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Challenges Facing Insurance Agents and Insurers

Challenges Facing Insurance Agents and Insurers

Being in the insurance industry is an exciting opportunity to serve numerous different clients, but as the industry has evolved so too have the challenges that insurance agents are facing. It’s important to be aware of these obstacles so that you can approach them with an open mind and develop a comprehensive strategy for addressing them.

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In a highly competitive and rapidly changing field such as the insurance industry, obstacles abound.

PwC, a consultancy giant, conducted a survey among CEOs to zero in on the roadblocks encountered across industries. The organization revealed that compared with those in any other field, a significant percentage of CEOs in the insurance industry expressed extreme concern about the threats to their growth prospects due to over-regulation, changes in customer behavior, the pace by which technology changes, and the steep competition in the market, especially with the coming of new entrants.

The obstacles facing those in the insurance industry ran the gamut from specific legislation concerns to worries about looming changes in the general landscape. Market players also expressed concern over straightforward marketing or sales hurdles that resonate equally among those in other industries, such as real estate or tax planning.

We list some of the biggest challenges agents are facing this year, as well as suggestions for meeting these obstacles head-on:

Lead Generation

Insurance product sales comes with a distinct set of lead generation challenges. Prospects, for example, are often unwilling to admit that what they are being offered is a necessity, as is the case for life insurance products. In some instances, prospects feel uncomfortable about planning for the inevitable, which makes them apprehensive about looking into retirement products.

These are just a couple of concerns that make lead generation a roadblock for advisors, year after year.  With the neck-and-neck competition, it becomes more of a challenge for agents to come up with creative and efficient methods for lead gen.

One of the ways to generate leads is to corner an underserved niche market such as the small commercial sub-segment. Tapping into this market gives agents and advisors access to almost two-thirds of US small businesses that lack business interruption coverage and 53% that do not have indemnity coverage.

It also helps find ready referrals by tapping into networking organizations or by onboarding technologies that deliver valid leads in less time.

Disconnect Between Customers and Producers

Insurers understand that many Americans face a wide array of short-term and long-term financial challenges, from making ends meet to saving for retirement. In spite of this, it’s rare for insurance companies to be able to assert their value terms of helping customers meet certain financial requirements and overall financial wellness. Customers also tend to forget that while getting insurance may involve time-consuming processes such as enrollment or document acquisition, the payoff is worth their trouble.

Other providers that have tried to proactively eliminate barriers between them and their customers have found that their efforts sometimes lead to unintended consequences. Onboarding auto-enroll capabilities to shorten customer wait time, for example, may provide a blind spot for any underlying cash management issues on the part of the applicant.   

Companies that set a goal of improving customer financial wellness, meanwhile, may center their efforts on improving financial literacy. They may take the traditional “inside-out” view, where they highlight their own product features, without providing customers with guidance in sorting out the products that they can piece together to meet their needs. Financial wealth advisors also tend to focus on the narrow, affluent customer segment, leaving underserved a broad segment of customers who need and desire advice and guidance.

To win customers who seek financial wellness, producers need to deviate from the traditional practice of simply focusing on product capabilities. It’s high time to revise the conventional approaches to financial wellness by taking into account what customers really want. By understanding customer wants and needs, insurers and producers may suggest a solution centered on managing their financial wellness, as opposed to presenting them with a basket of off-the-shelf products.

Here are three ways to understand customer needs:

  • Develop an accessible digital platform that takes the customer’s personal circumstances and evolving lifetime needs when providing personalized financial advice or information.
  • Provide easy access to an advisor, producer or coach who provides tailored guidance and actionable solutions to various financial wellness concerns. It also helps if they can provide answers to specific questions on finance-related topics such as insurance benefits or legal services.
  • Improve the range of customizable financial products. Give customers the flexibility to piece together various solutions to arrive at one product that meets all of their needs.


 

Pro Tip: As a producer, advisor, or coach don't be afraid to learn electronic enrollment processes to help guide your customer and close the deal faster.

Discrepancies Arising from Health Care Reform

Signed into law in 2010, the Patient Protection and Affordable Care Act aimed to make insurance available to about 95% of the legal population in the US. More than a year after its release, however, it became the beast that reared its head after leaving consumers in the dark regarding their coverage options. Years after its rollout, other concerns emerged, such as fears over losing access to their preferred providers, as well as doubts on whether they can afford the level of coverage they require.

This is just on the consumer side of things. The reform also left advisors and producers feeling like fish out of water. Now, insurance agents must navigate a maze of constantly changing regulations in order to sell products.

Agents looking to supplement sales may turn to ancillary product lines such as critical illness insurance. This product works especially well for aging consumers looking to fill gaps in their coverage. The Medicare market is an underserved niche, and with ten thousand boomers retiring daily, specializing in the critical illness product line can help pay the dividends.

Trust in the Industry

Many consumers are apprehensive about trusting financial institutions of all stripes. A TrustPilot survey, for example, revealed that 23.9% of 15,000 respondents see the finance industry as "a little trustworthy." Some 24.1% said they see it as "somewhat trustworthy," and 31% found it "generally untrustworthy or not trustworthy at all."

A report by Edelman affirms these findings, saying trust in financial institutions hit a historic low this year. In fact, the industry’s trust rating is lower than any other business sector’s.

Both studies suggest that a few bad apples can have the ability to sour the image of the entire industry. It is an unjust reputation that affects the market adversely, and definitely one that needs fixing.  

Whether consumers recognize it or not, financial services are a necessity. Advisors, Insurance agents, and coaches need to become increasingly holistic when giving advice. This way, consumers may realize that both insurance products and insurance producers play pivotal roles in a struggling economy.

To appease worry among consumers, insurers can offer guaranteed protection products. These lines are seeing an increase in demand, which makes it imperative to offer them now more than ever.


 

Pro Tip: As a advisor, producer or coach the first and most important step is establishing a rapport. Build value for your client, help them understand why your products are the solution to their problem.

The Economy

There are now various underlying economic and market conditions that were not present before the financial collapse that took place almost decade ago. The crash, as well as its aftermath, destabilized the pillars of many insurance business models.

While the economy is making baby strides to full recovery, it’s still nowhere near the flush economic climate seen in the late ‘80s and ‘90s. As a consequence, prospects tend to make calculated investment moves.

Many insurers jump industry hurdles by being extra diligent when it comes to improving their business. Many sought deeper insight into consumer needs and behaviors. Some cultivated unique capabilities that give them an edge over the competition. Others, meanwhile, have veered from traditional processes to embrace digitization and modernize both their products and distribution strategies.

As an insurance producer take full advantage of the recovering economy and encourage putting essential policies in place!

Pricing Competition

The long stretch of slow global growth has put pressure on producers to drive revenues, even if it means competing harder in terms of price. The steep pricing competition can lead to near-zero interest rates that can squeeze profit margins, especially for those that sell life insurance.

Take your cue from seasoned producers. They know that the most valuable client relationships are not based on pricing, but are established through trust. While the response to challenges of building trust will vary for every company’s and insurance producers unique circumstances and characteristics, the right solution will almost always involve structural/presentation changes to meet new needs.

Some major insurers choose to change their current structure by scaling and opening new distribution channels. They work on augmenting agent capabilities and find ways to drive down costs and rev up growth. When regulation becomes burdensome or profit-prospects become dim, they exit business-lines and explore other business locations.

By recognizing that sticking to traditional approaches may hamper the ability to respond to changing market conditions and challenges in real time, insurers become open to rethinking and redesigning vital processes that contribute to the company’s success.

What does this mean for you as an insurance producer?

Keep an eye on what insurance companies are doing and plan to be prepared for rapid change. Whether that is being open and willing to learn new technology or for an emergency fund for a few "rainy days". 

Technology Roadblocks

The one true constant of marketing is its changeability. It is affected by many factors that are susceptible to change, from consumer behavior to advancements in technology. When these factors shift, an organization’s tested-and-proven marketing strategy can become obsolete.

The solution? Keep up with the times. Digitize your marketing strategy.

The rise of fintech companies demonstrates that the entire finance sector, the insurance business model included, is being disrupted. Some of the most disruptive forces in the insurance field include the new market entrants. New players often bring technological tools that work to their advantage. This means that companies or independent agents who choose to stick to conventional methods may soon see themselves losing to non-traditional competitors.

In a world where consumers expect fast and seamless experiences, going digital can give insurers  and insurance producers plenty of advantage. Digital has the power to transform the way consumers discover businesses. It can also automate and improve the way businesses engage and transact with customers.

To say that the insurance industry has deliberately held off digitization isn’t completely true. In fact, the industry has been going through its own digital transformation for the past five years. Insurers have come into a consensus that digital is here to stay, so a great number of them have started incorporating digital solutions into their organizations. By implementing digital, they get access to ad hoc capabilities that make business operations faster and cheaper. They can create online tools that deepen and engage their distribution channels. They also get to set table stakes technology in customer self-service capabilities and the automation of some back-end processes.

Going digital has changed the ecosystem of capabilities available to insurers, producers, advisors and coaches. Technology has helped competencies to grow exponentially, as industry leaders begin to drift away from the “fast-follower” mentality. Instead of simply copying competitor techniques, digital allows leaders to reallocate their investments into core capabilities that provide them with a more customer-centric approach, as well as to find ways to cut through the clutter and differentiate themselves in the market.

While it’s true that modernization of platforms and digital transformation can be a sequential move that involves multi-million dollar price tags, they are also key to a future-proof organization. This is because true modernization will call for a foundational shift in the operating model, underlying architecture, and most importantly, the organizational culture. The result? More flexibility and agility in the organization.

Integrating digital solutions takes a business into the future. It allows organizations to transition from simply aiming to respond to current needs to working toward prolonged success as a insurance company or an agency.

Overcoming Hurdles, in a Nutshell

There are two major ways insurers and insurance producers can overcome obstacles. One is to invest in select capabilities that boost their existing business model and fix structural loopholes that may be affecting the organization’s ability to generate leads or meet targets. It can help onboard a bottom-up approach that identifies core capabilities within different parts of the value chain.

Two is to take a digital-first mindset, but not without understanding the end-to-end customer experience. The transition to digital becomes more valuable when an organization or agency has a clear grasp of how their business models need to evolve to be able to reduce costs and achieve growth. This approach, on the other hand, is driven by a top-down transformation, with the objective of becoming a digital and data-driven organization capable of continuously reassessing its own business and operating model.

Find a Insurance Marketing Partner that Boosts Your Efforts

Finding a marketing partner that assists your growth effort is essential to achieving success in the highly competitive insurance industry. If you find yourself sharing the sentiment of other players in your industry, get in touch with TR King Insurance Marketing, a trusted life and health insurance IMO/FMO based in Virginia. Whether you own an insurance agency that has sufficient leads but needs assistance in reaching out to them, or an independent advisor that needs access to quality, top-rated products by reputable national carriers, we can help.

We help you stay on top of the game by giving you access to powerful resources that up your marketing game, as well as innovative tools that expedite your work processes and allow you to service more customers

Key Takeaways In This Article

  • The insurance industry's pace changes rapid, stay on top by studying, researching, and staying educated. Use technology to enhance your knowledge and skills.
  • As you get objections, write them down. Approach others about how to handle them as guidance (or develop your own).
  • Build meaningful value and trust quickly by providing real solutions to your client's problems in a seamless way. 
  • Don't leave your client hanging, give expectations, let them know what their responsibilities are, and what you'll be taking care of for them.

Over to You

We'd love to hear your thoughts in the comments below on:

  1. What objections have you heard that you still don't have an effective approach for?
  2. Are you getting familiar with using electronic applications and quoting to stay on the top of the technology curve?
  3. How will technology affect the future of the insurance industry?

If you have any questions, please leave a comment below. We will carefully read each one of them. Happy Selling!

About the Author Matthew King

Matthew King is a co-owner of TR King Insurance Marketing and partner at Independent Life Insurance Agent Association. When he's not creating processes, content, and developing SEO strategies, he likes to immerse in gaming with his wife and friends.

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