Digital Tools Help Agency Revenues, But Cybercrime ConcernsMay Hamper Adoption
By Max Dorfman, Research Writer, Triple-I
Insurance agencies that adopt digital methods to interact with customers have seen their revenues grow faster than their less digitally sophisticated competitors, according to new research by Liberty Mutual and Safeco Insurance. However, the research also indicates that digital adoption by agencies has slowed in recent years.
The study, The State of Digital in Independent Insurance Agencies, found that “highly digital adopter” agencies — based on a 10-point scale related to the number and complexity of the tools the agency uses — experienced a 70 percent growth rate, as opposed to 17 percent for “high digital adopters”, and a mere 10 percent for “low” and “medium” digital adopters.
But while digital adoption has gained traction, it has declined as a priority in agencies’ plans. In the latter part of 2020, 58 percent of agencies said improving digital capabilities was part of their five-year growth plans, according to the Liberty Mutual/Safeco study. However, by late 2021, this had decreased to 47 percent, approximately the same as in 2017.
The digital tools that have seen a decrease in use range from social media to live online chats. Additionally, many agencies said they are not tracking which digital tools are driving growth.
The survey found that 60 percent of digitally focused agencies said they planned to invest in new digital capabilities within their five-year agency growth plans. Only 42 percent of slow and steady growth agencies said the same. Growth-focused agencies have used several tools to increase their reach and revenue. Self-service portals, video calls, live online chats, video quotes, and policy reviews have all driven significant improvement among these agencies.
These, however, are not the only tools being recommended and used. Artificial intelligence, machine learning, Internet of Things, and big data analytics are all being considered and used to increase engagement with customers and prospects.
Cybercrime may be a factor hampering growth in digital adoption. Indeed, global cybercrime costs are predicted to hit $10.5 trillion annually by 2025, according to Cybersecurity Ventures. Additionally, more than half of all consumers have experienced a cybercrime at some point, according to a 2021 survey by Norton.
Agents remain alert to cyber threats. The Liberty Mutual/Safeco study found that 57 percent of survey respondents anticipated that cyber liability would have a major impact on their agencies by 2025, an increase from 46 percent in 2017.
