COVID Chronicles: Adapting to a New Normal with with John K. Tiene, Executive Consultant, Strategic Agency Partners

Digital Transformation, Insurance Industry News & Views - July 7 2020

The coronavirus pandemic has had a profound impact on every facet of our lives – and it’s likely that we will be dealing with the aftereffects of COVID-19 for some time to come. With some countries and US states taking their first steps toward opening up their economies, we wanted to know how the insurance industry is rising to the challenges of COVID-19. We asked John K. Tiene, an executive consultant for Strategic Agency Partners and a 30-year insurance industry veteran to share his perspectives on the short and long-term impacts this crisis will have on insurance and insurtech.

John, in a recent interview with Property Casualty 360, you noted that, “The challenge with operating in the current condition of a lockdown is that it forces everybody to operate in a manner that they’re completely uncomfortable with doing.” How well would you say the insurance industry as a whole is doing in adapting and rising to the challenges of COVID-19?

Generally, I would say the insurance industry is doing very well. Insurance companies have adopted quickly. Their challenge has been dealing with and responding to state regulators who are issuing orders and bulletins before consultation with the companies. It’s great to tell consumers that refunds are being ordered but that creates undue expectations with consumers. Insurance companies need time to program changes into their systems etc. But generally, insurance companies have done a great job adapting to the challenges the COVID-19 crisis created.

Insurance agents have also done very well. But there are a lot of anecdotal stories about some agencies that weren’t able to respond quickly. For years, agents have been told that their client expectations were changing. Clients wanted more “digital” interaction. Many agents resisted fearing that digital interaction would undermine the client relationship. For some, this lack of investment in digital capabilities has proven difficult and they will lose clients as a result.

The COVID-19 crisis has accelerated the adoption of technology not only by insurance agents and companies but most importantly by their clients. Consumers are today much more comfortable with using technology than they were four months ago. The pandemic forced swift adoption and use of technology.

P&C carriers and brokers’ business continuity planning has been put to the test during the pandemic. Many have been working remotely for the first time. Leaders have been managing distributed teams and everyone has had to learn to collaborate 100% virtually. Where have insurance carriers, brokers and agents faced the greatest challenges in keeping their operations running?

First and foremost, it’s been the technology, getting it to work. Companies and carriers that operate on cloud-based technology were in the best shape, give an employee a laptop or desktop with an internet connection and they’re good to go. Agencies that still have their data on local servers had to overcome the challenges of all employees having to essentially call into the local server. For many that proved troublesome.

Managing a virtual workforce in the short-term is not difficult. Employees really stepped up and put in the hours to get the job done. They adapted under difficult circumstances. But now I think people are realizing this isn’t for the short-term. Many insurance companies are planning to keep their employees working virtually through the end of the year. Others like Nationwide are closing offices and employees will work from home permanently.

Agencies may not be able to bring back all employees into the office based on individual state guideline and in some cases, employees may not feel comfortable coming back to the office. The spread of COVID-19 is to a degree slowing but it’s not gone, and the likelihood of a resurgence is a real likelihood.

Managing a virtual workforce requires a much different approach than managing a group of people in an office, especially when that’s complicated by a pandemic with schools closed and day care operating in a limited fashion. The challenge is can managers adapt to this new style of management.

Workspace 1

How I've Been Working: "I’ve been working remotely for most of the past two decades, so working this way comes naturally. The difference is not being able to meet with people face-to-face. Video meetings help but it’s just not the same. I’m looking forward to being with people again even if from six feet away."

– John K. Tiene, Executive Consultant, Strategic Agency Partners

With lockdown restrictions beginning to be eased in many localities, what will the new normal of insurance operations look like going forward?

In some states that will mean a limited number of employees coming into the office. Clients may not want to come to the office. Prospects may not want to meet in person. Easing restrictions doesn’t mean going back to normal. Until a vaccine is developed, can be mass produced and distributed, we are going to be living with restrictions that impact all facets of our lives.

The largest challenge for insurance agents is transforming their new business prospecting methods. You can’t just “drop-in” to say hi anymore. Networking groups and meetings will be limited. Trade shows and conference are cancelled well into 2021. Many companies large and small are going to be working through the impact of COVID-19 on their businesses for the next year or so. Most business have lost revenue that will take them more than a year to earn back.

Insurance producers need to adapt. Building their “brand” and more importantly their credibility is key. Prospects want people they interact with to be genuine and knowledgeable. Remember that most business owners are going to be very interested to understand why their financial losses from the pandemic aren’t covered. So, insurance producers need to demonstrate they know and understand the classes of business they are going after. The ability to build trust with prospects has always been the key. Its just going to be harder now.

You come from the Independent Agency world where traditional distribution channels have been completely upended by the coronavirus. If you look at the insurance value chain, what do agents need most from carriers and brokers in challenging times like these? What about insureds’ expectations?

I started on the carrier side and spent decades in various management roles. Unfortunately, many insurance companies still underestimate the bond between the insured and their agent. Plus, for decades, “experts” have told companies that any day now policyholders would leave their independent agent and go direct. The value for the client is an individual that they know and trust helping them work through the intricacies of their insurance needs, being there for them. The pandemic proved that again and again. Most agents picked up the phone and called every client, just to check on them. It was the agents that sorted through adjusting employee counts, ensuring that the right credits were applied etc.  The bond is stronger today than it was four months ago and maybe more than ever in the last decade.

What insurance companies and brokers need to focus on is the ease of use of their systems and improved partnership with their agents. Now the independent agent world has gone through incredibly significant change over the last decade. Tremendous consolidation of individual agencies by equity-backed entities who are now controlling billions upon billions of premiums. The surge of agency groups like networks, alliances, and clusters. Today, 70% of all independent agents are affiliated with an agency group or have been acquired.

The pandemic will inevitably force carriers, brokers and agents to rethink their IT and operations priorities. What impact will this have on Insurtech, which has been a major catalyst for digital transformation? What areas of innovation will continue, or gain momentum, and which Insurtech investments will help hasten a broker or carrier’s recovery and return to growth post-COVID?

When Insurtech began to develop much of it was focused on getting to customers. The challenge was once you get the customer what do you do. Insurtech didn’t have any idea about actuarial science, underwriting or claim handling. Today, Insurtech is focused mainly on making specific processes simpler, faster and with the ability to hang onto existing operating systems. Making the application process simpler and faster for producers, account managers and clients. Comparing policies and endorsements. Mining client data for new opportunities. These and many more are the focus of Insurtech today.

The pandemic has accelerated tech transformation at some carriers, and I expect this will continue for a time.

Growth is going to be driven by the overall recovery of the economy. Up to a third of small businesses are forecast to go out of business. Unemployment is at record highs. The hospitality industry for example is decimated. Restaurants large and small are gone. Until the economy finds its footing, consumers start spending again, and unemployment begins to go down, new business growth will be challenging.

The opportunity for insurance companies, and agents is consolidation of business. Insurance companies who have not, or who have been unable to make significant investment in analytics, product and processes are in danger of being targeted by those companies that have made the investments.

When this crisis is finally behind us, what lessons will we have learned from COVID-19 and the experience of living and working through this pandemic?

The change that has been forced on consumers has changed consumer behavior. Consumers who always wanted to order groceries online but just never got around to learning how, now that they had to learn, they’re unlikely to go back. And that’s just one very basic example.

It’s really too early to tell exactly how the COVID-19 crisis has changed us. But we know it has.

The only other period of such upheaval was 9/11. For a period of time it changed how people interacted. It changed how we get on an airplane. It changed a lot of things. But the COVID-19 pandemic was a longer period of quickly forced change to a much greater extent than 9/11. Then add the protests and disturbances resulting from the horrible treatment and death of George Floyd. You could not avoid it, most of us were still on lock down. So, the impact on all of us is still unknown.

If we look at just the world of insurance agents, we certainly have learned just how important the relationships agents have with their clients is. The relationships between insurance agents and their insurance companies are essential.

What we do know is that change is constant and it’s accelerating. We know that you can’t ignore change. What we have learned is that we need to be better prepared for the future.

What gives you inspiration or hope in these anxious and unprecedented times?

I continue to be inspired by the selfless efforts of so many for their neighbors and fellow citizens. Everyday there is story after story of kindness and hope. Unfortunately, sometimes you have to go looking for them, but they are there.

Insurance agents and their teams have been on the forefront, helping their clients, family and friends.

No one should be alone during times like these, we must all open our eyes and offer a helping hand in friendship to those who are alone, even if from six feet away.


John K Tiene - June 2020

A former insurance company executive and most recently CEO and shareholder of ANE, Agency Network Exchange, LLC, John K. Tiene is a recognized leader in the property/casualty insurance industry. Under John’s leadership, ANE became the 11th largest agency network in the nation with more than $250M in aggregated premium. Today, John is president of Argonne Associates, a management consulting company and serves as executive consultant with Strategic Agency Partners. In this role, he is using his more than thirty years of executive and management experience to help Strategic Agency Partners’ affiliated agencies grow and increase agency revenue.

 

 

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