Are car insurance agents obsolete?

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

UPDATED: Jul 16, 2023

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Insurance agent showing thumbs up in front of car insurance policy flat concept image. Are insurance agents obsolete?

Are insurance agents obsolete? With over $200 billion in policy premiums written in the personal lines auto insurance market in the United States, consumers are utilizing the internet more frequently to compare and buy policies.

Direct writers like GEICO have made large investments in their online presence and digital channels in order to facilitate a smooth shopping experience. Even agency writers like State Farm have made the move to provide online quotes in an attempt to retain or recapture some of the business lost to companies selling direct.

Are insurance agents obsolete now?

With these large pushes into cyberspace and the digital realm, are insurance agents becoming obsolete? Are the days of sitting down with a trusted agent and discussing insurance needs over a cup of coffee gone?

Insurance agents are a hardy bunch, who are accustomed to having to change practices at the whims of new government regulations or contract requirements. While online quoting does make it easier to compare rates, and direct writers give consumers more options, there is still a need for insurance agents.

Online Close Rates Suffer

More and more people are turning to the web to compare quotes, with J.D. Power’s 2016 U.S. Insurance Shopping Study stating that 74% of car insurance shoppers are using the web to either research or obtain quotes.

Nearly 50% of shoppers actually get a comparison quote, but only 25% end up actually purchasing a policy online. The remainder of shoppers who purchase a policy either contact an agent to purchase the policy or buy via a call center.

Agency writers who offer consumers the ability to quote and buy online are only seeing about 10% of policies quoted online actually closed online. They are quoting approximately the same amount of policies online as through agents, but the close rate of online quotes is much lower.

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Trends Show Fewer Shoppers Are Looking to Switch

While nearly three-fourths of shoppers are using the internet to research or quote car insurance, fewer consumers are actually shopping around. Out of 100 policies, only 33 were shopped around in 2016, down from 39 in 2015. The average amount of savings dropped from $388 to $356 during that time frame, which is less incentive for drivers to switch companies.

Insurer Satisfaction Rate Drops

There is a lot of incentive for insurance companies to sell policies online, as it reduces acquisition costs significantly. But with less human interaction, consumers are less satisfied with the overall process. Converting the sales process to a digital medium is not conveying the sense of satisfaction that results from interacting with an agent.

Older Shoppers Are Not Converting

Shoppers under the age of 50 are using the internet much more than older shoppers, with 29% of younger shoppers using the internet exclusively for quoting rates. Only 17% of older shoppers are using the web for price comparisons.

This can best be summed up as a generation gap, as older generations are much more accustomed to having personal interaction and less inclined to make purchasing decisions by the click of a mouse or tap of a finger.

Opportunities for Insurance Agents

Insurance agents who see the digital trend as a negative are missing the boat entirely. Millennials were raised with cell phones in their hands and instant access to everything, and these are the same people who will be the lifeblood of any successful agency in the future.

Insurance digital channels

Agents can either adapt or wither away into obsolescence. It can be painful to adopt new digital strategies and social marketing plans, but this is the future of the insurance industry.

Human Interaction Cannot Be Replaced

As the data suggests, there is still a very real need for human interaction in the insurance sales process. Poor online close rates show that there needs to be a human involved in the sales process at some step. Whether via phone, online chat, or actual office sit-down, agents need to adopt an online strategy but still offer clients the option of instant contact.

Case Studies: Are car insurance agents obsolete?

Case Study 1: John’s Hassle-Free Policy Switch

John, a busy professional, wanted to switch his car insurance policy to a more affordable option. He turned to an online insurance marketplace and compared quotes from multiple companies. After finding a better rate, John easily completed the policy switch online, without the need for an agent. The seamless process saved him time and money.

Case Study 2: Sarah’s Personalized Coverage Consultation

Sarah, a new driver, was unsure about the right coverage options for her car insurance. She reached out to a local insurance agent, who took the time to understand her needs and explain different policy features. Through personalized consultation, Sarah gained clarity and confidence in selecting the appropriate coverage that suited her driving habits and budget.

Case Study 3: Mark’s Claim Assistance and Expedited Process

Mark experienced an unfortunate car accident and needed to file an insurance claim promptly. He contacted his trusted insurance agent, who guided him through the claims process, ensuring he submitted all the necessary documentation. With the agent’s expertise, Mark’s claim was handled smoothly and efficiently, faster resolution and a seamless repair experience.

Insurance Is a Relationship Industry

Customer relationships will always be a part of insurance. As any successful agent knows, there is much more to a sale than price alone. And there will always be customers who realize that price is not as important as service. Insurance is a service industry, and always will be, despite direct writers’ attempts to convince consumers that price is the only factor that matters.

In the end, the internet has not killed the insurance agent, but rather it provides them with a shiny new platform to connect with and convert potential customers into clients.

The internet provides consumers a great way to compare rates and see how other prices compare. More power to the shopper who understands how to find cheap insurance and is comfortable managing their own risk. But for the rest, there will always be a question of ‘Do I have adequate coverage?’ for which an insurance agent can provide the answer.

Frequently Asked Questions

Are car insurance agents still necessary in today’s digital age?

While the digital age has brought about significant advancements in online insurance platforms, car insurance agents still play a vital role in the industry. They provide personalized guidance, expert advice, and assistance in navigating the complex insurance landscape. While it’s possible to purchase insurance online without an agent, having a knowledgeable professional can be valuable, especially in understanding policy details, making informed decisions, and handling claims.

What benefits do car insurance agents offer?

Car insurance agents offer several benefits, including:

  • Expertise: Agents possess in-depth knowledge of insurance products, coverage options, and industry regulations.
  • Personalized guidance: They can assess your specific needs, recommend suitable coverage options, and help tailor policies to fit your requirements.
  • Claims assistance: Agents can guide you through the claims process, providing support and advocating on your behalf.
  • Policy reviews: They can periodically review your policy to ensure it aligns with your changing needs and recommend adjustments if necessary.
  • Customer service: Agents provide personalized customer service, addressing your questions, concerns, and providing assistance when needed.

Can’t I just purchase car insurance directly from insurance companies online?

Yes, many insurance companies offer online platforms where you can purchase car insurance directly. It can be a convenient and quick option for some individuals. However, it’s important to consider that buying insurance online without an agent’s guidance means you’re responsible for understanding policy terms, coverage options, and limitations on your own. Without an agent, you may miss out on personalized advice and potentially overlook crucial aspects of coverage.

Are there any disadvantages to relying solely on online car insurance purchases?

Relying solely on online car insurance purchases can have a few disadvantages, including:

  • Limited guidance: Online platforms may provide general information, but they can’t offer personalized guidance tailored to your specific needs.
  • Potential for gaps in coverage: Without an agent’s assistance, there’s a higher risk of overlooking important coverage options or underinsuring yourself.
  • Difficulty in navigating complex situations: If you encounter a complex claim or need assistance with policy changes, having an agent to rely on can be highly beneficial.
  • Lack of a personal touch: Online platforms may lack the personalized customer service and relationship-building aspect that an agent can provide.

Can I save money by purchasing car insurance without an agent?

In some cases, purchasing car insurance directly online may result in lower premiums since there’s no commission involved. However, it’s important to remember that agents can help identify available discounts, bundle policies, and tailor coverage to ensure you’re getting the best value for your specific needs. Additionally, agents can provide insights and advice that may help you make more informed decisions, potentially saving you from costly mistakes in the long run.

Can I consult with a car insurance agent even if I prefer to purchase insurance online?

Yes, absolutely. Even if you choose to purchase car insurance online, you can still consult with a car insurance agent for guidance, advice, and policy reviews. Agents can help you understand policy terms, coverage options, and answer any questions you may have. They can also provide assistance with claims or any complex situations that may arise throughout the policy period.

How do I find a reliable car insurance agent?

To find a reliable car insurance agent, consider the following steps:

  • Ask for recommendations from family, friends, or colleagues who have had positive experiences with insurance agents.
  • Research local insurance agencies and read reviews or testimonials from their clients.
  • Interview multiple agents, asking about their experience, expertise, and how they can assist with your specific needs.
  • Verify that the agent is licensed and affiliated with reputable insurance companies.
  • Trust your

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