Mandating Insurance & Technology, No Room For Agents

I was thinking the other day about the health mandate and how it compares to the state mandate with auto insurance. Every state mandates by law for individuals to buy auto insurance for the common good. With these statues on the books, the growth of online buying of auto insurance has exploaded. Folks can buy auto insurance without the help of an agent. The mandate forces buyers to the front door of insurance companies. Insurers do not need agents to "rustle" up the business and sell it. So as the studies show, agents are becoming less and less important in the buying decisions of auto insurance. Now comes Obama Care with a fresh supreme court "ok" on the mandate and I am wondering what is going to happen to agents. My prediction is we will see the same trend as auto insurance buying. The health mandate will force buyers to the doors of insurance companies via the exchanges and no agents will be needed to produce the business.  Agents will also be forced out of the equation by technology, as the health exchange online portals will provide application and buying choices, similiar to what we see with online auto insurance websites.

The good news for agents is that studies still show that people want to talk with an agent or broker right before they buy. They use the conversation as a little reassurance that they are making a good buying decision. Unfortunately, insurance companies know this and are not going to pay agents the same amount of commisssion as in the past just to fill this roll. The future for agents is pretty clear.
As Federal or State governments continue to mandate insurance, technology will push the role of agents into a minor state of "final resource" before insurance buying. Agents will still be in the game but paid at a lower rate for thier services. Bleak ?  Yea it seems that way. Gosh I hope I am wrong!
Until next time be careful out there and know your risks. K

Blog by Kevin Nemith, President CNC Insurance Associates Inc. & The Small Business Insurance Center. Specializing in Business Insurance , Small Business Insurance, Risk Management, & Enterprise Risk Management.

Popular posts from this blog

Delaware Legislature Preparing To Revisit Dram Shop Liability

Here we go again. Representative Peterson is preparing to introduce limited dram shop liability for consideration. The legislation caps the liability at $250,000 but, as is usually the case, this creates a starting point where limits are eventually increased once it's decided by the powers that be that the current limit is too low. This also puts restaurants, bars, etc, at an increased risk due to the vague wording of the legislation, specifically "reckless" sale of alcohol by the business. Also, you can be sure that if this legislation is passed, that rates will go up commensurately for not only Liquor Liability coverage, but if actual damages begin to be paid out under this law, that insurance rates on the whole will see an increase.
Read more

Get employees back to work quickly to keep work comp costs down

Image
In the past I have spoken to clients regarding a particular workers compensation claim affecting them and have asked if they have brought the employee back to work yet. Too many times the answer is no, they have nothing for that employee to do since said employee is not 100% and unable to perform their specific job prior to their workers compensation injury/claim. The problem with this is that too often employers miss the point that even though an employee can't perform in the position they were in prior to their injury, it behooves the employer to create some type of alternative task/job the employee can do until such time they are able to resume their normal duties. Bringing that employee back to work means that work comp benefits /payments in that particular claim are being curtailed, thereby saving the employer potentially more being paid out, while adding to their experience mod and driving their overall work comp expenses up.
Read more

Important to notify insurance company of potential liability claims

Image
When trying to manage their insurance policies, many business owners make the decision not to turn in potential claims and decide to take care of them on their own. By paying for small claims, such as property damage, etc, they strive to keep claim frequency down and in turn keep renewal premiums down. One area of insurance they should not try to manage though is potential liability situations/claims. Most policy conditions require prompt notification of any potential liability claims to the insurance company and if a claim isn't turned in promptly, the policy language does note that the company can deny a claim due to late notification. It's important to do this early on since information/memories are still fresh and it gives the insurance company time to completely investigate the potential claim. The potential for a liability claim is most likely the small business owner's greatest area of risk, whether they operate a restaurant, cleaning service or any other busi...
Read more