A Virtual Insurance Agency is Not What You Think It Is

If you’re anything like me, you’re getting really tired of hearing about the so-called “Virtual Agency”. I'm tired of hearing about it because all of the stories and all of the articles in the trade press take one of two forms:

  • The first is a version of the Chicken Little story, which we've all been hearing for at least two decades.
  • The other is the story that makes it seem like the virtual agency is some brand new thing. It's not.

The virtual agency isn't new

Why do I say that?

Any virtual business is nothing more than a business, in which some or all of the sales and service function is not done through face-to-face human interaction. That's it. Simple.

With that in mind, almost all retail insurance agencies have been virtual to some degree for years. If you think about it, it's more than likely that most of the client interactions and customer service that you and your staff have in your agency with clients is done either on the telephone or via email. In reality, a very small part of your relationship is based on face to face communication. Am I right? 

Over a quarter of a century ago, I built a large book of workers compensation business based on an automated marketing program that cranked out marketing materials to my target markets on a pre-determined basis, which resulted in phone conversations with prospects. 

Those conversations resulted in applications, quotations, and insurance services sales in which I never met the client. I still have some of those clients today, over 25 years later, and in many cases I have a personal relationship with those people whom I've never met face to face. That book of business has been virtual from the beginning, and for a very long time. 

Most people think a virtual insurance agency is some sort of digital agency

The digital agency

While agencies’ virtual operations may be in whole or in part digital, i.e., online, this isn't the only case. In fact, most people think that a digital agency is something that's 100% online, impersonal, and driven by algorithms. While it may be the case for some insurance agents, that won't be true for most of us in the insurance business.

"For most independent agents, digital simply means increasingly using technology (as it becomes available) to let clients communicate with us and receive service in their preferred method."

It means new ways of automating marketing. We've automated marketing for a long time, and so digital simply means new ways to do what we've always done. Digital means new ways to automate routine client communications. Many agencies have been doing this for up to three decades now to life and health insurance. 

Digital also means new ways to automate routine service requests like certificates of insurance, security verifications in claim filing. Digital doesn't mean new. In fact, agencies have been automating these processes for many years - doing them online just creates a new channel for that and makes it easier for clients seeking casualty insurance - for example - without having to physically visit an agency to get it.

One of the things that digital means is that there's an increasing and growing self-service component available for those insured to calculate their own premiums for personal lines, and a growing ability for them to quote their own policies for small commercial insurance. That capability will be increasing rapidly over the next 36 months and is something that all agencies should pay attention to, especially life insurance agents whose work is full of opportunities these days.

The virtual agency isn't new. The digital agency isn't really new either, except by degree. What is new is not the ability to communicate face to face using video conference technology that's been around for years. But its wholesale adoption is new, as everyone has been all but forced to work from home full time.

Geography doesn’t matter

One of the results of the coronavirus has been a dramatic increase in meetings of all kinds taking place over Zoom and other similar technologies. Because of that, geography no longer matters as it used to for the part of our business that requires face to face communications. 

This has two immediate obvious, and exciting, opportunities for agencies. The first and most obvious opportunity is to sell insurance to new clients over a broader distance. No longer will the local independent insurance agency be local. Agencies are now able to easily sell insurance wherever they can obtain an insurance license and create, sustain, and maintain relationships wherever the client is located (provided the insurance carrier operates there too). This means that agencies can be increasingly deep in their product offerings. In other words, they can be increasingly deep in the niche business they try to write, but broad geographically. This deep and wide ability, I believe, is the key to the insurance agency of the future. 

The second opportunity for insurance agencies is not quite so obvious, but equally important. That is the opportunity to employ people regardless of where they're located using tools like Microsoft Teams, Slack and Zoom. Employees can be located anywhere, you just have to change your approach to agency management.

"This opens up the talent pool for agency owners who are willing to manage people based on results, instead of attendance."

My own company, One Agents Alliance, now has employees in five cities in four states. We find that our remote employees are as productive and as important a part of our team as the employees who work out of our headquarters.

This is unusual today, but will be commonplace tomorrow, and it is an enormous opportunity for agents who want to be on the cutting edge. Within five years, many agencies will begin to further their relationships in service and sales with an entirely new way to interact with people face to face. That new way is in the realm of virtual reality.

The future of virtual reality

There are still some hardware and software issues that need to be worked out, but virtual reality equipment is increasing in speed, decreasing in latency, and increasing its potential. In the next few years, it will be possible to have meetings face to face with people in three dimensions remotely, where today, a two-dimensional conversation on Zoom is all that is really practical.

When this new technology arrives, it will drive the sales results across broader geographies for many agencies. It will also represent a threat to agencies who don't adopt it. 

So, the virtual agency isn't new, but it is changing, and those changes are exciting because they represent additional opportunities for agents to grow their business, reduce their expenses, and increase their value

4 minute read

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