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4 key challenges facing the insurance industry

Posted on Dec 22, 2016 by: Scott West

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An annual study evaluates new challenges facing the insurance industry. Let’s take a look at the four key challenges spotlighted in this year’s study. What does each challenge mean for your business? How can technology help you overcome these challenges and succeed in the digital era?

1. Agency growth is slowing

In the competitive landscape, consider the following:

  • Who is your target customer?
  • How can your agency deliver a unique value proposition to that customer?
  • How can you reach him or her?

Specializing your business in a crowded marketplace will focus your resources on optimal growth opportunities.

How can technology help?

Identifying target customers and finding the right markets for their risks can be complicated. Consider an agency management system that provides a complete view of your total business – both clients and prospects – to identify growth areas within your current book of business and trends within your prospect base to target specifically. Once your business has identified new – and potentially hard-to-place – risks, leverage appetite search tools to quickly find the best markets for your risks.

2. Consolidation is occurring at a record pace

Every day brings a new story on the latest mergers and acquisitions deal happening in the industry. The pace of consolidation continues to steadily increase, with more than 469 transactions announced in 2015 alone (source: SNL financial). This trend presents two opportunities: beat them or join them. Make your own changes internally to compete in a more specialized market and maintain customer retention.

How can technology help?

Firms being evaluated for mergers and acquisitions often review their technological assets. Account management, customer service, employee benefits communications, workers comp mods, rating systems, websites—too many hardware and software solutions can become a nightmare during a merger. As such, consolidating and standardizing your technology and related processes can substantially ease the transition.

3. The workforce is aging

The average age of employees at most agencies has increased significantly, and the Millennial generation has arrived. Developing the next generation of leaders at an early stage is essential to maintaining your position as an industry-leading firm.

How can technology help?

Training and on-boarding employees can prove time-consuming. Leverage an agency management system that has pre-defined workflows built in to reduce time spent on training. Additionally, your agency should consider opportunities to embrace cloud-based and mobile technologies to empower your young staff to work when and where they prefer. By creating a mobile work culture, you can increase operational efficiencies, extend customer service opportunities beyond the office and meet today’s employees demands for flexible working environments.

4. New technologies threaten the traditional broker model

Technology has a profound impact on nearly every aspect of our lives. The expectation for technology and connectivity has seeped into the market's expectations regarding customer service and workplace. Technology startups in the industry target consumers who are increasingly willing to purchase almost everything, including insurance, on the internet. Agencies must meet consumer demand for online quoting and self-service to remain competitive against direct insurance providers.

How can technology help?

Agencies must embrace digital transformation to enhance their competitive value while protecting their trusted advisor role. Provide online customer self-service portals and mobile apps for your customers to access their insurance information anywhere and anytime. Automate quoting processes through enhanced insurer connectivity to provide timelier service while ensuring the best coverage.