Article Synopsis :
The emergence of digital technology and platforms like smart phones, tablets, and cloud-based systems are going to significantly impact the distribution channel of the financial services industry. One of the pillars of the traditional distribution model of the insurance sector, traditional agency, has started showing signs of cracking due to technological advancements. Insurance Carriers have begun questioning the utility of insurance agencies and agents in their current format. A report by McKinsey “Agents of the Future: The Evolution of Property and Casualty Insurance Distribution” highlights the implication of digital evolution on various industry players. Although the report focuses on P&C insurance distribution channel, the analysis and recommendations are applicable to life insurance distribution channel as well.
According to the report evolution of technology and analytics are reducing the value proposition of Insurance Agents and Agencies in their current form. Insurance Carriers are establishing direct contact with customers using technology to save costs, reduce time-to-market, and grow in scale.
This transformation is being led by the customer who may jump ship due to lack of accessibility, agility and delightful service across digital channels be it smart phone, internet, social media, cloud etc. This multiple channels communication and accessibility requirement is making the role of agents redundant, who were once the face of the insurance companies.
The report says insurance agents and agencies will have to adapt to the changing environment for survival. They can achieve this by evolving their approach and methodology to fit customer requirement as there are fundamental changes in the way customers purchase insurance. Since Insurance Carriers are altering the distribution landscape this transformation should aim for better value creation.
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Digital Insurer's Comments1. Digital journey should be traversed with everybody on board as loosing the experience and personal touch of agents might cause more harm than good to Insurance Carriers.
2. The new model implementation plan should focus on reinventing Agents and Agency’s roles with the ultimate aim to drive innovation and ensuring market leadership.
3. Agents and Agencies should pro-actively seek guidance from Insurance Carriers and invest in themselves in order to save themselves from being obsolete. Consulting experts in the digital insurance field for role redefinition and skill development is recommended.
Addditional reading – read the article on Digital Advisors from The Digital Insurer (read article).
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