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Alexander Group survey results on how major insurance carriers and senior leaders approach their current go-to-market strategies

Whether selling commercial or personal lines across a variety of coverage types, economic uncertainties and changing market dynamics have caused a shift in the insurance industry’s traditional go-to-market models. Sales process inefficiencies remain a major challenge for insurance carriers as customary, exclusive agent channels have steadily eroded, giving share to independent agents, large brokers and consultants. Commercial leaders are prioritizing sales enablement tools to drive growth amid rising competition, evolving selling models and the growing importance of online/mobile channels.

Alexander Group recently conducted a survey with 60+ major insurance carriers and 80 senior leaders to gain their insights on current go-to-market strategies and growth trends.

Go-to-Market Strategies

Sales leaders revealed high expectations that online channels will continue to accelerate in the coming years as 30% of new policies are starting and 9% of new policies are closing through online means. This higher usage of online channels than traditional call-centers will have an impact on sales coverage models, premiums and agent compensation.

Sales Coverage

While the agent/broker sales model still dominates the insurance industry, online and mobile channels are seeing by far the most growth. Insurance companies use multiple routes to customers. Indirect channels (dedicated agents, independent agents, brokers/partners) account for 70% of managed premium, employee-based sales models (call centers, employed account managers) drive 13% of premium and the remainder is primarily gained through online and mobile channels with minimal seller support.

Premium Managed and Compensation

Personal lines agents manage $3M to $5M in premium, with those focused on commercial lines supporting over double that level. Most carriers do have some differentiation between new policy and renewal commissions, and the majority utilize additional bonus programs to drive incremental growth. These bonus programs can account for over 10% of total agent income, although on average most agents earn much less. These added programs can focus on a variety of measures, but new policies and incremental premium growth are among the most common. About 25% of survey respondents cited incentive compensation as the top challenge in their selling models. This may be partially due to the variety and complexity of core commission plans and add-on bonus programs, which are utilized by 60% of firms to drive more growth from agents and other channel partners.

Growth Trends

The median insurance carrier experienced premium growth between 3% to 6% in 2021 and forecasts similar growth for 2022. Insurance executives indicated that adding new selling capacity, investing in sales enablement tools and focusing on better marketing and lead generation strategies are their top growth priorities, as recent growth has been primarily gained through added sales resources and increasing marketing spend and automation.

However, executives cited the following three challenges that are adversely affecting their ability to increase growth and margin.

  1. Lack of understanding on addressable markets and segmentation
  2. Sales process inefficiencies across sales coverage and role design
  3. Lack of sales support due to an absence of sales enablement tools

To help navigate these growth challenges, Alexander Group is providing complimentary briefings on the Insurance Market Trends survey. Please contact an Insurance practice lead.

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