The technology revolution has created a boatload of collateraldamage in the business world, as evidenced by just this week'snews. Sears/Kmart, that bastion of middle-classAmerican retail, is in treacherous financial waters and plans to close 120 stores.Kodak, an American institution for more than 100years, is looking at filing a Chapter 11 bankruptcy; and the USPS,faced with mammoth shortfalls, this spring will closehundreds of mail processing centers nationwide and cut about28,000 jobs.

Let 'em fail, right? Who needs retail dinosaurs like Searswhen you can order virtually anything you want online (ironically,online sales for Sears holding Land's End aredoing fine)? Why print pictures when you can uploadshots direct from your smart phone? And email,Twitter and Facebook have rendered the government-run, snail mailapproach of the USPS irrelevant.

Perhaps this thinking is true, even in the world ofinsurance. According to a recent study by MintelComperemedia, direct mail volume toconsumers from life, health and property-casualty insurers isdown 11 percent in Q3 2011 compared to Q3 2010.The decrease is across all lines of business, withproperty-casualty direct mail during Q3 2011 down 8 percent from Q32010, and down 4 percent from Q2 2011.

These numbers seem to confirm what we've been hearing for years:consumers, especially the younger ones weaned on technology, preferthe virtual to the tactile.

Which makes it interesting and somewhatcontradictory to note that another study released this weeksuggests the anticipated mail slowdown created bythe upcoming USPS cuts could hurt American businesses,costing a typical large U.S. company up to $100 million ayear by making it harder to quickly collect payments fromcustomers.

The study, conducted by REL Consulting, notes that morethan 60 percent of all invoices are still delivered bymail, and that typical U.S. companies take more than 5weeks to collect payments from customers. If the USPS eliminatesnext-day delivery, it would add at least 2 to 4 days to thecollections cycle for many companies, which would “potentiallyincrease Days Sales Outstanding (DSO) for many companies by up to$100 million annually.”

I asked some industry tech folks what they thought the impactmight be on independent agents. Steve Anderson of The Anderson AgencyReport (TAAR), responded by breaking the issue of “direct mail”down to two components: customer service andmarketing. Steve commented:

From a customer service perspective I many agencies are movingcommunication to electronic formats. Customers are demanding it andit's less expensive for the agency…I also communicate almostexclusively by email with my agency. I don't see this trendchanging as more people become comfortable with using electronicmeans to communicate customer service issues and questions. I dosee text communication growing as more people have mobile devicesand become used to text as an effective communication vehicle. Thistype of electronic communication does present some challenges foragencies with documenting conversations effectively. But, likeother changes in communication platforms, agencies are/will figurethis out and the vendors will provide better means for capturingthese conversations for a particular client.

On marketing, Steve continues:

Many in the industry are moving toward electronic communicationsas well social technology platforms and away from “physical directmail” as their primary means of marketing. I am seeing some strongevidence, primarily in personal lines, where agencies are creatingbetter response and ultimately better sales results by using a mixof electronic and physical snail mail marketing pieces. I suspectyounger generations are not as jaded to receiving “junk mail” assome of us who are older. What I might consider junk mail might benew and innovative to someone younger. As an example, one agency Iam working with included sending a physical letter along with anagency brochure to Internet leads requesting a quote for automobileinsurance. Simply adding this extra “junk mail” step increased theresponse.

But what about policy delivery and payment? For personal linesand small commercial accounts, most invoices and policy documentsare still handled by carriers via snail mail. From an agencyperspective, agents should already be asking their customers (anddocumenting in their agency management systems) how they want theirdocuments delivered, Steve says. More people are requestingelectronic deliver in PDF format, which they can then store ontheir computers.

However, he concedes that there are legal issues involved ingoing completely paperless:

Some state insurance departments continue to require actualphysical delivery of policies using the USPS. There can be a legalpresumption that if the policy is sent using USPS then receipt bythe client is assumed. The same legal presumption may not beavailable if it's delivered via email attachment.

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So, with all that said, billing and policy delivery is stilldone primarily by mailing the documents to the client. I wouldthink the elimination of some postal services would accelerate thetrend toward delivery by electronic means vs. physical.

So what do you think? Can the independent agency system livewithout the USPS? What are you still snail mailing at your office,and do you see that changing in the near future?

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