We’ve all driven down the road and seen a sign for a local Statefarm or Allstate office. They are all over the place. This raises a question, does having a physical location change the service you receive or the cost of your insurance?
While the answer to that is complicated, one way to decipher and answer is to look at the success of Ally. Ally is newer to the game of insurance than its direct competitors, but is virtual based model has enabled it to deliver more cost effective insurance options. That does not mean cheaper insurance, but instead, better coverage for your monthly payment.
So why would it potentially be more cost effective? At first glance, there is no rent or mortgage to pay on the physical building. Think of all the insurance agency locations all over the country. That ads up to millions and millions of dollars in real estate each year. Who pays for that? The customer.
What about service?
One common misconception is that your insurance agent will guide you through any type of claim you have and help you get the coverage you need. Unfortunately, that is not true. Insurance agents are essentially sales people. When a claim is filed, there is an entire other team that will work with you to provide coverage. So if you don’t need to meet with someone in person to go through coverage options, why bother with a local agent?
With consumers becoming more comfortable with virtual experiences, many companies will continue to move away from being local agent dependent. Hopefully those savings will continue to be provided to the customer.