Let's Agree to Disagree – McKinsey Declares the Demise of the Insurance Agent

“Tact is the ability to tell someone to go to hell in such a way that they look forward to the trip.”
Winston Churchill

Over the past few weeks, a major disagreement has erupted on a controversial issue.  Both sides of the aisle have dug in and are bringing out the big guns to support their own side of the argument. The press and media can’t get enough of it. And expert resources (this blogger not excluded) from across the industry are weighing in with their opinions.  

And, no – I am not referring to the recent government shutdown or debt ceiling crisis. 

In case you missed it, McKinsey & Co recently published a controversial perspective on the future of the agent distribution model.  McKinsey argues that the value a local intermediary provides is being commoditized in the face of changing consumer preferences, brand associations from a deluge of advertising, and rapidly evolving channels of interaction. The global management consulting firm sees a trend towards dis-intermediation being exacerbated by the increased sophistication of competing carriers and their ability to “act” local from centralized operations.  And, while making some dire predictions for agents’ ability to stay relevant, the report does provide constructive insight on the ways agents and carriers can adapt to address these changing market forces and the competitive onslaught from direct channels.   

The response from the insurance industry has been swift and decisive. The industry leaders making a counterargument seem to be taking to heart the wisdom in the aforementioned quote from Winston Churchill.  Trade groups, like the IIABA, aggressively counter McKinsey’s findings with fact-based arguments asserting the health and well-being of the agent distribution model. And, they contend that the insurance agent is already an early adopter (and exploiter) of modern technologies such as social media and SEO. 

As for me, I think both parties have valid points.

McKinsey is right - change is coming.  As with any change, the resulting period of transition will lead to some casualties along the way.  The way agents have done business the last 50 years will not carry them forward for the next 50.  Agents and carriers must find new ways to exploit their local advantage and retain their position as a trusted advisor in the eye of the insurance consumer/buyer. Technology will play a key role in changing the competitive landscape.  Flexible, multichannel sales, service and marketing solutions will be a “must have” for any agent’s future to be successful. These solutions will be key building blocks of strategies to increase operational efficiency, capitalize on new market opportunities and ultimately increase the effectiveness of each agent. 

The insurance industry is right as well. Seismic shifts are occurring already – with many agents taking the lead.  Captive and independent agents alike have a real opportunity to own, and make an indelible stamp on, channels like social media. I guarantee you there are agents out there today using Facebook, Twitter and LinkedIn to rapidly expand profitable books of business as you read this. The trick for agents, and the carriers they work with, is institutionalizing this knowledge to drive future sales based on proven success. Rather than relying on the skill of a few agents, they need to adopt business and technology strategies that make these kinds of capabilities available for any agent to benefit from (whether they are a 30-year veteran or a newly licensed agent fresh out of college). Furthermore, agents (and carriers) can solidify an advantage by leveraging predictive and adaptive analytics to refine and personalize sales segmentation strategies, customer interactions and bundling recommendations.  In short, they can build new engines of growth by providing agents with the means to actively demonstrate and reinforce their value at every touch point.    

So is irrelevance a forgone conclusion for the agent distribution model? Or do agents have the unique opportunity to evolve and secure their future prosperity? For my money, I think Churchill had it right again when he said: 

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

Winston Churchill

Agents and carriers should be living by these words as they define their future in the days ahead.

Do you agree with McKinsey or with the IIABA?  Let me know your thoughts, I would love to hear from you.