The Top 4 Reasons Why Independent Insurance Agencies Are Vulnerable For Disruption In The Next 5 Years

During the last decade, carriers, investors, and startups have been creating “innovative” products to try and capture some of the independent insurance agency’s business. Despite InsurTech investments increasing 1382% from $270 in 2013 to $4B  in 2017, independent insurance agencies still sell the most P&C premium out of any other insurance distribution channel. With almost $7B invested in systems and advertising in 2015 by direct writers (carriers) and digital agencies, it’s becoming harder for independent insurance agencies to maintain the leader in the insurance market. 74% of insurance shoppers in  2017 started online at a US carrier’s (direct writer) website or an online aggregator (digital agency). Although only 24% actually purchased online - you can expect this number to grow year-to-year as direct writers and digital agencies optimize their systems. 


Among the many InsurTech companies trying to take the independent insurance agency’s business, there are a few trying to help the independent agency. XILO, an insurTech company based in San Diego, was built as a sword and shield for independent insurance agencies to fight back against direct writers and digital agencies. 


Before we go further into XILO, let’s discuss the real problem of why independent insurance agencies are so vulnerable for attack.


#1 They’re not tech savvy

Most independent insurance agencies are not tech savvy. I’ve spoken to a few out of thousands of agencies who I’d consider technically adequate. Direct writers and digital agencies are spending billions of dollars to outpower the independent agency with technology, which leaves the agency hopeless, right? Wrong. Independent insurance agencies have the ability to be on the ground, working personally with local clientele, something no direct writer or digital agency can do. Because of this, any tech savvy independent agency could overtake the two competitors any day of the week.

#2 They’re focused on offline clientele

I’ve spoken to thousand of insurance agencies and one common mistake is they focus tremendously on their referral and walk-in clientele, leaving the online market alone. This may work for the next few years, but insurance will eventually be an online consumer market. This doesn’t necessarily mean everyone’s buying online, it just means they’re shopping around more. If your agency doesn’t have the correct experience to convert these online shoppers, your business will surely be hurting in 5 years when this market movement becomes more prominent.

#3 Their online client experience is bad

Direct writers and digital agencies spend billions a year to optimize their online experience. This isn’t just to build the credibility of the organization, it’s to increase the conversion rates from website visits to leads. If an average insurance agency converts at 1%-8% of form visitors (industry standard), they’re converting 22%-62% less than the average online competitor. Independent insurance agencies need to change their online experience to match that of the direct writer and digital agency if they want to compete in the insurance market over the years to come. This includes providing clear call-to-actions, providing a quoting experience, an estimated quote, and being quick to service the sale.

#4 Executives are not foreword thinking

Great business strategy starts from the top of the organization. Direct writer and digital agencies are beating down the door of innovation every day to try and take the independent insurance agency’s business. Where are the independent agency owners during this attack? They’re funneling marketing spend into yellow pages and direct mail. I have nothing against offline advertising, it’s definitely worked in the past. Agency owners need to be more forward thinking. I spoke to an owner the other day who’s built 2 top-performing captive agencies and is now working on his first independent insurance agency. In just a few short months, he’s built his business to receive 30-40 online leads a month. This may not be incredible, yet, but he’s seeking technology to increase that number, and for that reason, I foresee him being a dominant independent insurance agency in the next 5 years.


This article is not meant to bash the independent insurance agency. I believe that independent insurance is the present and the future of the market. It’s meant to warn stagnating agencies of what’s to come if they do not improve on these four vulnerabilities mentioned. 


How does XILO help with all of this? XILO is built for the forward-thinking agency owner. It's the same technology that direct writers and digital agencies are using, put in the hands of the independent insurance agency. It helps those agencies who focus online and care about their online client's experience convert in the 40%-70% range and not the industry standard - 1% - 8%.


If you’re interested in checking out the XILO product - use the XILO DEMO tab to demo one of our products. Schedule a demo with us below to get the full scope of all the value XILO has to offer.


Most Popular