Knowledge Center

Knowledge Center Items Podcast Episode 39

What Should the Agency of the Future Look Like?

Published on

What should the agency of the future look like?

The best and worst part about being an independent agent is that you think you're a policy slinging maverick.

While some of that may be true, and it's hard to find a box everyone can fit in, there's still a handful of things we all need to focus on.

Most of which revolve around improving the digital capabilities all-around your marketing, operations, sales and service cycle.

When those things start to happen you can start to have people do more high-value people things.

Matt Masiello, CEO SIAA, talks about the digital agility agencies are going to need moving forward and how to prioritize getting started.

For more Change Insurance episodes, click here.

Joey Giangola: Mr. Matt Masiello, how're you doing today, sir?

Matt Masiello: I'm doing great, Joey.

Joey Giangola: But I got to know before we really get into it. What is one maybe skill or talent that you think you are good at or think you should be good at, but you're not really sure, afraid to take it out into the public?

Matt Masiello: Well, so my favorite hobby is actually fishing. I fish with my boys. I fish when I travel quite a bit and I like to think I'm a really good fisherman. But every once in a while, I go out with other people that are much better at it, and it's quite humbling. The bigger problem is when my kids are with somebody else that is better at it as well, they point out to me that I'm not quite as good as I think I am. So it's one thing for you to realize you're not good at something. It's another thing for your own children to point it out to you sometimes too.

Joey Giangola: Probably a humbling moment. Is there anything that you did as a result to level up that skill? After the fact, I got to just watch... I don't know if there's a fishing channel anymore, but I just got to consume more content and just got to level up my skills.

Matt Masiello:  Yeah. Look, I think it's the same in business and in sports and if you play instruments or anything else and it's practice. So believe it or not, I actually go out and practice. I take classes on it. I've read books on it. There are times I go out fishing with my kids and they'll say, "What are we doing? We've never done this before." And I tell them, "We're just trying something different." So it's breaking out of the box in the same way you get to Carnegie Hall, you just practice.

Joey Giangola: Yeah. For me Matt I think... I feel like I should be good at singing. I'm never really one to bring it out in public, even at a karaoke night, but that's one of the skills that I feel like I should be okay at. But it's just... I don't know if it's ever my cards. But speaking more on the business side of things, is there something around this time of year that you feel is maybe overrated in terms of resetting, getting charged up for, we'll say a new year. Is there anything that you bristle at that you hear around this time all the time?

Matt Masiello: Yeah. That's actually a great question. So I've been in the insurance industry for 27 years and I actually hate New Year's day. The reason why I hate New Year's day is in the insurance industry, as we all know everything resets on the calendar year. So I've always viewed January 1st as one giant Monday, where for some reason we have to start our year all over again. We start all over on our production commitments and we start all over on all of our different goals and loss ratios start over. Everything starts over on January 1st. I've always felt like in this industry, I wish we could do away with a reset every year on the first day of the year.

Joey Giangola: All right. Well, then this brings me to this question, Matt, because if you want to get rid of the reset, what's the alternative? Well, how do you think everything should go?

Matt Masiello: Well, I think that none of us run our businesses as if it's going to reset on the first day of the year or on Monday morning or anything like that. I know that when we've worked with organizations like either RPS or the insurance companies that we do business with, we always focus on the longer term. None of us are focused on, "What are we going to do from now until the end of December? Then what are we going to do from January 1st, through that next year?" We're all taking one, two, three, four-year views in how we're going to do things. I [inaudible] the industry would take that [inaudible] into some of those things as well.

Joey Giangola: Yeah. It definitely makes sense. I mean, from the agent's perspective, in terms of thinking outside the box, is there something that you don't maybe hear them talking about enough or paying attention to that should be on the radar that you think is going to play maybe a more important role, we'll say in 2021 and beyond?

Matt Masiello: Yeah. I think we're all hungover from the pandemic, but I think from an insurance agency standpoint, there's a lot of things that have happened this year that we have to acknowledge. Insurance agencies and all of us have had to adjust how we run our business, how we manage our staff and work with our staff. How we work with our clients. What our value proposition is. I think in the insurance agency world, insurance agencies really need to acknowledge right now the fact that digital usage by consumers has leapfrog due to the pandemic.

We're all using digital tools. This is what I think I said to you earlier. This is my third zoom meeting already today. Agencies need to recognize that their consumers are going to be looking for digital tools in the future. And agencies need to take a step back and say, "Okay, if my clients want handle some part of our business relationship digitally, am I meeting those needs? If I'm not meeting those needs, what do I need to do in order to accomplish that and give my clients what they want? Which is the best of digital capabilities and local sales and service and personal relationships."

Joey Giangola: What'd you think those table stakes are now as that digital barrier has been raised for everybody?

Matt Masiello: Yeah. I mean, certainly the table stakes are communicating with your consumers or your clients the way they want to be communicated with. We in the insurance industry, we're baked in that it's our process. Everything follows the industry's processes, but the consumer is going to change that like they have in other industries before us. We got to communicate with them the way they want to be communicated with. We've got to give them the digital tools that they have in other parts of their lives. So we all do our banking, our finance, there's all sorts of things that we do digitally now, including things as simple as making reservations or ordering food.

Insurance agencies, we need to recognize that we need to provide similar digital capabilities. As people in the insurance business, I think we also have to recognize, as much as we think our industry is unique, our digital capabilities and how we interact with our customers and our clients is no longer measured against other insurance organizations. It's measured against how the consumer does business with places like Google and Amazon and some of the other digital capabilities that have completely blown up or blown out, from an opportunity standpoint in the last 10, 12 months.

Joey Giangola: Yeah. I mean, some could say that's an unfair comparison just based on the gap in terms of how we have operated as businesses. Obviously, you guys overlook a lot of insurance. Is there anything that stands out to you as a model that you would like to see trickle down through the rest of the ranks?

Matt Masiello: Yeah. There is. We put a program together back in late 2019 called iEvolve. What that was born out of was a study that we were doing of really what the agency of the future is going to look like. When we sat down, we realized that independent agencies are mavericks. We all think we're somewhat unique. So to go to independent agencies and say, "This is the box we think you need to be in," is not the right way to approach it. So what we did determine is that agencies have really four areas that they need to focus on relative to digital capabilities in their agencies.

The first one is marketing, which is a dull moment. We all know we need to be doing digital marketing, but then digital capabilities do flow into your operations, how you service your clients and retention of your clients, and then ultimately digital capabilities flow into the sales aspect of your agency as well. So when I get asked about a model, I tell people that it's a dynamic model that crosses over marketing operations, sales, and service.

Joey Giangola: What do you think the biggest hurdle is in properly translating that relationship process digitally? Because there's a lot that could be lost in that communication process. That's one thing I'm always trying to focus on, is talking about not losing sight of the fact that you're still building relationships just in a different way. Have you found anything in your personal experience that has helped?

Matt Masiello: Yeah. So I think one of the things I've come across is that we all want the convenience of the digital capabilities, but we still want that interpersonal reaction. So the idea of implementing better digital capabilities really gives us the ability to spend more time with the interpersonal relationships, more meaningful relationships with our clients when we're dealing with them.

Joey Giangola: Is there any one particular area that you think agents should focus on technology or otherwise that you think is really an underserved opportunity? Again, we've talked a lot about the way that business should be conducted, but what about the types of businesses they're offering? What do you think has potential that maybe gets overlooked or maybe what's the thing that is stealing the attention that maybe they should not focus on as much?

Matt Masiello: Yeah. Are you talking about products and stuff like that? Products we're providing to the consumer?

Joey Giangola: Yeah. I mean, just in terms of the trends of what agents should be focused on in terms of their agency, their makeups. And what do you think really helps an agency look the way they want to in 2021?

Matt Masiello: Yeah. So, there's a lot of data out there about how we should run insurance agencies and best practices and things like that. But I think as we look towards the modernization of independent agencies and applying these digital capabilities, I think first and foremost, agency principals and managers need to look at their business and say, "How do I make it more agile? How do I make it a lower-cost model?" The agility was a proof in point when the pandemic started that... I've talked to agency after agency that says, "Oh my gosh. Thank God that my management system was in the cloud. I had a VoIP system. I had to buy a couple of laptops. I was able to find them and I was immediately remote."

That's an agile business. I've been able to send my employees remote. I've been able to bring them back in. So, I think that agility is part of what the agencies need to create. I think that lower-cost model where providing the digital capabilities for a service, instead of the manpower capabilities for service, and then freeing your staff up. So when they are interacting with the client, they're not having clerical or transactional discussions. They're having relationship building, and policy upselling, and business development discussions with those clients.

Joey Giangola: Yeah. That's a big one. It's just that simple shift in the idea of, "Listen. Let the actual people do more valuable people things." Again, have you seen any good examples as to where that's helped agencies really level up and transform what they're able to offer in terms of just what the services that they're able to provide? Where should they really maybe start to digitize those service capabilities?

Matt Masiello: Yeah. So I think there's two things there. There's one on starting to digitize the capabilities and then what the end product looks like. I think to start to digitize the capabilities, they have to do an analysis of where they are. I've been around a lot of agencies that say, "Well, I've got good digital capabilities." What I determined as we started talking through that, that they're really playing whack-a-mole. What I mean by that is they got a social media page, because they needed a social media page. They got a dynamic website because at that time they needed a dynamic website. I think making decisions based on whack-a-mole or needs today is a little different than taking a step back and taking a look at your agency and saying, "This is what I have today. These are the people I have today. But this is where I'd like the agency to be in the future."

Look, Rome wasn't built in a day. So they have to realize, "I've got to crawl, walk and run." So they can prioritize those things on what they need to do to ultimately get there. I always tell everyone, "Look, you only eat an elephant one way and it's one bite at a time. So even though you're putting a plan in place to digitize all of these aspects of your business, you're going to chip away at them over a period of time." What the end product I believe looks like... There are agencies out there doing this are the true digital agencies. When we talk about a true digital agency, we're not saying throw out the way your agency is run and what has made you and other agencies successful in the past. What we're saying is let's put a little bit more technology and a little bit of horsepower behind what makes you good and let's transition how we're going to run that business.

I always tell folks that the independent agency of the future is going to be an advisor in the risk coverage and selection process, and they're going to be an advocate. When I say that they're going to be an advocate, it doesn't mean we're going to service every aspect of the policy. Policies may be serviced through a self-service. They may be serviced through carrier service centers, agency management service capabilities, agency management system service capabilities. But we're going to be an advocate when the consumer starts those processes and then realizes, "I do want to talk to a person. Or I have a claim and the carrier is not doing the job I think they should do. I do want to talk to my agent." So that advisor and that advocate really allows the independent agency of the future to pivot, and instead of being staffed and having its expenses and its business model based on servicing the policies, it allows us to change and pivot the model of the insurance agents.

They'd be focused much more on business development. We're not ignoring service. We're not ignoring retention. We're simply giving the consumer the ability to service their policy multiple different ways, including calling us, and it comes full circle to what you and I were just talking about a minute ago. Now we're having more meaningful conversations with the clients on business development activities and policy sales activities, and coverage. Solving risk challenges with them, not simply performing clerical functions. We become an advisor, we become an advocate. We become business development and sales distribution points for the carriers that we represent. We've given at the same time, the consumer, multiple different ways to service their policy. Because not everybody wants to service their policy between 8:30 and 4:30 midweek.

Joey Giangola: So I usually get in trouble when I ask this question. I haven't asked it for a while, but I used to ask people, do you think we're in the knowledge business or the service business? Like what you're saying, and it's a sliding scale for sure. But based on what you had said, it sounds like... I'd be curious where you would put that slider on that scale and in comparison to where you think most agencies think it should go.

Matt Masiello: Well, look, I think we're in both the knowledge and the service business. One of the reasons why insurance agencies haven't been disintermediated to a huge extent by digital capabilities and InsureTech and the threat of the internet over the last several years is because it is a complex product. We can argue that it's not, but at the end of the day, we are secure in the value of the assets of people. We're an important part of their financial stability. I do think it's a service business. All I'm saying is that the service is going to change and the consumer is going to direct on how they want to service it.

The knowledge is what differentiates us. If I'm a consumer, I don't care about the knowledge, and I'm simply looking for an auto policy with low limits, and I just need to pay that premium. I can go direct to direct channel. However, if I need that knowledge set because I do have multiple policies or I'm a business owner. I have more complex coverages. I need professional coverages. Then I need that knowledge of the agent. So I would weight them about the same relative to importance. What I would just say is how they are done. Certainly the service part, it's that what's changing.

Joey Giangola: All right, Matt. I got three more questions for you sir. The first one, very simply, what is one thing that you hope you never forget?

Matt Masiello: What is one thing I hope I never forget? Well, it's actually not an insurance thing. It's just in working with people and all the agencies I've worked with over the years. That's actually humility. I believe a little bit, or a lot of humility goes a long way in working with folks and with the humility piece comes empathy. I think that whether we're working with clients and insureds, or whether I'm talking to insurance company folks or I'm talking to insurance agencies, you have to have some empathy and realize what people are going through in their business lives and in their day-to-day lives, and understand that in your communication and in your business decisions and how you drive process and results with people.

Joey Giangola: All right. Then the other side of that, what's one thing you still have yet to learn?

Matt Masiello: I think there's a lot to learn. It's interesting. I actually wrote up... I'm on a non-profit board, last night and the person that's head of the organization was doing a presentation. I'm in the business world, focused on marketing, sales, operations and so forth. This individual put a slide up that talked about a mission and tactics and using... I'm actually looking at it. I printed it. Strategy, brand, culture. So I'm on a call last night where I'm on a non-profit board, and this individual starts talking about this stuff and by the end of the night, I sent them an email that said, "You never stop learning." His slides started with doing a SWOT analysis on a situation, and then what the steps are that happen after that.

I recently wrote a book that ends in creating a SWOT analysis. I've been asked more recently, "Where do we go from here? What's next?" And I realized they actually picked it up from an individual on a nonprofit board, completely outside of the industry. So I think just in general, we can never stop learning. We have to be curious. We have to ask questions. Sometimes they're tough questions. Sometimes they're easy questions and we have to listen to the people around us. Take away what they have to offer.

Joey Giangola: Right, Matt. Last question to you. I generally ask this to everybody, but asking it to somebody like yourself, there might actually be ramifications that can come from it. So let's just see what happens. If I were to hand you a magic wand of shorts to reshape, change, alter, speed up the course of insurance, really in any way shape or form, what is that thing? Where's it going?

Matt Masiello: Yeah. I said this already. I make my bones in the independent agency business. I'm a huge advocate for independent agencies. If I could wave a wand, the independent agency, the portion of the independent agency distribution system that under million and a half dollars of revenue, which is about 70% of the channel. I would wave that wand then I would get all of us the digital capabilities that we need, that the consumers are clamoring for. So we can meet the consumers and we can provide them what they want, so they're not looking for the alternatives in the direct channel or an alternative on the internet. That's a big wish, but that's what mine would be.

Joey Giangola: Matt. This has been fantastic. I'm leaving right there, sir.

Matt Masiello: Awesome, Joey. Hey, listen. I appreciate the opportunity. Thank you.

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