The global pandemic, combined with local and national restrictions, has deeply impacted insurance distribution around the world. Looking ahead, you can prepare for this shift in distribution by building a strategy focused on immediate needs—such as accommodating remote workplaces—and long-term implications including adopting new technologies and developing a customer-centric approach.
Our relationship with technology and remote interactions is continuously evolving and accelerating as we move toward the “new normal” in 2021. Now, it is time to move our focus to the next set of challenges, including how to reimagine distribution in a remote and online world. Indeed, online insurance aggregators and direct channels report that decreases in new business and remotely building new customer relationships have been the two greatest challenges of the previous 12 months.
To address these challenges, we need to rethink distribution models across three dimensions: customers, salesforce, and enablers (such as digital distribution providers).
How insurance distribution is changing
Physical salesforces are responsible for most of the insurance distribution across geographies and industries. While the share of business conducted via these channels has been gradually shifting in previous years (some services and customers already migrated online), physical salesforces remain the primary channels in life, commercial, and personal (e.g., property and health) insurance lines.
But sustained social distancing continues to have a profound impact on insurance distribution in these three key areas:
Shifting to digital tools. Sales agents accustomed to in-person interactions are rapidly recalibrating to provide uninterrupted service to clients, who may indeed be facing health and economic challenges. Agents are also rethinking how they build relationships with prospective clients since most rely on in-person meetings. Recently, the desire for comfort around digital and remote interactions has increased for customers, agents, and insurers.
Moving toward self-service. Client demand for digital self-service in the current environment has rapidly accelerated. Digital access in insurance has increased but the level of customer satisfaction with digital delivery in insurance remains low compared with other sectors. Indeed, many find insurance self-service tools “hard-to-use”—especially when compared to the seamless interactions found in other sectors. Insurers need to invest in expanding and improving self-service tools to create high-value customer experiences and to better support customers and sales agents.
Transitioning processes online. Agents are currently navigating legacy systems that do not include online elements—such as physical signatures and medical underwriting, for example. Unsurprisingly, many customers do not want to engage in physical medical underwriting at present. So, insurers need to respond to this consumer trend by quickly finding ways of digitally underwriting policies—for example utilizing external data, using statements of good health, and allowing customers to forgo a physical medical exam without the risk of losing their policy.
How insurers can adapt their distribution model
By now, most insurance companies are thinking about how they can prepare for the new normal. Indeed, many of the steps towards digital distribution are unprecedented for the insurance industry as a whole. Many insurers are heavily focused on digitally enabling their salesforces and using data and analytics to support customers and generate new leads.
Alongside enabling salesforces and data, you can differentiate yourself in this rapidly unfolding new distribution landscape by acting quickly and piloting, testing, and learning new systems and processes (rather than pausing to develop thorough 36-month strategies). Getting started and learning to adapt is better than waiting for perfection and missing opportunities. The goal is to scale quickly, even while the full impact of COVID-19 remains to be seen.
To this end, you should focus your efforts on these three areas: customers, salesforce, and enablers:
Take care of your customers
To understand how customer preferences have changed, you can rethink existing processes, experiences, and products to be more appropriate for the new normal. This could involve simplifying products for remote sales (many traditional insurance products are too complex for digital sales, even with instructions). More broadly, understanding how to re-create the effectiveness of an in-person, advice-based relationship between sales agents and customers in a virtual environment is key.
You can look at effective digital shifts in other sectors, such as telemedicine—which has seen a dramatic uptick recently. Telemedicine tools (video appointments, photos, screen-sharing, SMS alerts and reminders, etc.) have successfully recreated the complex interactions between medical professionals and patients online while also protecting patient privacy and online security. Indeed, most telemedicine customers intend to continue using the service after the crisis subsides.
Take care of your salesforce
Launch a remote-only distribution force. Interest in remote distribution forces is higher than ever. A key advantage of remote salespersons is that they can generally serve significantly more customers than traditional in-person agents. This comes with the benefit of lowering commission costs per sale. Furthermore, remote salesforces also allow insurance companies to own and control their sales and brand messaging directly, which enhances their ability to respond cohesively during a crisis.
Emphasize joining a team. While there is much discussion about building teams between insurers and agents, some agents have never worked in a team—despite evidence that agents working in teams are significantly more productive. People now know the value of system redundancy (i.e., multiple agents being able to access a client’s account) to make sure operations continue without interruption if an agent falls ill, for example. Furthermore, teaming up with other sales agents brings together skilled people with backgrounds in different products and this helps salesforces to better serve diverse customer needs.
Expand distribution partnerships. As the current environment places even greater pressure on sales, now is a good time to look for partnership opportunities for multichannel distribution. Expanding distribution partnerships can help salesforces provide products to more customers while maintaining sales volume. Developing partnerships for mutual benefit will likely become even more important as the virtual agent model takes hold and agents seek to add value.
Invest in enablers
Promptly investing in digital distribution channels has many benefits—including increasing resilience, responding quickly to customer demand, and enhancing agent productivity.
Before investing in digital, you should assess and identify the gaps in your ideal customer-agent journey for your products. This will help you develop a roadmap that is tailored to your strengths and also accommodates your vulnerabilities so you can begin closing those gaps and enhancing your digital channels.
Planning for the long-term
Looking beyond the short-term, insurance companies must reevaluate their longer-term distribution strategy as they migrate over to digital distribution.
Identify required modifications and new technologies to support the new normal. Leading insurance providers see tech and digital as core differentiators and the essence of their value proposition. Drawing on this, consider what adjustments your existing tech setup requires to effectively migrate your channels to digital. These modifications will be important to enable your agents to operate in an increasingly digital world.
Tools to increase digital prospecting and build trust in initial conversations are key to help agents replace their traditional offline interactions. To develop your tech roadmap to the new normal, consider working with agents to identify the biggest productivity obstacles and work to develop the most viable product solutions to close these gaps.
Reinforce your life insurance distribution channels
Changing distribution channels takes time to implement. It not only means adopting new tools and assets, but it also requires developing substantial capability that affects other parts of your value chain—such as products and claims. Reduced interest in life insurance products from customers, more stringent regulation, and increased competition from insurtech services have intensified the need to scale up digital insurance services.
Automation, client-centric processes and services, and open architecture are all key elements to improve the efficiency of distribution networks and better engage with customers. Gambit’s life insurance products can open a digital distribution channel directly to your customers, reduce costs, increase your bottom line.