Insurance Strategy: Moving Beyond “Sold, Not Bought”

They say insurance is sold, not bought. They say the onus is on the agent. You can’t expect consumers to go out of their way to buy non-compulsory insurance products; people don’t think about things like that. Even those who do will probably postpone indefinitely: permanently inking the purchase on the “someday, when I’ve got extra” list.

Or so they say. But is the conventional wisdom behind the agency distribution model still accurate?

Distribution in a consumer-driven economy

In a climate where agents are the ones who generate transactions – where insurance is sold, not bought – the complexity and emotional distance that separates consumers from products may not be a problem.

But we live in a consumer-driven economy. According to Maria Ferrante-Schepis, the managing principal of Insurance & Financial Services Innovation, consumers now have access to capabilities that simply didn’t exist when the agency distribution model was formed. They can control the flow of information, the experience, even the sale. They’re not unwilling participants anymore, but active players. Perhaps, like author Alvin Toffler who coined the term, we’d do better to think of them as “prosumers.”

“As an industry, we have convinced ourselves that nobody wakes up in the morning and wants to buy insurance unless someone makes her do it,” said Ferrante-Schepis. “This … had truth to it in the days when consumers did not have access to information like they do today.” But for today’s customer? They’re likely to find that assumption “disrespectful … even arrogant.”

The climate has changed. And the agency distribution model is maladapted to survive in it. The sold-not-bought mindset may have served our industry in the past, Ferrante-Schepis said, but it’s hurting us now.

In an evolving climate, are agents dinosaurs?

This is not to suggest that agents are fated for extinction. “Agents can live without this paradigm – and likely be better off for it,” said Ferrante-Schepis.

It is, rather, to say that it’s time for the model to adapt. To evolve. In times of ecological flux, it’s the most adaptive species that win out; industry flux is no different.

What might that evolution involve?

• Education. Consumers will not shop for a product unless they believe they need it. They need to understand how the product connects to their needs.
• Urgency. Later is a synonym for never. Consumers must feel the purchase is time-sensitive; most importantly, they must feel its importance.
• Simplicity. Overchoice can interfere with purchases of all kinds; in insurance, there are many options and enormous complexity. Consumers must be able to get themselves to a point in the shopping process where they feel confident that the product they’re considering is “the one.”
• Experience. Hard-to-sell products damage the customer experience and increase abandonment. A 2014 study revealed that almost 19 million people got stuck while shopping life insurance, so couldn’t complete the purchase, Ferrante-Schepis said.

To address these issues would mean moving from an industry-centric distribution model to a sales process that’s more equally balanced between agent and customer, insurer and insured – where the industry’s job is to cultivate demand, deliver a better experience, and court the interest of active customers who want to take the initiative, themselves, via direct sales.

Whatever the future may hold in that vein, it’s important for insurers to be ready. Choose the right software, and be prepared to adapt as needed. Does your insurance software facilitate the direct-to-consumer sales process? If not, take a closer look at Silvervine. Request a demo here.