Q&A: Inside Farmers’ digital-powered Eastern expansion

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Despite its national advertising strategy, Farmers Insurance hasn’t had its flagship branded products available in markets across the country, with some states served by subsidiaries only. But that is changing. Over the past decade, the company has been expanding east of the Mississippi deliberately, as fast as it could recruit and stage agents. However, with the advent of the digital economy in insurance, that strategy is ramping up with more tech-driven launches.

In early 2020, the company launched Farmers-branded auto insurance in South Carolina without an agent presence, relying on a digital strategy. In the summer, that strategy was applied to the state of Kentucky, but with a multiline approach that includes home and renter’s insurance as well. Farmers expects to have its branded products in every state by the end of 2021. Keith Daly, the company’s president of personal lines, talked to Digital Insurance about how it's executing this digital transformation.

Digital Insurance: What’s different about the launches in Kentucky and South Carolina compared to previous market expansions?
Keith Daly: Our strategy we built late in 2019 was to fill in the remainder of the continental U.S. where we didn’t have branded Farmers products. We went in totally digital without agents in South Carolina, launching a digital auto project leveraging the work we had done with [usage-based insurance unit] Toggle and the new Ventures team. The product that will become the adjacency project for what happens with Toggle.

After that there were 11 states we didn’t operate in with the farmers brand. Kentucky is the first state for the full suite of auto, home, renter and condo. We created small agile teams to do the buildout, we’ve done it from getting the first team together to launch in about five months.

DI: What has evolved from a tech perspective that’s allowed you to take on this path?
KD: We have a number of automations today that exist in the exclusive agent channel, but the agent walks through instead consumers walking through. We’re leveraging the data that exists and building that experience in the sales funnel so customers can quickly see the rate that is validated with third-party data. We are evolving our product to be more streamlined and digital, the goal here was around speed of quote. That’s some of the work that agents could do but we’ve digitized that in a simple way for the customer.

DI: Will Farmers agents have a role in these areas?
KD: We would consider agents in these markets. These experiences benefit the agent channel just as well. We do a lot of work to validate the competitiveness of the product when you launch.

As we build new products and experiences for these expansion states, we deploy those learnings into our existing core state. The faster the agent experience, whether face to face or on the phone, the faster they can get to the rate. Work we’re doing here will feed our longer term strategy of sophistication of our underlying product. We just could move very quickly starting digital, if we had to build in the agent onboarding process that extends time to market.

This will allow us to go into a market, build up a bit of a book, and then our agency distribution channel can see that they have relationships to cultivate. That’s a very different entry point for an entrepreneur. They can boost higher-value products. Financial services, life, small business insurance -- when we bring the agent channel we bring in commercial products as well -- these are a big part of our agent economics.

DI: How did the insurtech movement figure into your launch? Did you work with many partners from the startup world?
KD: Not really a ton of partnerships for the launch in Kentucky, though in building out an API strategy that is where we are headed. In building Toggle inside of farmers, the learnings that have permeated from that small group to the larger organization, we feel we’ve disrupted ourselves to the extent that it’s led us to this point. We feel we have the confidence and skills internally to do this.

We created a very small internal team that’s leading this effort, and we have adopted the safe Agile platform not just within the small team but everywhere. The speed in which we are making decisions at the appropriate level has been transformative for our biz over the last 18 months. This project, if you tried in a waterfall environment, never would’ve happened.

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