How Should Insurance Be Distributed in the Future?

There will certainly be winners and losers along the way, it's just a matter of how long the status quo will remain.

One thing seems pretty clear, agencies that continue to invest in technology and customer experience will do most of the winning.

There is a good chance the future won't be able to make room for agents who struggle to adapt and reinvent themselves as needed.

The biggest wild card will likely come from the independent agencies, see InsurTechs, that are unrecognizable by the traditional standard.

Chris Cline, Westfield's National Agency Distribution Leader, talks about all the adaption and reinvention he's seen recently on the front lines.

Joey Giangola: Mr. Chris Cline, how are you doing today sir?

Chris Cline: I am fantastic, Mr. Joey Giangola, the venerable Joey G.

Joey Giangola: Chris, if you could do one thing besides work in the insurance industry, I guess maybe professionally, would it be playing guitar or BMX biking? I'm pretty sure I know the answer to this question.

Chris Cline: A curveball question. What if it was neither?

Joey Giangola: Oh, all right.

Chris Cline: If it was an A/B question, despite my passion for bicycles and BMX, it has actually been a stated, rub the magic lamp and the genie comes out and get one wish. I'd love to be able to have made a living as a musician, playing guitar specifically.

Joey Giangola: Really? I would've thought the biking would've taken it. I feel like you might be more accomplished in that arena. That's just me casually observing your social media activity, but who knows?

Chris Cline: Well, that's fair. Not to position it as that I was this fantastic BMX racer or anything. I think it's more of, I'm more accomplished there by virtue of how bad of a guitar player I am.

Joey Giangola: Fair enough. Well then I got to know, what's the third option? What's the write-in option that I wasn't giving you?

Chris Cline: It would be some sort of a weird thing. So I'm an odd... I guess you wouldn't expect this, but I'm a science geek and I've really become over the last maybe decade, a lot of this stuff I've consumed is certainly full blown astrophysics. I find that stuff to be phenomenal, but I'd love to be a neuroscientist. I'm fascinated by the brain and the way the brain works. And even as something as simple as the book Blink by Malcolm Gladwell, or some stuff that's just really, really deep. It's just fascinating to me, so I'm probably already out of horsepower to talk about it right now. But I think it would be really neat to be on the leading edge of neuroscience and our abilities cognitively as humans. And you hear a lot about bias now in the media with many of the topics that are front and center, but that kind of stuff is fascinating to me. And the way we're hardwired versus the way we've adapted.

Joey Giangola: I definitely agree. If I could do anything, I would be more on the space side of things. Much like your guitar playing ability, I'm not nearly as smart enough in math as I need to be to even hang in that realm. But if I was, I would certainly like to have dabbled in some sort of academic, I guess maybe arena. That would be interesting for sure.

Chris Cline: I'll tell you, the Neil deGrasse Tyson podcast is easily one of my top three listened to content that I listen... And it's anything that he talks about with any guest, AI and sports, to anything as it relates to the universe and the cosmos is fascinating to me. Absolutely fascinating to me.

Joey Giangola: Yes, yes, indeed it is. And it makes you feel, I think you can get too caught up into it sometimes to where you start to think everything going on down here, what's the point of it all? There's just all of this stuff out there that we have no idea existed. It becomes very humbling I guess, in some aspects, but- [crosstalk]

Chris Cline: I know we didn't get on here and talk about science, but I do want to... Literally just the other night in my Facebook memories, I must've posted this from around the campfire somewhere over the last couple of years. And staring at the stars, but my Facebook post was something like, "If you've wondered how small we really are, contemplate this. The closest star to the earth is 78 million or 78 light years away. So that's how old that light is, and that's the closest. Or some crazy thing like that, and so it's just fascinating to think about. So at light speed, it would take 78 years to get there.

Joey Giangola: So let's bring that home a little bit. What are we looking at in terms of our industry that feels like it might be too far away? What is out there that we maybe feel it's too big, it's expansive. Is there something that we're kind of looking at that is old, that we're just not paying enough attention to, that we have the right perspective of?

Chris Cline: There's probably some really great, fascinating conversations we could have there. And I love that dynamic, where how do you take these seemingly disparate questions and bring them together. I feel like, and I've spoken about this in a couple of spots. And it might be a little narrow over time, but the first thing that came to mind when you said that, and there were probably many, is how does the proliferation of the utilization of data in our industry. And AI, and modeling, and all of these types of things that bring a great deal of value to everything, right? Even in the consumer experience and the decisioning on the carrier side from pricing and underwriting. And the ability of an agency to play their role in all of this. While on the other side of this thing is this also growing concern around consumer privacy and how that's coming to life in very different ways, in different parts of the globe and even in the country.

And I don't know what that looks like, so there is scientific... What was the question? What happens when an unstoppable force meets and immovable object? I feel like these things are on some sort of a collision course, and I don't know that they necessarily collide. But they're concepts that seem somewhat contradictory that are gaining significant momentum in their own place. And as this becomes a much more global... We're past that, everything is global now. It's one world, but we're 50 state regulated and we're talking to people, I presume that are mostly inside the United States. But privacy and compliance laws are starting to look different by state.

New York and California are obviously maybe the ones that would raise the most attention, but even here in our home state of Ohio, there are obligations financial services firms. I think you have to be over 5 million in revenue or over so many employees where you get some exemptions, but a typical independent agency, probably not incredibly equipped to comply, and notice, and be able to do those types of things. So I don't know how this looks, but that's one that comes to my mind and it has a scientific-y spacey type thing when you think about worlds colliding.

Joey Giangola: It's definitely a good point because it's something that we've seen on the horizon for quite a while, we've seen it coming. Here's my, and I think what you said perfectly is that the thing that I'm, I guess maybe concerned about is us maybe missing the potential of that as we get up to full speed capability in that department again. Privacy coming down on the other side of the track, do we get ahead of it before they collide? Or what does it look like? It's not really like a game, but I don't know if there's necessarily a question in there. But I think what you said is right, is that there's a lot more responsibility that's going to go into this. And how we navigate through that and what the consumer expectations are. And just not being to a point where we're playing catch up on this, you know what I mean? So it's fascinating, definitely.

Chris Cline: I think you're right, and these things do tend to work themselves out over time. This is a very, very large industry that provides a great deal of good to the communities that we're all in, for the people that we serve and protect and insure. So this will sort itself out, and we're not the only industry that has to deal with this. Everybody's, I mean this is so cliche, Joey, right? But everybody's doing business online and especially now over the last five months, so many of our transactions are happening virtually. And we're exposing so much of our digital footprint to folks. So every industry is having to deal with, how do you make sure you're really anonymizing PII and those types of things, and complying with the privacy expectations of customers.

And I just think that the nuance of our industry is the state specific regulation, and the nuance that could live there. And as more and more independent agencies start to cross state lines and serve larger constituencies outside their individual state, it's something to pay attention to. And it becomes somewhat political, I guess. Are you a, you can have all my data if it benefits me in some ways person? Or do you want all of your stuff kept under lock and key, and the whole make me disappear world of the GDPR I guess, in Europe? But I think just being proactive about it, trying to understand it, be a good partner and be a good steward of people's information and use it for good. Which is a fascinating topic in of itself, I know it's hard to crawl out of bed in the morning, unless you assume noble intent, those types of things. That's one thing that comes to mind.

Joey Giangola: So bringing it back down to the ground even further on all of this, what are you seeing from that frontline approach with agents? What are they dealing with right now in the very immediate present in terms of the challenges they're facing? What are the things that they're working through right now? What are some of the more interesting things you're seeing?

Chris Cline: That's interesting, I don't know that a lot of that stuff has changed fundamentally. Obviously, it'd be really easy to say that agencies have responded differently to the global scenario here, and pivoted more quickly and more successfully. But five months into the current state of affairs, it's no longer about how you work in a more remote environment. And how do you take care of customers in this situation, you either did or you didn't. And it seems like by now, nearly every... We didn't lose any agencies. No agencies that we work with magically ceased to exist, everybody's figured it out. And some were far more equipped. And I guess I would say that magic Monday when this hit, at least in our geography, some were running just as fast and some it took several weeks.

So I kind of set that aside, right? That's just an operational thing, but when you step back and look at it, there's still all of these same conversations around, how do you create organic growth in all of this? And that probably is the one thing that is very real right now, depending on the mix of business and the target classes that certain agencies focused on. There are very real and very different impacts on their financial return. So if you see agencies out there that focused on the hospitality industry and did very, very well for awhile, and they're having different conversations with their carriers. And maybe even their employees today than they would, but we also talk to agencies that are having record breaking months, not just in the year, but period.

Great success using traditional marketing. We've talked to some folks that are actually now back to TV, and traditional radio, and direct mail. And having phenomenal success in attracting personal lines and still helping small businesses. But organic growth is a very real conversation with carriers, again, based on their nuance and the way most carriers treat their contingent models. Have some sort of a net policy gain that customer gain growth component to them. And so that's very real and front and center. And again, sometimes it's just a nonissue and then others it's a very heartfelt and passionate conversation around very real financial circumstances that agencies are in.

But beyond that, agencies are investing still very heavily in thinking differently around this digital component. And those that were dabbling in it are being forced to move a couple steps up the ladder fast and playing catch up. And so what tools are out there, how are we helping arm them? And how are we thinking about exposing them to, I guess the mechanisms and maybe some other vendors. And those types of things that are good at this type of stuff, but I could stop now and see if you have any follow up there, I'm rambling.

Joey Giangola: Well, I think one of the things that I found, I was struck as you were going through that was, I remember a conversation we had a couple of years ago. And you were saying, "Yeah, I basically work out of a backpack now." And Westfield was pretty, maybe progressive in adopting this freeform kind of work environment. And I'm assuming that's only served you better during everything. What is the opinion, how does Westfield view itself now after all of this, in terms of how an insurance company should look, feel, and operate? Because it only maybe solidified the path you guys were on. Were there any big epiphany moments or conversations about, "Hey, I think I'm glad we made the jump to where we were now."

Chris Cline: That's a great question. I think if I was to speak on behalf of the organization, I know deep down, there's a decent amount of deep thanks that we'd started to make this transition. To equipping people with the tools to work when and where they're the most comfortable, a while ago. So part of that was creating a campus, and you've been there and seen the transition we've made. Full overhaul, and renovation, and very open, very collaborative. A lot of that modern work environment that was gaining some momentum, but along the way it was giving people the tools to work anywhere. We wanted the campus to be where they wanted to work, but they could work anywhere. And so quite candidly, when we all went home in March and started to work on Monday, I'm sure there were some blips along the way but holistically, there were really none. Nearly everybody who was asked to continue their job duties from their home using their laptop or VPN dial-in did.

And we had the infrastructure to support that and people were using WebEx. And that's the platform we use, or Zoom, and Jabber, and those types of things. And we were pretty successful so from that perspective, I think very, very fascinating. And we will continue down that path. And we've been, in many of the agencies that we work with may started to have experienced this. Now it's how do you go from business continuity mode to this is the way we're doing business? And now realizing that you can actually have a visit with an agency, a business discussion with an agency, using video. And if everybody now that is in the same spot of using those tools, the business conversations are just as hardy as they were before. And they're just as healthy because now there's not this, "Well, we don't want to do it unless we can do it in person." Because now everybody's forced to do everything via video or via phone, so the novelty or the angst around all of that is long since passed.

So very, very fruitful conversations, and more and more examples of us engaging larger partners with more people than the agency, with less disruption to the agency. So what might've been a field call from a commercial lines person with a couple of folks in the agency, now we can invite 30. And here's what we're doing, here's what we're up against, here's the appetite, here's our hit ratios. What are you guys seeing? And so in some ways, it's improved our ability to engage our agencies. And then of course in certain geographies, we're starting to get back into some face to face, but local guidelines are dictating those. As is individual comfort with the situation.

Joey Giangola: And you mentioned that you've talked to some agencies who are having record months just of their entire careers. And I've heard that too, from a number of different people. Is there anything that sticks out as to why that may be the case? Is just that a lot of the noise has been stripped away, there's been just focus? There's been, again, a forced efficiency to the whole thing? Assuming they're dealing in a business that wasn't obviously, dramatically impacted.

Chris Cline: I don't know that there's really a magic formula there, but those that were already well going down this path of being able to interact with... Well, starting off with a engage the sales process through more of a digital approach. They were already investing in SEO. They were already investing in the top of their funnel via... And then you overuse the word digital, but they were investing in that and able to interact, they're able to service all their clients. So it wasn't odd in their market for their agency to show up that way. And that's got to be some level of authenticity around it being in your model. And so it really wasn't any disruption for them, and I've talked to some agencies who are really good at their own analytics. Part of this is, when you really start to look at it, there's some significant efficiency gains that people are starting to see.

I've seen it even on the team that I lead and work with here at Westfield. There's a lot of distraction, just talked about how great the workplace is, but there's still built in distractions. There's coffee shops, and bumping into people, and going into longer lunches, and things that are inherently healthy. But for at least this period of time right now, you start to see very real and measurable efficiency gains when people are just doing their work. And so how long and how sustainable that is, we all read the stuff that's floating around on social media around, is this sustainable? What's the future of the office? What's the future of all this? How do you keep people engaged and motivated, and those types of things. But those that are winning, they just kept on going and they poured fuel on the fire.

So I guess there was an interesting one, I was involved in a couple of web panels and different conversations really early on was, is it okay to sell in the middle of a pandemic and an economic downturn? And some folks that we mutually know even debated, "Hey, let's just be here for our clients." And others were like, "I'm going to go sell." Being here for your clients also means offering them solutions to make sure their coverage is sound, they've got the right stuff going on based on life changes. And maybe they do need to think of, want to figure out a way to trim a few bucks off of their monthly expenses. And so there was some ethical dialogue around that at the time, but now I think everybody agrees that it's okay to be out hitting the streets virtually. And sell, and write business, and grow, and try to get there. And so attitude, tools, prior approach, or a quick ability to pivot. And be attentional about what you want to write and what your value prop is.

Joey Giangola: And I think, like you said it was that just adjustment period of dealing with, there's a difference between selling and exploiting, right?

Chris Cline: Yeah, totally.

Joey Giangola: Any sort of exploitation, just any talking about what it is that you did felt like you were taking advantage of some sort of vulnerable situation. But I think we've all, like you said, worked our way through it, but speaking of selling. Part of your fancy title at Westfield deals with the word distribution. So what do you think, it's a long contested conversation about, what does the future of ditch distribution look like? Where do you see it going? Who do you see gaining an advantage? Or do we just continue down the same path, just only better?

Chris Cline: There's definitely going to be winners and losers in all of this, and I think that what we don't know is how long the current state of affairs persists. And what what that does to any of this, but in terms of the big buyers being the big buyers. And so if organic growth isn't there, what returns are they able to generate from their model with the private equity backed firms? But I think in many ways, that machine is going to continue to grow to go. And those that are able to stay really disciplined and focused in investing in customer experience for the future, being when, where, and how the customers want to interact, are going to have a great deal of success. And there's a pretty broad, I guess a number of swim lanes, of types of agencies there.

So even more traditional, privately held, county seat type agencies, there are some of them that are having phenomenal success. And as long as I've been in the industry, there's been this notion that that segment of the independent agency channel goes away. And I've just come to the realization and the belief that some will always go away. But those that are willing to reinvent, stay relevant, and invest in all the right tools are going to have a great deal of success. And what you start to see is it's a little bit of a script flipped on how they're approaching. So this traditional expense model built around service, heavy commissions on producers, those models that are starting to see. And you see them on TV, and they're highly digitized, much more global, they're investing in far more on the front side of things.

And the role of the producer changes. It'll be interesting to see how successful they are and whether they're able to get to the point where they're generating real terms. But I do think that model has traction, and there are some of those firms out there now that are going to make it. And they're going to be really successful and they're going to move the needle. And some traditional agencies don't like that carriers like us would be entertaining those, it feels like competition. But they're just independent agencies with their DNA that have completely restructured the way they think about those types of things. And so you could go to our website and see these types of folks, but you're talking about a goose head, for example, that's completely rethought the franchise model. And they're crushing it, but they invested in technology and they invested in a turnkey model. And they're giving people that want options chances.

This notion of networks and aggregators, it does feel like there's continual growth in that space. And the quality networks are really investing in a menu of items that are appealing to a certain class or certain group of agencies. And they're attracting, and they're growing, and they're adding members. And if the tide continues to raise most ships, they're going to be successful. And the interesting thing is what the customer wants, and so will more and more customers want an experience that is 24/7 and remote? And will they be willing to buy without an agent? Our market share stays pretty healthy, but how carriers view that other segment that the independent agency hasn't been able to attract, I think is maybe the direction of the question you wanted to go down.

But I think carriers will always be tested to think about, is there a play to work directly with a customer? What is the role of each member of this, the customer, the agent, and carrier along the way? I do think that morphs, but there's going to be a segment of customers out there that will never find an independent agency. What's a carrier think about those? Might be the gist of your question, and is that really competing or is that just going after another segment?

Joey Giangola: All right, Chris, I got two more questions for you. I'm curious to know if you had to just have one thing that you could tell an agent, of everything that you've learned throughout your career in the industry. Everything that you've seen, as to maybe what sits at the core of what you think is important, effective agency distribution, whatever, right? What is that one thing that you've seen time and time again, that has been tested, that always comes out on top? Maybe a little bit of an impossible question, Chris, but we're going to go with it. Is there a thing that, if you just gave somebody one little golden ticket of sorts, what is that thing?

Chris Cline: I guess I'll answer that through the lens of not thinking about the really, really, really large firms, because they've got this somewhat solved for based on how large they are. And there's so many different answers that wouldn't be wrong. But it feels like if the midsize and smaller agency gets really intentional around processes and culture of always be hiring, then a lot of the things that we talk about becoming lows could be solved for. And I would asterisk that by always be hiring diverse thought and be thinking different. Don't hire yourself, and that's maybe an easy way of saying, hey, the perpetuation thing is a problem. But if you're bringing new blood in, you're bringing new talent in, and you have a fresher look on the customer. And a fresher look on the market, and if you're thinking about that through the diversity lens, you're really expanding what your agency can do. And by default, you're being forced to re-engineer your culture, re-engineer your tools, and re-engineer your approach of engaging customers because you have to be doing it to be attracting talent.

Joey Giangola: All right, Chris, last question. I might've asked this to you before, I'm not sure. If I did, I certainly don't remember the answer, but I'm curious to see if it's changed in any way, shape, or form. If I had the ability to grant you a magical insurance power to magically reshape, reform, restructure any part of the industry that you feel is the most deserving. What is that reshaping, restructuring, and where's it going?

Chris Cline: You did not ask me that question before. I don't know, maybe it's utopian. It would be great to get over this... So you want to talk about a science analogy, the great filter. So depending on your point of view, but it's this notion that those believe that every living species or it has to get through some great filter ultimately, to survive and flourish. And the big debate is whether or not mankind has already gotten through that, or whether it's still coming. So it'd be that discussion over a glass of wine and your favorite friends, so it doesn't get too political or even more spiritual. But if you view that, right now we seem to have an opportunity to be thinking about, we started them down this path, but there are so many disparate technologies and platforms emerging. All trying to solve slightly different and then overlapping problems, statements, or friction points in the overall value chain.

And we all can see what it looks like to get over the wall, and carriers, and agencies, and customers, are transacting business on this unified platform where data flows freely. AI is out there, behaviors are being predicted, products are being offered, risk is being mitigated. And what does that look like through the lens of, we're still several thousand insurance companies dealing business with tens of thousands of independent agencies across millions of clients? It'll probably never get perfect, but it would be really magical if when we get over some sort of a hump and the players that are going to win, win. And we really know what that looks like so that we're dealing less with that, and more about how do we go out and serve the customers? So everybody's building this from the customer back, but slightly different approaches. So I don't know if that's super specific, but getting past all the noise of the tools that are out there and waiting for some to win. And let's really start taking care of the customer and growing.

Joey Giangola: Chris, this has been fantastic. I'm going to leave it right there, sir.

Chris Cline: Much appreciated, dude. It was great to catch up. Every time, now that we're doing this video stuff, I still want to bust out the guitars and play a song, but I don't think anybody listening wants that.

Joey Giangola: We'll see, Chris, maybe someday. And-