The insurance industry has seen many changes over the past decade as technology has advanced in leaps and bounds. One of the significant changes in insurance has been the availability of insurance via websites. Now, insurance policies can be written by collecting information from customers online. Insurance carriers are increasingly relying on Direct to Consumer (DTC) models of selling insurance. Does this mean that agents will soon be cut out from the equation altogether?
What exactly is the DTC model of selling insurance?
The DTC model allows customers to pay directly for their insurance to the insurance carrier. The agent does not act as an intermediary. Usually, the insureds go online to the carrier website, fill in the necessary details, make the payment, and they’re done!
The popularity of the DTC model is a result of the opportunities for savings and the personalization that it allows. Additionally, customers find it more upfront. They are making their insurance policy decisions themselves. This gives them more control over their purchase.
On the other hand, insurance carriers love the DTC model because they do not have to keep agents on a payroll. With customers willing to fill the paperwork through an online portal, carriers can cut costs on hiring. Furthermore, getting to customers directly makes it easier to tweak products according to what’s popular and what people are looking for.
What does DTC mean for insurance agents?
As is evident from the above points, the most obvious consequence of the DTC model is reduced job opportunities for insurance agents. When clients have the choice of going directly to the insurance carrier, they are less likely to approach insurance agents. Agents are increasingly treated as unwanted middlemen in the policy purchase process.
However, that isn’t the only negative effect. Many agents find themselves strained in their day to day operations. Now, with the rise in popularity of DTC insurers, agents are faced with clients looking for more options and more personalization of their insurance policies. When before, most insureds would happily go with the first carrier their agent recommends, now they like to shop around before making a decision. Unfortunately, appointments with multiple insurance carriers is a demanding process. Not all agents can offer a multitude of policy options. Competing with the DTC model is taxing for insurance agents. The DTC model has been a curse to many insurance-selling professionals.
Does this mean insurance agents will become redundant?
Does the rise in popularity of DTC herald the end for insurance agents’ careers? Should they start looking for other career options?
While the DTC model has made many insurance carriers change how they offer insurance, it’s not the end of the line for insurance agents just yet. The DTC model of insurance is only feasible for simple insurance policies, such as auto. For more complex policies like professional liability, DTC isn’t appropriate. The expertise and experience of agents are necessary for making decisions on policy limits and other details of such insurance policies.
Nevertheless, insurance agents need to be on their toes. Keeping up with the latest technology and developments is no longer optional — it is compulsory for survival in this ever-changing industry. To match customer purchasing habits, insurance agents will have to offer multiple options. In order to adapt to new consumer demands, agents are already finding new ways to run their business. Many choose to go independent rather than stay as a captive agent. Of these independent agents, some will become part of professional alliances, i.e., aggregators. These aggregators provide good standing with insurance carriers because of their cooperative approach. As a result, getting appointed with multiple carriers is simpler.
It is clear that insurance carriers, as with other businesses on the rise, are always on the lookout for what best serves their customers. For now, it’s DTCs. In the future, it may well be smaller niche-focused clusters. It’s up to professionals in the field to stay updated on the latest developments, but staying in the know isn’t enough. Insurance agents will also have to refocus their energies accordingly to remain relevant.