Relationship: the way in which two or more concepts, objects, or people are connected, or the state of being connected…this definition very much applies to the agency and customer relationship.
Insurance agencies want to have long-term relationships with their customers. It is the driving mission of an insurance agency to retain as many customers as possible and for as long as possible. Agencies want to provide all the policies that may be needed by a customer, which requires a strong agent and customer relationship.
But the nature of this relationship is changing in today’s digital insurance world. We at TechCanary see three basic kinds of relationships forming.
1. The Traditional Insurance Agent and Customer Relationship
This is the tried and true relationship the industry has relied on for decades. Here a strong bond develops and the customer prefers dealing with a specific agent for both sales and service. This may be more typical in captive agencies.
2. The Team Relationship
There is another type of agency that says there is no exclusive relationship between the customer and insurance agent, that the relationship is with the agency as an entity or a team within the agency. According to this model, you have a separate group of sales agents that only sell and a separate group of customer service representatives that only service. With this model you could still have many satisfied customers. I would surmise that this is successful as long as you have experienced customer service reps that provide good service which in turn creates a relationship with the customer. Here, part of the relationship is forged between the customer and the customer service rep and another part between the insurance agent and customer, which then makes the relationship between the customer and a team, or the agency itself.
3. The Web-Based Agency and Customer Relationship
Then there is another model that says it’s all about price and how fast you can deliver. If your agency has the best price and can deliver on the customer’s schedule, you have their business. Today, we have web-based agencies that may never meet their customer. Yes, there are customers that prefer this type of insurance agency and doing their business online. Many customers only want to get the insurance, sign by electronic signature such as DocuSign, and move on to the next thing. They don’t care about developing a relationship with their agent; they want the best deal and the quickest solution.
I know this first-hand, from personal experience. I needed to get home owners insurance when we were closing on our house. We were with a captive insurance agency for our auto and life insurance but they weren’t writing home owners insurance in Florida at that time. I called many other local independent agencies in my area that I could easily drive to within 30 minutes. None of them returned my call to obtain insurance through them before the house closed. Thankfully, six years ago, there were agencies online that could provide home owners insurance anywhere in the state of Florida.
I found an agency about one hundred miles away from me that wanted my business and got it done for me. I ended up staying with them for about 3 years before I developed a relationship with a local agency and changed to them. Did I have a long-term relationship with the remote agency? No, but, they were responsive to me and they held my business for three years. Not a bad return on their part for their quick turnaround time. Based on my personal experience, I would venture to say there are other customers that don’t care if you’re hundreds of miles away. Here the agency offers convenience and comparison shopping to provide the customer the best price among a number of carriers.
There are many agencies that have carved their nitch in one of the three models and are widely successful at it. The relationship model they have picked can even be their competitive advantage. Yet, I wonder if to compete in today’s digital insurance world, an agency has to support one or more of the agency and customer relationship models to be competitive and grab a solid base of customers, some of which stick around for a long time, some for a few years and move on.
This is one of the reasons TechCanary has placed an emphasis on the customer experience and the agency and customer relationship in designing our agency management system. What ever model you have, we believe it is important that your AMS adapts to it and optimizes it.