The insurance industry and insurance agents are at a crossroads.
As more consumers go online to buy goods and services—including insurance—a question emerges: What is the future of the insurance agent, a profession built on providing personal attention and trusted advice to help protect people’s families, homes, and other important assets?
While some insurers focus exclusively on digital channels, American Family Insurance is taking a balanced approach, deeply rooted in meeting customer preferences—including the many customers who continue to want their insurance needs served by an agent.
Make no mistake about it: American Family is bolstering its online capabilities for consumers who want to do business that way. But it’s simultaneously investing significantly in its agents—a respected group of business owners who have fostered strong customer and community relationships for decades. American Family continues to believe strongly in its agency channel and is transforming it through technology and other innovations.
American Family is pursuing this strategy through an initiative called Reimagine Agency. American Family Chief Sales Officer Jeff Swalve and Vice President of Agency Strategy and Growth Rondale Dunn sat down with McKinsey to discuss the effort. They talked about how the company is producing strong revenue growth and positioning agents for additional success by setting clear goals, testing many ideas, pivoting off those ideas, and—above all—communicating and collaborating.
McKinsey: Let’s start with a little context. What opportunities did you see that led to launching Reimagine Agency?
Jeff Swalve: Our agents and customers need to be able to do business with us when they want and how they want. Our customers shouldn’t have to decide if they want to do business quickly online at two o’clock in the morning or if they want to have an insurance agent that they can run questions by. We want to give them both.
One of the main goals of Reimagine Agency is to digitally enable our best-in-class agency force and help them become more efficient so they can do what they do best—which is to continue to be strong partners in the community and drive profitable growth.
Another goal is to build off the idea of the trusted adviser—so, looking at the relationships that our customers have with our agents and figuring out how to build in different conversations for agencies to expand the value they can offer.
The pace of technology is not going to change, so a hybrid agency model that embraces technology and provides strong community support—this is the future.
The pace of technology is not going to change, so a hybrid agency model that embraces technology and provides strong community support—this is the future.Jeff Swalve
McKinsey: How did you organize the effort to ensure buy-in from all involved?
Jeff Swalve: We built a team of people from multiple divisions across the company, and we’ve seen an unbelievable amount of collaboration, ownership, and engagement under this model.
Rondale Dunn: We meet weekly to brainstorm solutions, tackle issues, raise challenges, and discuss resources required, allowing us to move fast, react, bring clarity, and provide support when needed.
The other thing we’re doing is validating ideas and proving them out through small pilots before we roll them out to all customers and agencies. We run the quick and agile pilots with a number of agencies and ask for real-time feedback. We make data-driven, well-informed decisions and adjustments and focus on dozens of measures to track our impact against clear revenue baselines. We repeat this process until we are confident that a particular initiative is worth scaling. Then, when we decide to allocate resources to scale a pilot, we have a higher level of confidence that it will meet customer needs and can deliver tangible ROI.
Jeff Swalve: These pilots allow us to gain empathy from agencies, customer-facing employees, and customers before an initiative goes live. And by testing, learning, and iterating, we ensure that there’s value for agencies in any new tools, products, or partnerships that we roll out at scale.
McKinsey: What are some of the successes you’ve seen throughout the transformation, and how did you build on those?
Rondale Dunn: One quick example that we’ve seen tremendous engagement with has been remote service support. Our care center was piloting it with agencies for more than a year. After we launched Reimagine Agency, we invigorated that initiative and scaled it up more rapidly with our agile approach. With each successive wave, we moved faster and incorporated new learnings. The care center frees up agency capacity to sell and service more customers by providing 24/7 care center support for their customers. Agencies that are in this program have seen a significant increase in quoting and new business premiums compared with those not in the program.
After we launched Reimagine Agency, we invigorated that initiative and scaled it up more rapidly with our agile approach. With each successive wave, we moved faster and incorporated new learnings.Rondale Dunn
Jeff Swalve: The story of this transformation is about learning from and leveraging both success and failure. We’ve experienced a lot of success throughout this transformation, and there have been a few things that didn’t go exactly the way we had hoped. We stopped doing work on them, and that’s OK. But when we looked at the results and we saw new business premiums coming in from a certain initiative and it was outperforming, we challenged the team to go further. We asked, “What is possible? What would it take to move the timeline up? What if we put more resources behind this or added more agents?” It wasn’t always as simple as trying to get more premium but rather asking how we could accelerate what we were learning. So when we find out something will work for agencies, we say: let’s double down on this and ask more questions. We want to learn how we can save them time and meet their customers’ needs. And again, I think that’s a big benefit of the way this was organized. It allowed us to do that.
McKinsey: What are some of the challenges you’ve faced, and how have you worked to overcome them?
Rondale Dunn: From an agency perspective, their number one priority is taking care of their customers. They are independent contractors who serve their customers every day while pursuing their own innovations—in addition to those provided by the company. They have a lot on their plate, and we recognize and respect that.
We quickly learned that we had to sometimes slow down and check in to understand the root cause when agencies weren’t engaged with an initiative. Communication was sometimes the issue, but sometimes they had feedback about functionality. We also learned that being able to pivot is a sign that the process is working. For instance, if we were excited about an effort but agencies didn’t see it the way we did, we needed to listen and adjust as necessary.
Jeff Swalve: We learned early on that the more communicative we are, the more we bring people in and along with us. You can’t tell the change story enough times. You can’t ask and answer enough questions. So we put everything on the table about where we’re going and how we’re going to get there. There’s also a fine line between pushing hard, the way we we’re trying to, and having the patience to see things through. That’s never an easy balance, but I think it gets a lot easier as you communicate more.
Rondale Dunn: Another challenge for me was having patience and trusting the process. You have to remember that there’s a change curve. People learn things at different paces, and they need to feel comfortable before they jump all the way in; that takes time. So being patient is essential.
McKinsey: What gives you confidence that your efforts will stick and you’ll continue to find success with this model?
Jeff Swalve: We’ve seen such a transformation from where we were 18 months ago to where we are today. We have everybody pulling in the same direction, we have common goals, and we have processes in place to help us identify what success and failure look like on a more granular level than we’ve had before. These processes, systems, and new ways of working together give me a lot of confidence in the future—as do the results that we’ve seen so far.
This initiative was born from listening to our customers and our agents and the needs that they have. Our goal, as we look to the future, is to continue to build deeper and stronger relationships between our agents and our customers, to build efficiencies so they’re able to operate faster and stronger, and to support them in ways that we haven’t in the past.
Rondale Dunn: Customers’ needs are constantly changing, and we must respond. Having a process in place where we can quickly test and validate our assumptions to meet these changing needs is going to be paramount—as will having AI and machine learning incorporated in our processes. We are well positioned to inject new technologies and processes and to quickly learn from those processes before we scale them. The companies that can balance technology with relationships will win in the long term.