Why Most Automated Insurance Quotes Fail The Mass Affluent

By Victor Nawrocki

Over the past two years, due to global workflow disruptions, the insurance industry and its agents on the ground have embraced technology like never before.

Automated price comparisons and related technologies streamlining the sales process are fixtures across insurance agencies, helping agents complete sales with minimal customer interaction. Although these largely automated processes function well for many working consumers seeking basic products, a large group of Americans is overlooked and largely underserved.

Mass affluent families and individuals - those with a net worth of $100,000 to $1 million, not including the value of their primary residence - represent 32.3 million U.S. households, according to a Spectrum Group study released earlier this year. Despite representing such a large portion of the country, this group often feels invisible in the insurance marketplace, sandwiched between the white-glove service afforded to high-net-worth and automated insurance quotes provided to those with fewer assets.

Technology advancements have been instrumental in enabling insurers and agents to provide more coverage for a greater number of people. In addition, automated risk analysis and insurance quoting technology have dramatically improved over the last decade, making the process smoother and more user-centric. However, when it comes to the mass affluent, a hybrid approach pairing comprehensive technology solutions with the guidance of dedicated, professional agents is not only the best solution for the mass affluent; it's the most responsible one.

The Needs Of The Mass Affluent Are Often Neglected

Because the mass affluent are not as sought after by financial and insurance professionals as those with a high net worth, they are often caught in the middle between those with higher net worth and those with fewer assets. According to a New York Times report, the mass affluent are "either fending for themselves or struggling to find good financial advice."

On the insurance side, their coverage needs far exceed those with more standardized risk. Yet, the mass affluent are often marketed to and serviced in the same manner primarily through automated quotes and self-service methods. This not only results in customers who lack adequate coverage, but also an agent with missed opportunities for additional lines of insurance. Neglecting the personalized needs of the mass affluent helps no one and can have a negative impact on all parties involved. This group is aware of their increasing insurance needs, but they lack the knowledge and resources to bring the various pieces (home, auto, life) together to create a comprehensive plan.

Pandemic innovations have certainly allowed insurance agents to discover new methods of interacting with prospects and customers, resulting in a nearly 20% increase in the use of artificial intelligence and robotic process automation, per a Deloitte Center survey. However, as the economy continues to move forward, customer experience must be a primary focus, especially in the mass affluent market.

Consequences Of An Underserved Mass Affluent Market

Allowing the mass affluent market to make coverage decisions based on automated assessments and quoting systems without professional guidance puts them at high risk for being unwittingly underinsured. Forced to solve the problem of determining coverage needs on their own, they fill knowledge gaps with misassumptions that can put their financial futures at risk.

While the ultimate purchasing decisions are determined by the customer, it is the agent's professional responsibility to provide them with honest and accurate information needed to make educated insurance decisions. Good insurance agents have the knowledge, experience and responsibility to prevent the consequences of unintentionally missed or underused coverages by providing the consultative services the mass affluent need to make informed choices.

A human touch can make a difference between a long-term customer and one that quickly moves on, looking for the advice they crave. Applying a human touch to the sales and service process of the mass affluent market provides better protection for the customer and a more loyal customer for the agency.

Solutions For Meeting The Needs Of The Mass Affluent

The solution is not to do away with the technology advancements in insurance risk assessment and quoting. In fact, the answer is to embrace innovative technology but in a way that mimics a more consultative approach. However, when doing so, technology should be a part of the consultative process, not its entirety. Combining the use of innovative, customer-centric technology that does more than just provide a standardized quote with a human touch is the key to the hybrid approach.

The insurance industry has a responsibility to take its technology implementations seriously. When used effectively, this model creates a more comprehensive understanding of the customer and their insurance needs and reduces the risk of inadequate or replicated insurance coverage. With a combination of innovative technology and professional, individualized insurance advice, the result is a better customer experience, a more efficient sales process for the agent, and higher rates of retention and cross-over opportunities for the future.

Victor Nawrocki is president of National Advisors Group. He may be contacted at [email protected].