Creating Value For Clients Could Financially Drain Agents

To beat commodization of insurance, agents have been working real hard to create and show value to their customers. By developing services that can be shown to differentiate themselves from the competition, agents hope to secure relationships. However there is a big disconnect in the real world. The transactional processes of dealing with insurance is getting more time consuming. Computers have made work flows smoother and processes more streamlined but transaction amounts have increased. What time efficiencies that were saved by technology, have been lost by the sheer volume of transactions that have to be completed just to do the day to day insurance business. Which brings me to my main point. Agents create added services for differentiation at the risk of their own survival. With transaction amounts increasing and commissions decreasing, adding services could be the straw that breaks the camel's back. The only way services can be done effectively over time is for agents to charge fees for them. This is what the big guys like Marsh and Willis do already. They figured out years ago that commissions only cover the transactional part of the business and fees have to cover the proactive services. Agents are going to have to do the same thing in order  to survive. The challenge is training a clientele culture that has been used to not paying for agents added value because it was "built in" to the insurance premiums they paid already. Time will tell how this will play out. Until next time be careful out there and know your risks. K

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