Optimizing Agency Relationships: A Data-Driven Approach to Premium Growth

The reported demise of the independent insurance agency as a sales and distribution channel has been greatly exaggerated. Over the course of a decade or more of predictions about the growth of the direct-to-consumer models, independent agents continue to thrive and generate the lion’s share of revenue in life and annuities (L/A) and the property/casualty (P/C) space. In fact, the independent agency still places 50% of L/A policies and 62% of all P/C insurance in the United States, according to data from the Insurance Information Institute and the Big “I” Market Share Report.

While the resilience of the agency model in insurance shouldn’t surprise industry stalwarts, the legacy relationship-driven agent/carrier business model does present operational challenges for carriers aspiring to modernize. Among these is developing a more predictive, data-led approach to relationship management.

Within their confines, carriers have started breaking down data silos and looking across the organization to identify emerging growth opportunities and mitigate underperforming assets — whether it’s integrating insights from aerial imaging technologies or using telematics and smart home technologies to improve underwriting accuracy, or extracting intelligence from customer service interactions, or tracking patterns of sales activity to optimize customer experience.

Nowadays, insurers are getting increasingly sophisticated about data-led transformation. Once the aperture is expanded to include the wildly unstructured world of local agency networks, things tend to get a little less precise.

Transforming the Legacy Carrier/Agency Relationship

In most cases, the agency relationship management model is very static, i.e., once a sales partnership is formed and a specific agent, or team of agents, is assigned to the carrier, nothing really changes. Carriers may have a rough idea of who their top producers are, but they may also have dozens of contracts with agencies that generate very little value and remain vastly underutilized.

That’s a costly strategic knowledge gap that may exist. On average, a top performing independent agent can generate $500,000 or more per year in sales for a carrier. Compound that across a universe of roughly 2.2 million agents across the U.S., and it becomes clear why finding a better way to proactively manage agency relationships should be a priority.

The good news is that data-led transformation no longer needs to stop at the carrier walls.

With today’s cloud-enabled analytic capabilities, it is possible for carriers to truly gain a granular, 360-degree view of their agent relationships and those agents’ relationships with their customers, and use that intelligence to proactively manage the strategic relationships.

Creating a Data-Driven Golden Profile

For example, in a recent digital transformation project that EXL developed with one of the nation’s largest life and annuity carriers, we were able to create a golden profile of all agency relationships, including individual agents and clients with regional demographic and economic information, that can be monitored, and enriched over time. By applying this consistent, rules-based framework, that tracks agent volumes, types of volume, client profiles and market penetration, we’ve been able to help the carrier identify segments of agents most likely to produce, which are falling short of their potential, and those at risk.

The newly developed advisor intelligence — enables the carrier to personalize and nurture key relationships, reignite those that have been underperforming, and optimize resourcing on the dormant accounts.

Most importantly, this capability allows clients to explore ROI maximizing opportunities through better targeting and marketing personalization. In the long-term, the client expects the data driven capabilities to drive economic benefits and customer experience and increase the Net Promoter Score by 2% to 3%.

Insurance is one of those rare global and hyperlocal industries requiring a comprehensive, enterprise-wide view of key metrics and a highly personalized, customer-centric view of Main Street. Until recently, connecting those dots in a centralized manner to better anticipate how a single-customer event can ripple across the larger organization was just not feasible. Today, it is the key to unlocking new growth from old sources.

Topics Trends InsurTech Pricing Trends Data Driven