Agents have been aware for quite a while now that their business model is being threatened. And there has been no more threatening battleground for the past ten years than the Internet. Traditionally, people have bought insurance from agents who live and work in their community, whether they are direct writers or independent agents.
As we know, the Internet has a tendency to disintermediate. Who needs a bookstore when you have Amazon? Who needs Blockbuster when there’s Netflix? Who needs the newspaper want ads when there’s Craig’s List?
What’s more, companies like Geico and Progressive actively promote the notion that auto and home insurance are just commodities; same for life insurance. Why go to the trouble of making an appointment with an agent to discuss the purchase of a commodity? Just get online and buy the cheapest policy, right? Or maybe it’s not as simple as that. So if you want to buy insurance without the aid of an agent, what do you do?
The answer is social media, says Terry Golesworthy, president of The Customer Respect Group, a consulting firm that works with many large insurance companies. Getting advice about buying insurance is now just like getting advice about what kind of TV to buy. We ask our social media friends.
The challenge for insurance companies — and agents — is to become part of the conversation. To sell insurance today, you must become engaged with people at the social media level, says Golesworthy in his January 20 blog post: “It is Not How You Want to Sell, It Is About How the Consumer Wants to Buy That Counts.”
This is exactly what insurance companies are now doing. They are engaging or at least attempting to engage on Facebook and other social media. Agents do have an advantage here, though. Insurers tend to have lousy listening skills. As Golesworthy points out, too often insurance companies mistake content for engagement. Instead of providing disaster preparedness tips, they explain how homeowners policies work; that is, they don’t cover flood.
He recommends that insurance companies listen to the customer instead. This, he says, “for most insurers, requires a new content marketing strategy focused on addressing consumer concerns and not on product features.”
So obviously there is a kind of war going on on the Internet between insurers and agents. And the principal battleground right now is social media. If insurance companies can succeed, there may be disintermediation on the scale we’ve seen in the newspaper, travel or retail book businesses.
The challenge agents face today is how to beat the insurance companies at the social engagement game. And there’s every reason to believe they can do it.
Some companies, like Acuity Insurance, with their Facebook sites targeted to specialty groups like truckers, contractors and retailers are already beginning to figure this out. Fortunately, most companies are not this nimble. In niche markets, too, the playing field between insurers and agents is somewhat leveled.
Still, agents shouldn’t be comforted. We always say it’s a people business. Agents need to focus on using social media tools — or concede this battleground to the insurers.