How the Insurance Industry is Changing Today

The insurance industry has faced serious change in the past few years. The financial crisis has affected companies in all areas of the financial sector, including insurance—and also brought major changes to the markets where insurance agents work. In addition, social media has changed the way insurance agents market their products. Here are just a few broad ways the insurance industry is changing.

Marketing is going digital. Phone prospecting, traditional advertising strategies, networking, and community involvement used to drive business for many insurance agents. Today, that’s all changed. Insurers are increasingly expected to have a strong web presence, be easily visible in local search, and connect with their customers and prospects via social media. If you’re not online, it’s likely your business isn’t thriving as it could be.

Captive agent agreements are becoming more rare. According to the US Department of Labor, insurance agencies are looking to save costs by looking to work more with brokerages than with captive agents. That means as a new insurance agent, it may be more difficult for you to find an insurance agency willing to finance your start-up costs. However, many insurance agents these days work under some combination of captive and independent agreements.

The market is more price-conscious. After the financial crisis, consumers in pretty much every insurance market have become more price-conscious. That means that the more options you can offer your customers that help them save money, the more competitive you’ll be. Insurance companies selling themselves on a benefit other than price may have a difficult time competing with lower-cost plans, particularly in the price-sensitive consumer markets.

Greater instability in financial markets. Big insurance companies took a hit in the financial crisis—losing a large amount of invested financial capital. That means the larger insurance companies are scrambling to make up for lost revenue these days—in a market that’s increasingly price-conscious and unwilling to make big purchases on insurance coverage.

Greater challenges for smaller agencies. Because the bigger agencies are so squeezed, they’re competing more aggressively in local markets and for less high-revenue customers, where smaller agencies used to dominate. That means smaller agencies now face increased competition from larger carriers that may be able to afford to undercut them in price.

The insurance industry is currently facing economic conditions that include greater financial risk, more price-conscious customers, less stability in the job market, and greater competition. Still, there are opportunities among the challenges—particularly for agents who are willing to embrace social media. Become agile in reaching your customers online, and you’re likely to succeed in today’s challenging marketplace.

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