Understand the State of the Industry with Independent Insurance Thought Leader
Rick Fox steps into the studio to turn the tables – and the microphone – on Michael Jans. For over 20 years Michael has been supporting the independent insurance channel and helping find their voice so agents & brokers can connect with their customers and their marketplace. Join Rick and Michael in a serious analysis of the state of the insurance industry and learn about what is driving change with consumers, how the agent & broker channel is performing and how the insurance marketplace is evolving.
What are other agents & brokers doing to thrive? What are the biggest trends affecting the retail insurance agent & broker? What are the most important strategies and tactics you need to grow faster? Find out here in the Connected Insurance Podcast, where Michael Jans discusses the biggest issues affecting the independent insurance agent and broker with the industries leading figures.
[Transcript] Michael Jans – Founder of Agency Revolution Interview with Rick Fox
Welcome to the Connected Insurance podcast presented by Agency Revolution. Listen to interviews with the most influential people in the insurance industry. Learn the most important strategies, tactics trends and challenges facing today’s independent insurance agents & brokers.
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Rick: Welcome to the Connected Insurance Podcast brought to you by Agency Revolution where we automate your systems, engage your customers and grow your agency or brokerage. Today, we switch seats and we let Michael Jans do more of the talking. I’m going to ask him some questions. I know he’s been out in the industry, widely thought of as one of the industry’s thought leaders, knows a lot, been around for a little while and welcome Michael.
Michael Jans: Thank you very much, good to be here.
Rick: So, Michael, let me ask you a question, I know you’re spending a lot of time thinking about the state of the industry and what that means for agents and brokers, how do you feel about what they’re facing today?
Michael: That’s a great question and I– so, we’re going to spend the next 20 or so minutes talking about that but I’ll give sort of a brief overview and how I arrived at that. Probably not everybody is aware of the fact that I’m not the CEO of Agency Revolution. I’ve sort of been elevated or graduated or something to become executive chair and what that has allowed me to do is get out of the time-consuming day-to-day operations and really spend time doing what I love doing which is researching, examining, thinking, testing, probing, talking, listening and being either– frankly, I spent a tremendous amount of my time reading the research that’s being presented on the industry right now and talking to the people who are delivering that research.
I feel like I have the greatest job in the world and I feel like I have an obligation to take what I’m observing right now and find a way to package that so that it makes a difference to agents and brokers. I want to be very straightforward, very honest about my answer to your question about how I feel about it.
I think that they’re– unequivocally, there is absolutely no question in my mind that the period that is coming is going to be different than anything we’ve experienced before.
I think that after serving agents for almost 25 years and loving agents and brokers as much as I do; number one, I get to be a little critical about performance, and number two; I probably have an obligation to tell the truth the way I see it. I think that it’s kind of like here in Central Oregon on the Deschutes River, we’ve got a few class three an class four and maybe class five rapids, some people are going to take their kayak or their raft through those rapids and do just fine and some of them are going to get spilled.
I think that’s kind of what we’re facing is that in the next few years, the more skillful operators are going to be fine and they’re probably going to win and grow and get more market share, but I also think that we’re going to be facing some turbulence and those who are wishing for the old days are not going to get the old days and the old practices are not going to work.
I think we’re going to see a period where the winners and the losers get separated.
Rick: What do you mean by that? Like what is going to cause those changes? Let’s start with the consumer itself. What are some of the things that consumers are doing differently today that impacts the independent channel?
Michael: All right, well, that’s a great question and I think that’s the thing. That’s the driving force that changes everything and because of changes in consumer behavior, which are largely driven by changes in technology and their interaction with technology, then other changes are going to happen. I’ll get to that in a moment but it’s interesting you guys about changes in consumer behavior. I’ve been asked to keynote a presentation in California for insurance company executives and I’m speaking on the topic of changes in consumer behavior. It’s a topic with which I’m pretty familiar and one that I’ve spoken about a number of times.
As I was thinking about getting ready for it, I realized that if my research was more than two or three months old I probably had to update it all which I did.
I’ll share with you a few– and no doubt if somebody is listening to this conversation two or three months, some of these numbers are going to be old because they keep growing.
Rick: This podcast expires in 60 days.
Michael: Let me share a few things that I think are really important and I’m going to be– I won’t cite every source because each one of these comes from almo– most of these are coming from a different source and so to get the sources, visit my blog because I write about this a great deal.
81% of consumers research online before shopping. 88% of consumers trust online reviews as much as they trust what a real person says to them, like a friend or a colleague.
65% of the population read more than four reviews– between four and more than 52 reviews, okay, but a minimum of four.
98.4% of the population checks their email at least once a day. In other words, everybody reads their email and almost 40%, 39% of the population checks their email, get this, between 10 times and as they would put it, throughout the day. In other words, basically they’re on their phone all day long.
In fact, how much are they on the phone? 145 minutes a day. This is an average, 76 separate sessions. 87% check their phone between midnight and 5am, all right. Here’s one that I think is just a crazy number, so think about this one; the number of discrete touches that the average person execute on their phones, so in other words, if you’re dialing a number, you’re going touch, touch, touch, if you’re reading something and then you click a link or something like that, you’re touching it, you’re swiping and so on and so forth okay. They counted that the average person is touching their phone discreetly 2617 times a day.
I can go on and on about the fact that almost everybody’s on Facebook and so on and so forth, but clearly the change is this, I mean, if you and I were talking about this let’s say 15 years ago, we wouldn’t even know what we were talking about, right?
Michael: And now this is how people live, this is how people think, this is how people read, this is how people research and shop and so clearly the big change in consumer behavior is that they are digital and they do almost everything. They either preface the activity or they perform the activity using some digital device.
Rick: That means for yesterday’s agencies that are yellow pages and things like, that’s gone. It’s just gone.
Michael: It’s somewhere still on the internet as my old report 25 ways to write a killer Yellow Pages ad that I– nobody’s been asking for that lately.
Rick: All right so, research I’m reading, there’s been some pretty rough things said about agents and brokers lately. Do you think they’re right? Do you think that research and that those harsh words are correct?
Michael: Well, unfortunately, I do think they’re right and the reason I think they’re right is there based on science. These aren’t just opinions. These comments are generally made by one of the large research or consulting firms like, well let’s take like Forester, okay, they do more surveys than– I think than anybody on the planet except for the US Census Bureau, all right, so they’re going out and they’re finding out; how do people really feel.
I remember it was about a year ago, I saw an article in the New York times and it quoted; now my friend Ellen Carney from Forrester who said– she said there are 40,000 agencies in the US you could absolutely see them shrinking by a quarter.
I reached out to Allen and since then we’ve become good professional friends and I’m going to quote her, this is Ellen being Ellen, I’m not certain this is Ellen representing Forrester but this is this is something that she shared with me, she said “Right now, consumers are looking for a great experience. Other industries have raised the bar for insurance carriers and agents. Consumers aren’t just ready to defect but to tell the world about their crappy experience.” So we’re seeing a lot of startups and they’re tracking over 400 startups that are disrupting or transforming or innovating our industry. It was also about a year ago, I had a conversation with Sam Friedman, who is the lead insurance researcher for Deloitte and then shortly after that, they published a report that said, in the small commercial arena, 60% of consumers don’t feel that they get value from the agent other than shopping for the policy, wow. When we say that the thing that we deliver that they can’t get from a device or a digital relationship or an 800 number, we deliver relationship. When the consumer is saying that, obviously we’re not delivering on her own promise.
Last week I was preparing for this keynote, I went back to see if they had updated the research or if Sam had anything else to say and they had done a survey where they asked; what’s the likelihood that you would buy your commercial insurance online? Yes, not likely at all, somewhat likely so on and so forth. Between either very likely or somewhat likely, 100% of the respondents said that they would be willing to do it online.
Clearly, I think that– I mean, there’s– nobody advocates more for the broker than I do. I mean, I love the channel and I think we deliver something incredibly important to the consumer but we have to make a change in order to make that happen.
Rick: I’ve heard you say many times that the money is in the relationship, that’s kind of been one of your catchphrases for quite a while, how do you think today’s agent is doing on relationship.
Michael: I think the industry as a whole is not doing well on that and that is also true for the broker channel. A while back, EY, formerly Ernst Young, reported on our industry that 44% of insurance consumers report that they have had zero interactions with their insurance provider in 18 months and 86% of insurance consumers told them that they are not very satisfied with the communications from their insurers.
So, as a whole I would say the industry is ripe for disruption and the broker channel is– there’s an impracticality here, so I want to come to the defense of the broker. We want to be in relationship with our customers, I know that’s important but as Mackenzie pointed out about four or five years ago, the economics don’t support it.
You cannot pick up the phone or go visit every customer, I mean let’s say you’ve got 5,000 customers and maybe your average commission is $200, $300, $400, the economics don’t allow for the manual labor to make outbound calls to them. Add to that, the fact that there was another report from a company called Em-blocks that said eight– I think was 84% of consumers don’t want your phone calls anyway, they don’t want their insurances– so that’s not the way.
Unfortunately, we’ve seen a couple of things happen. This is the time of year when all of the consulting firms are more or less most of them are producing a report on; what’s the state of the industry and what is the industry have to look forward to?
There are a few messages that are really strong but one, is their message to carriers is that they believe that carriers need to take responsibility and quote-unquote, ownership, of the customer relationship and so– I’ll share this one with you, this is also from EY’s most recent report on global outlook for the industry. They said, “Be ruthless with brokers who are damaging the long-term economics of your business.” so and they’re not the only ones saying that, Mackenzie said something very similar to that.
I think part of what we’re seeing is that carriers feel like– for their own customer lifetime value of, their own growth, profitability, revenue, they need to take more responsibility for the customer experience and they’re not going to wait for brokers to figure out how to do it.
Rick: So that’s a pretty good segue here into what I think is kind of at the crux of this whole thing which is Insure Tech and the disruption that’s happening and I kind of put you in the category of one of the very strong advocates for the independent broker channel, the independent agent channel, but let’s get practical with this, what does today’s agent do to win?
Michael: Well number one, I think they have to be aware of the fact that change is coming. This Insure Tech buzzword, it may not have felt terribly real, I mean obviously we’ve seen some brokers, digital brokers arise that are funded by Insure Tech Venture Capital. But most people have– we haven’t started losing a lot of customers to them yet.
I think it was this morning, I saw an article or a posting and as I recall, it was from Sealant and what they had said was about Insure tech 2016 was a year of hype, 2017 is a year of value. I think people are beginning to say “Ah.” it’s going to become real.
So number one, the worst place to gauge trends and major forces is in your office, sort of like Wednesday feels like Tuesday and Tuesday felt like Monday, it’s like one day kind of rolls and feels the same until boom, all of a sudden there’s change.
The largest conferences on the planet, I mean not just in the United States or North America but Europe and Asia, in the insurance industry or insurer tech conferences and there are a lot of them and they’re getting a thousand, 2,000 people at them and there are probably 15 or 20 that you could find fairly quickly. Number one is we just need to be aware and then number two, we have to do that thing that– I mean this has been my soapbox sermon for a long time, we have to create meaningful relationships and deliver ongoing value. We have to be able to do that.
Mackenzie put out a report fairly recently on– where is the money going in Insure Tech and I think every broker needs to listen to this; they’ve identified 15 different categories where the Insure Tech money is going and last year was $1.7 billion. So, a lot of money, okay.
Of all of the 15 categories, the one place where the most money is going by a long shot is property and casualty distribution, not product, not marketing, not pricing that claims, distribution.
So those of us who are in the distribution channel, the broker channel, we better be listening to that. I would say that top, sort of high-level overview to your question in a practical sense what do we need to do? The money is clearly in the relationship. It’s not in acquisition in our channel. We need to acquire customers but our standard a core marketing model attract, convert, optimize and retain customers.
Agents will discover that revenue will grow faster, margins will be much higher, customer satisfaction will be higher if they focus appropriate resources on the latter stage of that customer journey. In other words, the celebration– yes we should celebrate when we get a new customer and bell should ring and we should feel great about it, but we should feel really great as that customer feels like they’re being guided through a customer experience or a customer journey that makes them feel like they have a provider that they love and that they are loyal to. Clearly, that is where the money is, I’m not going to take a lot of time on it now but I can show the Math on it and of course our own clients can demonstrate in case studies that when you make deeper relationships and you continue to deliver ongoing value throughout the customer relationship, that’s where the greatest growth is going to be and that’s what our channel.
I think agents need to think strategically. The digital channel, the emerging digital channel; they’re going to be better at things that were not good at.
I mean clearly, they’re going to be in your smartphone and you’re going to be able to do things 24 hours a day in that channel that you’re not going to be able to do in our channel for a while. There are other channels like the direct channel that frankly, if you take all of the expenses and the combined ratio, you’ll discover, you know what? It’s a little bit cheaper to operate. We’re not necessarily the price Channel and I don’t think we should be. We’re not necessarily the convenience channel but the strength that we build is the relationship and we need to get back in the business of building relationships. We just to do it the way that it happens now, not the way that we did it in the 1990s.
Rick: And that kind of feels sort of off the cup question. It feels like a lot of agencies get stuck in the if-it-ain’t-broke-don’t-fix-it mode because they’ve been doing things a certain way for 10, 20 years. Is there a–? Let’s talk about technology and that is the thing insure tech is about technology, it’s about disruption, but specific to the agents and brokers, how does technology solve the problem of this communication gap or whatever you want to call it?
Michael: All right, well, just like technology presented a new problem. Technology changed consumer behavior and then because of that, the Insure Tech world is swooping in because they see that there’s a gap between the broker channel and the consumer. Technology also provides solutions and so software does things and allows you to do things that can bring delight to somebody’s life and to the insurance customer. They can feel good about the relationship by getting the sense that you are there.
Rick: While simultaneously making the workload on their staff internally much less.
Michael: Love it, yes, absolutely. Well, it reduces the workload– I mean, it’s magic, right? This is what great software is supposed to do. It makes work less and allows you to do more so, the leverage is incredible.
There are five things that I think that are absolutely critical and software does four of them for you,okay, but the first one is a strategic decision that needs to be taken by the leadership of the brokerage of the agency and that is to make a decision.
First of all, if somebody’s listening to this and they say “All right, what Michael is saying actually kind of makes sense.” My consumers are online, they’re expecting a digital relationship, they’re expecting me to be there like other merchants and vendors are there.
Number one is; we have to make a decision, are we going to do it or not? Are we going to be there or not? So number one is obsess over the customer experience. The customer is our most valuable asset and a loyal customer is our most valuable customer. we got that’s– we have to decide, are we going to live by that and I think historically because this was the sort of the default channel, this was the original channel through which insurance was delivered.
It allowed us to become a little bit complacent; those days are over. Technology then allows us to do four things, number one; after we make the decision to obsess over the customer, it allows us to go from being in our communications, from being passive to being active.
If you go to most– let’s say you walked into an insurance agency or brokerage right now and there were CSRs and producers maybe talking to customers. Those conversations are the result of a passive approach, we’re taking inbound calls from customers, we’re delivering great service to them, we’re responding to them but we are doing it in a passive way.
If we’re going to be responsible and be in control of how our customers think about us and feel about us, we have to go from being passive to being active, that’s number one.
Number two; we have to be willing to go from one-on-one conversations to one-on-many conversations. And that doesn’t mean that all the one-on-one conversations go away, those are important. But it’s like next week, I’m in front of a few hundred company executives and agents, that gives me an opportunity to say something important to the entire group. Digital marketing is just like that, it allows us to say things and deliver value that a lot of people will absorb and embrace.
Next one is we have to go from in our communications to go from being missing to being meaningful. We want make– just because you’ve got digital marketing doesn’t mean you go sell, sell, sell and try to take, take, take.
Advanced marketers know that the magic of marketing is not just how much you can get, it’s how much you can give. We want to deliver ongoing value throughout the year. Then ultimately, and this is the fifth step, it’s, we have to go from the impossible, which is delivering a meaningful communication to everybody at the right point in time to automatic and only technology can do that. A couple of years ago, I added up the number of important life experiences that somebody might have in an agency. Let’s say if a brokerage has 10,000 customers and you add it up, all the new leads, new customers, birthdays, open claims, closed claims, let’s say 90 days out from renew are luck, those really critical touch points, I realize you could easily have 150 of those and they fall into seven or eight different categories, to be able to track them manually, impossible. To be able to do them with technology, piece of cake.
Technology allows us to deliver ongoing value and to create meaningful relationships in a way that is absolutely impossible in the old school way but it allows us to create those old-school relationships where people feel like we’re caring about them.
Rick: Michael, in a nutshell, I mean I know you’ve been out in the industry now and you’re really engaged with all of the stuff you’re getting to do now, I’m going to put you on the spot, three things every agent a broker must read or watch or look at every morning when they get up, not counting agency revolution?
Michael: That’s a tough one. So, if I can take a minute on this. Well, first of all they should read my blog.
Rick: Yes absolutely.
Michael: That is separate and so what I do with my blog is I take this content that I’m consuming, the conversations and the research and I attempt to synthesize it and package it so you can use it. Hopefully each blog gives you something that you can go use. I will say number one it is the Michael Jans blog. Beyond that, that’s a really interesting question. I could–
Rick: Kind of put you on the spot.
Michael: Well yes, because I probably read 30 or 40 sources and so it’s a tough one but I’ll share with you how I do it, briefly. A tool that every agent or broker should have is some kind of the news aggregators like Feedly, which is the one I use. If you use that tool– so what I do first thing in the morning, first cup of coffee, open up my laptop and I take about an hour and I read and so I’ve set my Feedly account so I’m reading everything in insurance, everything in Insure Tech and then of course there are things in digital marketing and software that I care about that I’m going to be reading about, all the insurance blogs and so if you set that up, you can allow Feedly to go find some sources for you.
There’re so many good ones. All of the major consulting firms have blogs that I think they’re worth paying attention to but if you don’t want to go through all that, if you follow my blog, I’ll do my best to synthesize, you might definitely find [foreign] publication, coverture is a really interesting way to kind of see what happened yesterday in the world of insure tech and you know what? She’s always got about three really interesting things to report. I would say I’d say that’s a really good one.
Our friends at Agency Nation have a terrific blog on practical items and I think main thing is make a commitment to examine the resources and if you set up some kind of an account like Feedly or one of the news aggregators, over time, you’ll discover what makes the most difference to you.
Rick: And just so everybody that’s out there, make sure you’re also going to Agency Revolution with Michaels lead, we have really put together some unbelievably talented and influential people in the industry in our podcasts, the blog series, our connected insurance minute is bite-sized chunks of information that would be good for you and your staff. We’ve really tried to set ourselves apart from an informational and educational perspective and have done a pretty good job.
Michael as always, I always learn something when I listen to you, thank you so much for being on with us, we appreciate it.
Michael: Great to be here and thanks to everybody for listening.
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