Reimagining Insurance Distribution – Accenture
Article Synopsis :
A variety of well-documented, strengthening trends are causing insurance distribution to be transformed at an accelerating pace. Carriers resisting the imperative to change are standing firm in the face of higher service standards, rising customer expectations, continuous digital innovation and a wealth of emerging opportunities for growth.
In “Reimagining insurance distribution; Distribution and Agency Management Survey” Accenture shares survey results from more than 400 senior executives at large and medium-sized Life, P&C (both personal lines and small commercial) and multiline carriers in 20 countries.
According to the survey four of five carriers have either implemented or are planning a wholly digital sales process in which human interaction plays a role only upon human request. Allied to this finding:
- P&C personal lines insurers estimate 21% of all current sales are concluded digitally from end to end, and they expect this to rise to 31% percent in three years’ time
- The equivalent data for commercial lines is 14%of sales today, rising to 24%
- Life insurers estimate the share is 20% today, increasing to 26% in three years
According to the survey, forward looking insurance companies are shifting to a digitally inclined distribution model with their product and service strategies being driven by Internet of Things (IoT) technologies. As far as distribution strategies are concerned, insurers are focusing on:
- Channel digitization: Shifting to digitally enabled omnichannel distribution models with impact from information discovery to advice and purchase. The onus is on how best to reposition the agent channel and how online interactions should take place
- Insight-driven customer experiences: Shifting from a product-focused sales process to a need-based sales process
- The changing role of the agent: Shifting from just selling the product to a more expanded role involving cross-selling, improved advisory skills and increased customer interaction across multiple channels. This requires the effective use of digital and social media tools
- The future of aggregators: Aggregators are expected to form a part of the channel mix
- The role of ecosystems: Creating new or joining existing ecosystems with ‘living services’ which constantly learn and adapt to customer needs and help provide end-to-end buying experiences
- The Internet of Things: IoT-related products and services are seen as an opportunity to drive growth in forms of real-time monitoring and instant alerts to customers
Some of the recommendations from the report include:
- Commit to your chosen business and distribution models, moving beyond a succession of pilots
- Proactively define your position in new ecosystems, cooperation models and partnerships
- Move from indemnification to real-time protection
- Make innovation and customer centricity the cornerstones of your distribution strategies
- Strive for simplicity in access, transactions and offerings
- Focus agents on advice and value-added services to deepen customer relationships
Customer Experience, if it hasn’t already, must be elevated to an enterprise level activity. Insurers should move beyond pilot plans and devise concrete strategies for differentiation from the competition.
Digital Insurer's CommentsInsurers need to revamp existing distribution mechanisms. As this survey suggests, some are taking the task seriously while others defer.
Digital technologies impact distribution more than any other link in the insurance value chain. It’s the distribution function that competes indirectly with the likes of Amazon and Orbitz and eBay, e-tailers that shape customer expectations around shopping and buying online.
Lagging on investments in digital distribution in this market is like scrimping on agent training ten years ago—penny wise, pound foolish.
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