The folks who own independent insurance agencies are among the most savvy small business people around. But, when it comes to their presence on the World Wide Web, something seems to be amiss.
According to the company Sound Internet Strategy, only about nine thousand of twenty-nine thousand identifiable independent agents in the United States have a Web site. That's right around thirty percent.
According to the Kelsey Group, forty-three percent of U. S. businesses with less than one hundred employees have a Web site. That's about one and-a-half times the rate of insurance agents.
We know that insurance agents are savvy business people, so the reason they're not adopting the Web at the rate of other small businesses must be a good one. It is.
Lots of independent insurance agents don't have a Web site because they can't see a way to make it fit into their business and help build profitability. That's a business judgment based on a look at the ways most Web sites work and what the agents know about their own business.
What they know is that their business won't work with the standard Web business models. Those models have been popularized by big sites like Amazon and eBay. To make money from it, you must do one of two things.
Sites that sell goods and services like amazon.com tend to sell products that are essentially commodities. The book you buy from amazon.com is the same as the book you buy from your local bookstore or from another Web site. You don't need a lot of sophistication or research to figure out whether or not you want to buy that book, either.
EBay demonstrates the other big Web business model. That's where you bring large universes of people spread across a broad geographical area together to create markets that wouldn't exist otherwise. While there are thousands of kinds of goods sold on e-Bay that require description, e-Bay is not the one doing the describing. Instead, they have shifted the burden of accurate and marketing-effective description to the sellers themselves.
Most insurance isn't anything like the books that amazon sells and that the market isn't much like the giant market that e-Bay serves. The insurance that's sold on the Web is mostly either term life insurance or auto insurance for high-risk drivers.
The fact is that most insurance in the United States is sold locally. There have always been both mail order and phone order insurance operations they're a small part of the market. In the United States, most insurance is sold by local agents. That's not an accident of history - it has to do with the nature of insurance and the nature of the insurance market.
No matter where the company whose name is on the policy is headquartered, insurance is sold by local agents because it is essentially sensitive to local conditions. Take homeowners policies, for instance.
Where I live, in coastal North Carolina, you are concerned with hurricanes. There are not many hurricanes in central Ohio, but you will find tornadoes there and the risk of damage from them. If you're in the Bay area in California the risks aren't hurricanes or tornadoes. They're more likely to be earthquakes, mudslides, and fires.
But wait, as they say, there's more. Insurance isn't something like a book you buy on Amazon. It's a complex good that requires understanding and expertise for the customer to make a good choice.
Most consumers simply don't show up with that knowledge or with the tools to assess their risk and the means of protecting against them. That's why they use an insurance agent.
Insurance agents are the spirit guide to the risk management process. They are like the wizened old fellow that you run into in the fairy tales and movies, who sits at the edge of the forest and gives good advice about what trails to take and how to deal with the monsters you might encounter.
Insurance is also a market where long-term relationships matter. Those folks buying high-risk motorcycle insurance might be looking just for any coverage they can get and then maybe for price, but most folks who buy insurance to cover risks to their homes, persons, businesses, or health want to make sure that somebody will be around to stand with them when things turn bad.
Insurance agents have a vested interest in those long-term relationships, too. They derive income from policies as long as the policies are in force. Beyond that, an ongoing relationship with a policyholder provides opportunities for cross-sells and up-sells almost forever.
If we look at these three characteristics of the insurance business, it's easy to see why the standard Web models simply don't work. The challenge is to look for ways that the Web can help build insurance agency profitability. To do that, we'll re-visit our three market characteristics.
Because most insurance is sold locally - by a local agent - any Web site and Web strategy should stress that local component. There should be a prominent mention of the location, including the town, county, and state where the agency is located and does business. Location mentions should also show up in metatags and title tags and in the copy of the site, so that searches for a particular area find insurance agents who serve the area.
The strategy that helps drive traffic to an insurance agency Web site should include lots of links from local sources. These include any local directories, the local Chamber of Commerce, and more.
And let's not forget that the Web site is part of the overall agency's marketing and service strategy. That means that pointers to the Web site should be found in all print and electronic ads, as well as in any piece of print or collateral material that the agency produces.
Consumers are looking for a trusted adviser when they buy insurance. We haven't studied how this affects buying behavior in the insurance business yet, but we do have a lot of evidence from another industry that can give us some ideas of how consumer buying works.
Consider real estate. Even more than insurance, there's a strong local component. The sale is a complex one that involves many factors and regulations. And we've studied consumer behavior in real estate. What we know is that in the Digital Age, folks who are searching for a new house do so by searching first for information about the process and about advisers.
They are looking for information so they won't be embarrassed. Most adults will do just about anything to avoid embarrassment, including research.
Consumers also look for information about their adviser. They want to know if the adviser is knowledgeable, and if the adviser can be trusted. Once they feel like they have sufficient information to proceed and a knowledge of who the potential agents are that they choose to work with, they approach a limited number of agents; and, very often, pick the first one who responds to be their adviser.
To make a Web site work in these kinds of conditions, it should have as much information as possible. That information should enable people to learn about how they can quickly assess both risks and advisers. They should learn a little bit about the language of insurance. They should learn what questions to ask.
The best way to demonstrate that an adviser is trustworthy is that old standby, testimonials. Remember, insurance is sold locally; and, therefore, local testimonials have a power that celebrity testimonials can never approach.
Testimonials are also the key when people start assessing long-term relationships. I don't know how it is for you, but I don't want to have more than one insurance agent in my life if I can help it. How do I know a good one? It's those testimonials again.
Going beyond that, a good insurance site also ought to have features that help people manage their insurance once they become policyholders. Those features can make things easier for the policyholder at the same time that they lift an administrative burden from the insurance agent.
The site should also have features that both educate and offer options to policyholders. They should be tied with email and news features into a system of reminders.
Some of the kinds of features we are talking about can be quite sophisticated, but the good news is that there are several options for getting these kinds of sophisticated features on a Web site. Many are now available off the shelf as standard blocks of programming or pre-packaged Web services. In insurance, many insurance companies provide specialized tools.
Clearly, there is a lesson here for insurance agents, but there is also a lesson for all of us. The big lesson we can learn from looking at independent insurance agents lack of World Wide Web sites is that savvy business people aren't willing to go to the Web without something they believe will help their bottom line.
That means that for independent insurance agents and for you and me, the character of the market and your business should be what drives your Web strategy.
