We had an idea of what the premium was going to be, based on the individual’s accident and violation history and the motor vehicle report.”
He adds, “We could rate the policy manually or use a rater. We could issue the policy in our office with one of a number of carriers, and send the client home with binders and ID cards. Even if we had to call an underwriter, we could make that call while the client was sitting there and wrap up the sale right then or, at worst, later that day. We were in control.
“[C]arriers need to work with agents and their vendors to give agents the ability to bind a policy in a once-and-done fashion in their agency system, regardless of the point of engagement: the agency’s office, the client’s location, via phone or email.”
—Keith A. Savino, CPIA
Warwick Resource Group LLC
“Since that time, our operating environment has changed significantly,” Savino continues. “Now we must exit our management system’s platform, visit multiple carrier sites, enter large amounts of data, and answer questions that are unique to each carrier. Instead of being able to provide a customer experience with immediate multi-carrier binding, we may have to wait days or weeks before coverage can be bound.
“Useful tools like predictive modeling, multivariate rating, and each carrier’s ‘secret sauce’ have had the unintended consequence of taking away the agent’s ability to bind coverage on the spot. The only way around this time-consuming process is to quote only one carrier, which places the agent in the position of not truly being independent. We’re forced to visit multiple carrier sites, which means we cannot get a policy issued in the system we want to use. As agents, we need the ability to begin and end in our own systems.”
A complicating factor, Savino points out, is that most independent agents today represent more carriers than they did in the past. “Fifteen years ago, if an agent represented five personal lines companies, that was a lot,” he says. “Now it’s not unusual for an independent agent to represent 15 or 20 personal lines carriers or more, and we should!
“With the advent of predictive modeling and sophisticated rating, many carriers are telling agents, ‘We have a rate for everybody. Quote us 100% of the time.’ To do the right job for the client, however, we need to obtain quotes from multiple carriers—not only for auto and homeowners, but also for the umbrella, one or more floaters, and possibly watercraft or motorcycle coverage. There’s no ‘magic button’ in the agent’s office that he or she can push to bind these policies.”
This situation, Savino observes, is a sort of Back to the Future for independent agents—back to the dawn of the agency automation era in the 1970s and ’80s when there was a dedicated terminal in the agency for every carrier it represented. Now, as then, he says, the advance of technology has actually impeded efficiency and is costing independent agents business they’re losing to competitors that can bind policies on the spot. “Most agents would be better off with a rate manual on their desks so they could rate and bind coverage then and there,” he asserts.
A simple solution
To address this problem, Savino advocates a concept called the Buy Button and is working with an initiative spearheaded by PIA, with initial support from ACORD, agency automation vendors, other agent associations, and insurers, all dedicated to providing independent agents access to a real-time binding process. PIA has launched a major initiative to promote the Buy Button; early last year, it initiated an industry-wide dialogue on the concept of enabling independent agents to offer real-time binding that could include a level of purchasing capability on the agent’s website. A year ago, PIA adopted a position in support of the concept, which has been endorsed by the American Insurance Marketing & Sales (AIMS) Society and NetVU, among other organizations.
“PIA National decided to take a leadership role,” says association Executive Vice President and CEO Mike Becker. “Part of the impetus was PIA Partnership research showing that commercial lines customers who prefer to do business with independent agents nevertheless want their agents to be fully capable, digitally.”
Before explaining what the Buy Button is, Savino says it’s important to clarify what it is not. “It’s not a campaign to promote selling insurance online,” he emphasizes. “What is it? It’s a campaign to promote selling insurance online.
“Here’s why I say that,” he continues. “If you pick up the phone and call a captive agency, the representative can begin and end a conversation with you by selling you a policy. The rep takes your information, feeds it into the rating module, and says, ‘Ms. Smith, I’m so happy I could spend this time with you today. Would you prefer the Platinum Plan for $9 a week or the Gold Plan for $7?’
“Now pick up the phone and call an independent agent. The rep takes your information and says, ‘Ms. Smith, I’m so happy I could spend this time with you today. I have a lot of the information I need to get started. I’ll call you back soon with some quotes or questions, depending on the results of our underwriting process.’
“What do you think that is doing to independent agents in the personal lines market?” Savino asks. “If that’s how we’re doing business in personal lines, how are we doing business in commercial? Right now, most commercial lines clients are fine with getting a call back in a few days. What’s going to happen as the captives and direct writers start writing more and more commercial lines in real time?”
Implementing the Buy Button will be a three-step process, Savino says. “Step one: the carriers need to work with agents and their vendors to give agents the ability to bind a policy in a once-and-done fashion in their agency system, regardless of the point of engagement: the agency’s office, the client’s location, via phone or email. If I represent 12 companies and a green button is next to two of them in my system, those are bindable quotes.
“Contrary to conventional wisdom, all insurance is not sold on price,” Savino remarks. “If one of the carriers with a green button next to it has the desired coverage, but it costs $100 more, if you can guarantee to the client that the coverage is going to be issued, you’ll be a lot more comfortable working with that bindable quote than telling the client you’ll have to get back with her in a few days or next week. In most cases, by the time you call the client back, she’s gone, and you’ve put in hours of work for nothing. That happens all the time,” he says.
“The independent agency system has some of the best carrier, coverage, and premium options you can find. So why don’t we have a majority share of personal lines? It’s mind-boggling. What’s more, we keep hearing that the independent agency channel has a lower personal lines market share today than 15 years ago, before predictive modeling. Why? I believe it is the unintended consequences of new automated processing that are handicapping the sales efforts of independent agents. If someone calls me or walks into my office, I need to be able to begin and end that conversation in our system.”
Turning to the second step, Savino says, “Say I have an existing client for whom we write the homeowners and umbrella, and now we want to cross-sell other lines of business. We have a client portal where the client can look at her account. Why wouldn’t I want to offer her the ability to quote the other lines inside my client portal? That might be a baby step for a lot of agents, who otherwise wouldn’t feel comfortable selling online.
“The third step in the Buy Button process is the ability for agents to sell to prospects online,” Savino continues. “Ultimately we will be able to sell online to our clients and prospects—but I can guarantee you that if we can’t figure out how to sell insurance offline, it will be a long time before we can sell online.”
According to Savino, agents and other volunteers are welcome to join the business, technical and regulatory/legislative workgroups that are moving the initiative forward. Stay tuned for further developments as the Buy Button continues its progress from concept to reality and puts independent agents back in the game.
For more information:
By Elisabeth Boone, CPCU
PIA Statement on the Buy Button
The statement below appears on the PIA website.
“The Buy Button as conceived by PIA is the ability for agents to bind a policy in a once-and-done fashion, in their agency systems, regardless of the point of engagement and/or policy sale. The Buy Button is a business concept and technology capability. Currently, agents must leave their systems or bridge to the carrier system to bind the policy. [Buy Button] will empower agents to bind coverage in real time for prospects or clients that call on the phone, walk into the agency, meet, or visit online. This concept
will apply to mobile technology for agents to use when meeting with prospects or clients offsite, giving them the same real-time binding ability when they are out of the office.
“Technology exists today to empower agencies. While not limited to a line or type of business, today this concept could be quickly adopted in personal lines in conjunction with an existing comparative rater or
similar agency-managed tool. This will allow agents to fully compete in a digital world.
“This concept can also be extended by the agency to prospects and clients, by empowering them to bind coverage on an agency website themselves, enabling agents to transact business however their prospect wants to transact business. Any policy that could be bound by a customer would be owned by the agency and subject to filtering of forms and limits, all set in advance and fully controlled by the agent.”