Agents turning to tech in hard market
Use of AI and digital tools is becoming increasingly important.
Agents are adapting to a tough market by increasing their use of digital services and digital interactions, according to a recent webinar.
Speaking at Travelers’ Mastering Market Shifts webinar, Charles Symington, president and CEO of Independent Insurance Agents & Brokers of America, said the organization’s 2024 Agency Universe Study found agents turning to tech for help. Among those surveyed, 32% said the biggest change they’ve made to adapt to the hard market has been ramping up digital services and interactions with clients, and 27% have increased their digital interactions with carriers.
A hard market is when insurance rates increase, underwriting standards tighten and coverage becomes more difficult to obtain. “It’s one of the biggest issues the marketplace is facing right now,” Symington said.
The study found agencies are also increasing their use of electronic tools. Among respondents, 95% are now using at least one digital tool, such as e-signatures, mobile apps or texting with clients, which is up from 89% in 2022.
AI is also likely to become a more common tool for agencies going forward, said Sean Ramalho, executive vice president of enterprise distribution at Travelers. “Unlike where we were probably five or six years ago when we talked about AI or tech replacing the independent agent, we’re now seeing opportunities where it’s going to enhance what independent agents do,” he said.
Ramalho said he sees a future where AI helps agents better understand market trends, streamline processes and serve clients more effectively.
Technology could also improve the relationship between agents and carriers. According to the Agency Universe Study, one in five agents (21%) believe carriers are doing an extremely poor job of meeting the challenges of the hard market. Most agents (68%) think carriers are handling the market moderately well, and just 11% say carriers are doing it extremely well.
When asked about the top challenges they’re facing, agents say their number one challenge is finding carriers that will maintain their commitment to their market (56%, up from 31% in 2022), followed by finding carriers that are addressing new risks by adding new products, services or coverages (49%).
As technology usage increases, agents and carriers will be better able to work together to create new products and services, Ramalho said.
“As technology becomes more and more a part of what drives how the independent agent shows up in the marketplace, they will have better data and analytics and insights into what a customer’s needs are and how those trends are changing,” he said. “And they’ll be able to inform or educate or partner with carriers like Travelers to develop new products to suit customer needs.”
Despite the challenges presented by a tough market, the study found three in four agencies saw revenues increase from 2022 to 2023 by an average of 26%, and the number of independent agencies remained stable.
“I think the hard market really highlights the strengths of the IA system—its choice, its customization, its advocacy,” Symington said. “I believe the future is bright.”
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