Editors' Cuts

Buying vs. Selling

Chris McMahon
Insurance Experts' Forum, August 8, 2013

Nothing happens until somebody sells something; that's the old adage anyway. But consumers today are not only different, they are changing. The Web has democratized the marketplace, unlocking access to information and enabling consumers to make more-informed decisions and better choices.

In many cases, the Web effectively has ended the existence of asymmetrical information. Remember what happened to travel agents, for example? Agents and producers may be able to put together the best quote and product offering for a consumer. But it's also possible, and increasingly likely, the buyers already may have the same technology, access to information and the opportunity to find a better deal for themselves faster.

Personal lines insurers were first to offer and feel the effects of online sales. As their technological capabilities increased, insurers increased their advertising expenditures dramatically. In 2011, for example, 16 P&C insurers spent more than $50 million each on advertising, according to research firm SNL Financial. GEICO led the way, reportedly spending $994 million that year, having increased advertising expenditures more than 10 percent from the previous year. And that was actually below the industry's average advertising growth rate of 14.9 percent, SNL reported. Online sales of personal auto insurance for example increased to 17 percent of the market in 2011, according to research from Novarica, up from just 7 percent in 1995.

Now commercial lines insurers are beginning to offer online portals for sales and self-service. Early adopters, including Hiscox, Foresters, OneAmerica and others, are going out of their way to extend that technology not only to buyers, but to agents in an effort to simplify and accelerate sales cycles and lessen the administrative burden of servicing those buyers. "Online/direct doesn't mean no people," Novarica offered in a recent report.

Insurance can be complicated and even the best-informed consumer wants advice - from family, friends and professionals. And that's where the opportunity for differentiation lays for insurers. Consumers need insurance, they may even want to buy, but they don't want to be sold. As insurers plan for and create opportunities to buy insurance online and offer self-service channels, they are realizing that they still need the agents. And agents are realizing that though their roles may be changing, they are in a position to benefit from many of those changes, and spend more time having better interactions with buyers.

Chris McMahon is a senior editor for Insurance Networking News.

Readers are encouraged to respond to Chris by using the “Add Your Comments” box below. He also can be reached at chris.mcmahon@sourcemedia.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

Comments (1)


Please don't confuse my story as any sort of advocacy. Clearly, an informed decision is better than an uninformed decision every time. The points I was trying to make are that consumers have greater access to information and are being habituated to making their own decisions and acting on them, enabled by technology and with fewer intermediaries, whether they be bank tellers, travel agents or checkout clerks at the grocery store.

I think you're right , agents do perform a very valuable service in offering informed opinions on risk management, and those who thrive are those who overcome consumers' inertia and lack of knowledge to help them make good decisions. Insurance is complicated and agents are uniquely capable of interacting with consumers directly, over the dinner table, to get it done. I'm not so sure about your scapegoat remarks, though. Buyers' remorse isn't confined to the insurance industry.

Posted by: Chris M | September 23, 2013 12:43 PM

Report this Comment

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

To Quantify or Not — That is the Question with Modernization

Making the quantitative case is a long-practiced ritual in many insurance organizations.

3 Reasons DevOps Matters

Every insurer needs to compete on products and information turned around in light-speed fashion.

Coordinate Coverages to Manage Social Media Exposures

The bottom line is that no one policy will cover all the exposures in the social media realm.

The Internet of Things: Helping Insurers Make Better-Informed Decisions about Risk

The IoT is a major game changer for the insurance industry, and will likely affect every part of the insurance value chain. After all, insurance is data-driven, and that’s exactly what the IoT can deliver—relevant, actionable, real-time data that can provide an accurate picture of what is being—or may be—insured.

Software-Defined Everything

What does it take to virtualize all the key components in your data center?

On Thanking the Regulator … Really

The Financial Conduct Authority is demanding higher standards of consumer protection from insurers, which could lead to greater customer engagement and understanding.