Independent Insurance Agents not Immune to Digital Disruption, According to Accenture Report

From Accenture:

January 06, 2015

Independent Insurance Agents not Immune to Digital Disruption, According to Accenture Report

New York, Jan. 6, 2015 – Changing consumer behaviors, new technologies and the evolving competitive landscape may disrupt independent agents’ traditional strengths in customer service and risk management, according to a new report by Accenture.

The report is based on a survey of over 1,100 U.S. independent property and casualty (P&C) insurance agents, who were asked to rate the relative importance of a wide range of issues, from growth strategies and value drivers to operational competencies.

The agents who were surveyed saw the increase of insurance carriers’ direct sales via the online channel as a serious competitive threat, with 39 percent of respondents citing such direct solutions as their greatest source of competition. Nearly three-quarters (71 percent) of the agents said that threat took the form of lower prices, while 48 percent saw better brand recognition and more effective marketing as key elements of the competitive threat.

When asked about the most important digital capabilities, “web-based service and claims” were rated the highest by agents, followed by “web-based quoting.” Survey respondents placed a relatively low priority on mobile and social media capabilities.

“Changing consumer behavior and the continued rise of the direct channel are threatening agents’ dominance of insurance distribution,” said Erik Sandquist, managing director for Accenture Distribution and Marketing Services in North America. “So are new insurance players - with new distribution models - that are making a determined effort to entice customers away from agents. Leading independent agents will take advantage of innovative digital technologies and big data analytics to develop greater customer knowledge and insights, improve their ability to reach their target markets, and deliver a superior customer experience.”

Independent agents torn between keeping customers and growing their business
The survey indicates that agents place a higher priority on keeping and servicing existing customers than on finding new business. When asked to rate the most critical operational competencies, agents put “retaining customers” at the top of the list, followed by “servicing customers;” “attracting new customers” was ranked only third.

In rating information available to independent agents, the agents placed the highest value on insights into existing customers, while qualified lead lists were ranked last on the list. However, when agents were asked what they would do with more staff, finding new business rated highest among priorities, followed closely by cross-selling and up-selling new business.

“Independent agents, as a group, carry enormous weight within the P&C insurance business, representing more than half of total premiums written in the industry,” said Michael Lyman, global senior managing director for Insurance within Accenture Strategy. “It is understandable that they are focused on keeping existing customers, especially in light of capital constraints that make it challenging for most agencies to add sales capabilities to grow their business. New technologies can make agency operations more efficient, but they can also be used to create new digitally driven market opportunities to boost reach to new customers. The question is how to make these technologies both affordable and easy for agencies to use.”

Independent agents downplay their ability to provide differentiated advice while consumers value them for such services
Despite their strong focus on customers, agents downplayed their ability to provide differentiated and superior advisory services as a competitive advantage. Access to competitive products, improved customer experience and better brand recognition were viewed as more important sources of competitive advantage than the superior advisory services they could offer to their customers.

“According to a recent personal lines consumer survey we conducted, independent agents have been surpassed by insurance company websites and web search engines as consumers’ preferred source of information about insurance products and prices,” said Erik Sandquist. “However, insurance consumers trust the advice provided by independent agents more than any other source. Independent agents are well positioned to understand customer needs, provide risk management advice, and recommend personalized and tailored solutions. Serving as an effective risk manager will increasingly require insights derived from the Internet of Things and big data.”

Mutualizing investments to access additional capabilities is an option that agents need to investigate
The report also indicates that many independent agents join others in an association, alliance or cluster, but while small businesses in other industries may do this to bolster their limited resources or to meet and network with peers, insurance agents’ goals are principally to enhance access to carriers and to increase their commission. Membership in these groups gives agents greater power to negotiate with carriers than they would have on their own, and the survey reveals that this is more important to them than support in operational areas such as marketing, agency management systems, technology and 24/7 call centers.

“Agents need additional capabilities to compete in the future as confirmed by our survey,” said Michael Lyman. “It is also clear that they are not seeking to develop these capabilities with the help of industry associations, nor to adopt them from carriers. By sharing investments, independent agents can benefit from economies of scale and cost-efficiently access a broad set of core operational capabilities such as agency management systems, customer management solutions and digital technologies, which could help them both improve efficiencies and take share from online competitors with more effective digital channels of their own.”

Methodology
Accenture surveyed 1,158 independent agents in the U.S. in mid-2014. The data was collected and analyzed using TrueChoice Solutions’ patented real-time preference analytics platform. The survey explored a wide range of issues, from growth strategies and value drivers to operational competencies and customer insights. It explored independent agents’ views on their business relationships, operations and preferences across 12 priority areas. These priority areas covered 85 individual elements that were ranked in order of preference.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with approximately 319,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com
 

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Estimating Income from YouTube Videos

January 4, 2015


This video is along the same lines as the previous video, except that it goes more in-depth with regard to estimating potential income from posting YouTube videos.

The calculations are rough approximations.  The actual algorithms are proprietary.  But for ballpark income estimates, the calculations could prove useful.

Affiliate marketing is not mentioned, nor is using YouTube to generate leads.

But the speaker is a hand puppet.  (Calculations can be pretty dry, so doing something to make the discussion a little more fun helps.)  Fans of the Muppets will probably enjoy this video:


https://www.youtube.com/watch?v=diPHM0l8zFU

4 Strategies for Making Money on YouTube

January 4, 2015


This video by James Wedmore may be of interest to the small business owner.

Mr. Wedmore discusses four strategies for making money on YouTube.  He only recommends one (the last one).

The four strategies are:

1.  Google AdSense.  Mr. Wedmore lists several reasons why he believes that the Google AdSense program is NOT a good deal for the small business owner.

2.  Affiliate Marketing.  If you do not have a product of your own to sell, you may want to consider writing reviews for products that you use and like and providing links to those products.  Mr. Wedmore has done some of this himself.

3.  Sponsorships.  If you already have a successful channel, you might want to do some product placement in your videos.

4.  Lead Generation.  If people are watching your video, they may be interested in your product or service.  Mr. Wedmore discusses how to get contact information from the viewers for later follow-up.


Here is a link to this enjoyable video:

https://www.youtube.com/watch?v=Xt7HaDpeEbU

Apple’s Tax Strategy Aims at Low-Tax States and Nations

The following is an excerpt from an article in 

The New York Times
Sunday, April 29, 2012

Apple’s Tax Strategy Aims at Low-Tax States and Nations 

By CHARLES DUHIGG and DAVID KOCIENIEWSKI

RENO, Nev. — Apple, the world’s most profitable technology company, doesn’t design iPhones here. It doesn’t run AppleCare customer service from this city. And it doesn’t manufacture MacBooks or iPads anywhere nearby.

Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.

Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.

California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.

Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.

Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high. Wall Street analysts predict Apple could earn up to $45.6 billion in its current fiscal year — which would be a record for any American business.

Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy. Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft derive not from physical goods but from royalties on intellectual property, like the patents on software that makes devices work. Other times, the products themselves are digital, like downloaded songs. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers. A downloaded application, unlike a car, can be sold from anywhere.

The growing digital economy presents a conundrum for lawmakers overseeing corporate taxation: although technology is now one of the nation’s largest and most valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’. (Cash taxes may include payments for multiple years.)

Even among tech companies, Apple’s rates are low. And while the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.

Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.

Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. (Apple does not disclose what portion of those payments was in the United States, or what portion is assigned to previous or future years.)

By comparison, Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.