In these times of economic hardship, even the normally solid insurance industry is being hurt, and that includes the technology sector of our relatively placid world, but a new study suggests that agents may feel the brunt of the damage.
Just how will the economic downturn affect the planning and spending decisions carriers will make? There is no doubt that insurance companies have been among the many unwise investors in poorly-backed securities, and that has certainly taken its toll. The real question is how insurers will attempt to offset such losses–and what role technology could play in such efforts.
A recent report by London-based market analyst Datamonitor suggests that one change insurers will make will be a move toward more direct online sales, enabled by today’s technology.
Competitive marketplace conditions and changing customer habits are also driving insurers in the U.S. to find ways to save money, and one such way is to invest in direct online sales strategies, according to Datamonitor.
“By developing an online sales strategy, insurers are able to lower customer acquisition costs, as well as gain control of the customer relationship,” the researcher says. “Wide scale adoption, however, will be tempered by the fragmented regulatory regime and the powerful agent forces in the U.S.”
Indeed, “tempered” may be a severe understatement. Are mainline insurers-property-casualty or life and health–really prepared to cut out the agent? Are we going to see a wholesale abandonment of the agent channel in favor of all-direct sales online? The Datamonitor research focuses on personal lines, but the market pressures and the need to make up for poor investments reach across the insurance divide.
Apparently this is what is being touted. According to Datamonitor, “Today’s market is challenging. Insurers are facing a soft pricing environment, as well as poor investment income. The combination of these two factors is placing great pressure on the bottom line. To bolster their competitive position insurers need to adopt cost-efficient sales and servicing strategies, as well as improve the customer relationship, both of which are possible with an online strategy.”