The COVID-19 pandemic necessitated sweeping changes in the way people work and do business. Business shutdowns, shelter-in-place orders, social distancing and other measures to protect public health moved businesses and individual customers online at an unprecedented pace.

Insurtechs and other digitally-forward companies gained early benefits as insurance customers flocked online. While incumbent insurers have lagged behind in the early months of the pandemic, their networks of agent and broker relationships may offer a hidden advantage as digital insurance agents become more common as well.

COVID-19 and Customer Demand for Digital Access to Insurance

The COVID-19 pandemic rapidly accelerated the pace of digital transformation for insurance. According to a Bain & Company survey, digital adoption in insurance increased 20 percent globally between September 2019 and September 2020. That’s nearly four times the compound annual growth rate between 2016 and 2019, write Henrik Naujoks and fellow researchers at Bain.

“Recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks,” Aamer Baig, et al. write at McKinsey.

Insurance agents and brokers, already struggling to maintain their market share, took a blow in the first weeks of the pandemic. Yet they can play a key role in building stronger customer relationships within insurance as the pandemic continues and eventually passes.

To protect their own ability to add value and cultivate relationships, agents and brokers will need to focus on their own digital tools and abilities. By doing so, they’ll be able to reduce costs by automating repetitive tasks and streamline the insurance process for customers.

For example, customers expect their agents and brokers to have access to more information than they have and to be able to access that information just as easily as a customer can on their own phone or laptop. When agents and brokers meet this expectation, customers feel reassured that they have chosen the right intermediary to help them with their insurance needs. They also benefit from a faster, more personalized insurance experience.

“One big lesson that COVID-19 has taught our industry: Independent agents will have to change the way they do business,” says Eric White, EVP of distribution at Superior Access. “Having access to the right digital tools is so important in today’s environment.”

Equipping Agents and Brokers to Provide a Seamless Experience

In the early months of the pandemic, use of digital tools to acquire insurance increased. Agents and brokers reported seeing dramatic decreases in business volume and said their biggest challenge was in building new customer relationships, write McKinsey researchers Simon Kaesler, Matt Leo, Shannon Varney and Kaitlyn Young.

The Bain & Company study, however, found that even in the pandemic, customers are relying on offline channels to learn about insurance options and to purchase coverage. The pre-purchase research phase is one of the most common points at which customers want to speak to a knowledgeable professional.

Reimagining the Agent-Broker Relationship

Agents and brokers have long served as intermediaries between insurance customers and insurance companies. As such, they’ve worn many hats, from educator to liaison to first responder when a claim needs to be filed.

As digital transformation has surged ahead for insurance companies, however, agents and brokers have been left behind.

“Independent brokers’ adoption of digital tools for customers remains low in most countries,” write Naujoks, et al. at Bain & Company, with only about one-fifth of brokers in the U.S., the U.K. and Canada offering any kind of mobile access for customers. At the same time, agents are adopting technology that allows them to communicate more effectively with customers, only to find that communication in the other direction — with the insurance company — is clunky or even impossible to do in a digital environment, writes Laird Rixford, CEO at Insurance Technologies Corporation.

We Can Rebuild Them: Toward a Digital Agent/Broker Future

To help agents and brokers connect to new customers and build strong relationships, insurance companies must leverage technology to create a seamless experience.

Insurance companies with the best customer loyalty scores “have made more progress on delivering a digital experience built on simplicity and convenience,” write Mário Conde, Andrew Schwedel and Tanja Brettel at Bain & Company. They took early steps to build digital options, making it easier for them to pivot these or similar tools for agent and broker use rather than for direct insurance sales to customers.

Incumbent insurers with good digital infrastructures can often bring agents up to speed quickly, using technology that brokers can benefit from as well. Often, they do so by deploying technology they have already developed or deployed.

Rethinking Distribution Post-Pandemic

Digital agents and brokers benefit from applying digital tools within their business in a number of ways. These include automating business tasks and connecting with both customers and insurance companies to improve efficiency, build stronger relationships and improve the customer experience, writes Stacy Stevens at Agency Nation.

As with any digital deployment, however, the tools that agents, brokers and insurance companies use are a means to an end. As the COVID-19 pandemic continues and eventually passes, key changes in customers’ attitudes, habits and expectations will continue to shape their relationships with every player in the insurance distribution process.

Some of these changes are already apparent. For instance, in one survey, 27 percent of respondents reported feeling anxious and overwhelmed about their pandemic-related financial situation. Those who purchased insurance coverage during this time valued a fast and simple process over cost savings, and preferred the ability to process policies and claims online, write Graham Boffey and fellow contributors at KPMG.

As Raztech Research Institute CEO Rahul Razdan notes in a Forbes article, the move of many daily activities to digital showed millions of people that alternatives to previously established methods were possible. People discovered there are different ways to do everything from attending school to purchasing insurance.

Even once the pandemic is manageable, the fact that alternatives exist will mean that customers will continue to choose. Moreover, customers will expect such choices in nearly all their daily activities. Insurance companies that make both direct insurance purchases and agent or broker relationships equally effective for customers will engage and keep their customer base, no matter which option each customer picks for any given interaction.

At first, it appeared that insurtechs, digital-first and digital-only insurance companies and products would benefit the most from these pandemic-related changes to daily life. As agents and brokers embrace digital means of doing their work, however, incumbent insurers are poised to embrace a digital environment for the benefit of their business and their customers.

Images by: Andriy Popov/©123RF.com, Olga Yastremska/©123RF.com, milkos/©123RF.com