Innovating Your Insurance Agency in 2023
By Jason Rogers
Are you looking to strengthen your business this year? Then it’s time to get serious about innovating your insurance agency. This article provides a running start.
There’s never a wrong time to innovate, especially for insurance agency leaders whose industry is experiencing paradigm-busting change. You may have trouble navigating these challenges unless you devise new ways to function, as innovation will always be your admission ticket to the future.
Anatomy of Innovation
If you’re asking yourself, “How can I innovate my insurance agency ?” it’s best to start at square one by defining our terms. What is innovation? It’s the process of developing capabilities that move a business forward. It focuses on creating new or improved products or services and refining workflow to improve speed or efficiency. Whatever the focus, innovation is about solving problems in new ways, thereby equipping your agency to compete more effectively in the future.
While innovation is usually good, it can be accomplished in a myriad of ways. It is important to understand the differentiation between types of innovation to assist in maximizing the potential of your business. For example, sustaining innovation delivers steady improvements that help a company better sell its existing products to current customers. This type of innovation is the lifeblood of everyday business. When you sustain innovation, you prepare your company to generate steady revenue and profit growth for years to come.
Disruptive innovation, on the other hand, occurs when you develop an entirely new product for existing customers or sell existing products to customers in a new market niche. Although it may be difficult, you can deliver a completely new product or service to a new target market. The rewards can be immense when innovation propels you out of your existing business model or markets. Instead of producing incremental sales increases, you might experience an order-of-magnitude upward shift in your revenue curve.
Whether you aim to achieve sustaining or disruptive innovation, the benefits of improvement usually exceed the comfort of maintaining the status quo. Here are the three essential benefits that occur when insurance agents innovate:
- It produces adaptability – Innovative agencies adapt reasonably well to the external environment when the world changes rapidly (think COVID-19 response or the rapid adoption of artificial intelligence). For example, insurance agencies that learned to conduct prospect and client meetings online could continue generating revenue during the global pandemic.
- It facilitates growth – Doing the same tasks the same way is a recipe for disaster in an evolving world. Of course, stagnation can be comforting for leaders who lack drive and imagination. But treading water is a precarious place to be when incoming waves are about to engulf your agency.
- It creates differentiation – Most industries, including insurance, have commodity players and innovative competitors. The former offer similar products and services and compete primarily on price. The latter offers unique solutions that rise above industry norms, and because they provide what other companies don’t, they can command premium prices.
Finally, innovation also applies to distinct business functions. Most people think of it as mainly addressing product development, as a company’s creative energy often focuses on developing its product portfolio. But innovation also applies in several other business domains, including:
- Business processes – Innovation can improve a firm’s internal procedures, giving it a competitive edge.
- Marketing – It can shape how a company packages and promotes its products and services to the marketplace. Innovation can improve a firm’s brand, promotional strategies and distribution methods, among other marketing resources.
- Organization – Finally, innovation can affect the structure of a company; this includes its organization, the quality of its talent and the strength of its financial and technological infrastructure.
In short, if you’re telling yourself, “I’m interested in enhancing my insurance agency,” it’s essential to master the nuances involved. It’s a complex process that takes time and effort. It only happens when insurance leaders commit themselves to unleashing it at every level of their companies.
How to Become More Innovative
Becoming more innovative isn’t a discrete event; it’s a continuous process that involves creating and maintaining a supportive agency climate. Because business culture often flows from the top down, agency leaders must encourage innovation through their decisions and behaviors if they expect their firms to develop creative approaches to conducting business.
Here are some ways you can increase your agency’s capacity for innovation:
- Start by looking outside your agency, not inside – In other words, task your team to continuously search for data about your target market’s risk exposures and insurance purchase experiences. Networking is an imperative strategy in this regard. When you get signals that target-market prospects have an unmet need, brainstorm ways to provide a solution. Include members from every agency department in this effort.
- View the world as your oyster – Many worldwide trends will shift insurance needs in the future. The sharing economy, self-driving cars, the Internet of Things, artificial intelligence, global health and politics will affect individual and corporate insurance needs and purchases. Make sure multiple people in your agency have their eyes on these forces and are assessing the underlying insurance opportunities.
- Ask employees to seek opportunities in their own lives – Encourage everyone who works for you to try new things. Ask them to report on their experiences with new modes of transportation, connected home devices, wearable technology and more. View new and exciting technology as fodder for agency innovation.
- Transcend your box – “We’ve never done that” statements are innovation killers. One way to avoid them is to put your limiting mental models aside and consider an opportunity from the perspective of a business from outside the industry. Ask your team, “What would Apple or FedEx think about this? How would Amazon roll out this concept? What elements of Uber’s business model would apply?” By viewing opportunities through an external lens, you can more easily identify the critical competencies required to make the idea work for your business.
- Play mix and match – Sometimes, a product or service idea has potential but needs a key element to make it viable. Instead of discarding the idea, combine it with others in your innovation hopper to create a more workable option. “Never dismiss an idea because it’s not perfect,” said Amy Cusack, AVP, innovation and strategy for Selective Insurance Company of America. “Sometimes, assembly is required.”
- Unleash staff minds to think in new ways – In agencies, people often fall into habitual modes of thinking. The perpetual optimist will love every idea, and the devil’s advocate will rip everything to shreds. In your next brainstorming session, challenge people to adopt new ways of thinking and expressing themselves. Direct the optimist to adopt a more critical stance and the critic to view things more positively. Shuffling the cognitive deck in this way can unleash unexpected insights for your agency.
Finally, here are some tactical steps you might take to identify promising new ideas:
- Harness outside experts as needed – Invite subject-matter experts to address your team onsite or via a webinar.
- Mine your clients for ideas – Ask them to complete a questionnaire or attend a focus group.
- Evaluate your current product/carrier set – Determine holes in your ability to serve clients and search for appropriate insurers to add to your roster.
- Think expansively about how to implement new technology in your agency – Whether chatbots or automated renewal emails, let the sky be the limit as you consider new ways to automate your agency.
Launching new ventures can be risky. Since they attract attention and may involve new procedures, mistakes can happen. Enter NAPA’s Errors & Omissions (E&O) Insurance, which protects insurance agents and agencies against client lawsuits for as low as $26.25 per month.