While many believe the McKinsey report has caused quite a stir in the insurance industry as of late, I don’t believe that’s an accurate assessment. The information in the report has pushed insurance agents to a point of fear, chiefly from its statement regarding the end of local insurance agents. Comments such as these can cause severe backlash, as well as support, for a number of reasons. First and foremost, I believe the report to be about 85% true. In the report, it talks about three core capabilities that insurance agents need to do in order to survive. The first capability revolves around dividing a target market and understanding that agencies need to look for a larger area. The second is that agencies need to have a defined plan to reach their target market while keeping an open mind as to who they should be targeting. The third core capability is that agencies need to reach out to their target markets in other ways than the traditional advertising tactics. The McKinsey report states that old marketing tactics no longer work and that agencies need to be better at marketing by creating a digital presence online through channels such as Twitter, LinkedIn, and Facebook, which in turn will allow for more flexibility in communication. To me, the most interesting of these three aforementioned core capabilities is the third because it is something many insurance agents have already adopted into their communication strategy. I have yet to come across an agent who doesn’t believe that we need to be more flexible in our communication skills. Social media has become critical to the insurance industry and that’s why the McKinsey report has said that without using social media to communicate, your agency may not exist in the future.
Another facet of the McKinsey report that I feel is very accurate is its discussion about the modern consumer who is now looking for expertise. I firmly agree with this because I believe the consumer is no longer willing to pay for general information; they want the expert knowledge. We as agency owners need to create teams within our agencies to become experts in the different areas of coverage we offer because this will help satisfy the consumer‘s need. The consumer is not looking for us to be a ‘middleman,’ they are looking for us to be so much more. Having a value add will not only satisfy the needs of your consumers, but it is also critical to the future of your agency. Value add gives the consumer something more than just insurance. At Paradiso Insurance, we offer our prospects and clients the opportunity to be a part of our partner’s page- a site that allows businesses we insure an opportunity to advertise on our website. Another value add that we offer to local businesses is a social media marketing class because we feel it’s important to help each business in fostering a lasting partnership, just as their attorney or account has done over the years with them as well.
I feel that as an agency owner, the industry doesn’t do a great job explaining to prospects and clients what we stand for. Have you thought about what your agency actually stands for? This is the one thing that will separate us from all of our competition. For example, I was recently at Motorist Insurance Company and they were discussing where the next trip was for the qualifying agency owners. While they were discussing where they were going, they talked about the qualifications for the trip, and one in particular struck a nerve with me- if you qualified for the company trip, you were only allowed to bring your spouse, not a fiancé, girlfriend, or boyfriend. Motorist Insurance Company set these guidelines because they have chosen to take a stance and believe in their company identity. It’s not whether you like the stance they’ve taken or not, you should commend them for actually have the guts to take a stance on what they believe in, rather than worrying about being political correct.
Another interesting topic that the McKinsey report discusses is that agents position themselves to succeed through operational efficiency and sophisticated marketing tactics, rather than through deep product expertise. I firmly disagree with this notion because all you have to do is look at amazing consultants in our industry such as Roger Sickens and Scott Addis and see how our industry continues to adapt. The key though lies in how fast an agency adapts to the necessary changes, because otherwise that agency will be in deep trouble if it’s not willing to adapt itself. However, I believe that agencies are hiring consultants to assist them in creating efficiencies in their operational management because as I travel throughout the country and teach social media to agents, there is an overwhelming amount of interest in this subject matter, so clearly agents are willing to learn and adapt. Agents are not turning away from social media, they are embracing it and incorporating it into their overall marketing strategy. They need to do it quickly though, otherwise they will be left behind.
The report also metions the decline of agency force within the industry. These are facts, there’s no denying that, but as agents, we need to stop thinking about ourselves and start thinking about the industry. Once we start thinking about the industry, we will realize that our agencies need to associate themselves within our community. One way to do this through our local high schools and community colleges to help the younger generations realize how rewarding and profitable the industry and the field of insurance can be.
Additionally, the report discusses how insurance companies will exert pressure on independent agents because they believe they’re paying agents too much. I disagree that we’re being paid too much because we play a vital role in helping people understand how important it is to have the right coverage. The report talks a lot about how agencies have focused entirely on price lately. Now while this is correct, we have to understand it is not just agents that have caused this, it’s advertisements like Progressive’s Flo that have commoditized insurance. Remember, insurance is NOT a commodity. Insurance cannot be bought out of a box like Flo lets on in her commercials. We need to educate the public and explain the importance of what they are actually purchasing and how it plays a role in their financial future. We as agents need to move away from selling on price because consumers will leave you on price as well. It’s our responsibility to hire consultants to help work with our sales teams to educate them on how to become better salespeople. It is our responsibility as agency owners to invest back into our most valuable assets: our sales team.
So while you may or may not agree with what the McKinsey report has said, you can rest assured that I stand firm in my belief that this report is wrong to say that the era of the local insurance agency is over. First, insurance agents have by and large become a focal point of the community through involvement in town basketball and soccer programs, Little League, softball, and church functions. Secondly, insurance agents will also remain because insurance is not a commodity, and lastly, agency owners are realizing that it’s no longer satisfactory to simply sell insurance and be insurance agents. Agency owners have realized that they have to run a business first and sell insurance second. Numerous owners are investing time and money to become better leaders in the hope to eventually become better entrepreneurs to fight direct writers for personal lines insurance. Personal lines insurance should be purchased through local agents, and it is our job to fight direct writers with tools like social media marketing. If agents continue to focus on hiring better marketing and social media engineers, we will turn around the statistics of the McKinsey report. We may not win every battle, but we will win the war because agencies have become the backbone of the American community.