For decades, agents and brokers have been the channel of choice for P&C and L&A insurers. Featured Content. At the same time having a local brand, including a digital presence in a community and in targeted markets, is so important and will perhaps become even more so in the years ahead. The Future of Insurance Series taps into the experience of industry influencers, technology visionaries, and key partners to give listeners insight into what’s next. Your email address will not be published. The Future of Insurance Distribution – Digital Ecosystems The way insurance is purchased will change dramatically in the very near future. Old definitions of agency types — captive, independent and direct channels — are less useful than they used to be. “We believe a local presence is important to consumers; it gives them the peace of mind that there is someone in their community with whom they can speak/ask questions if they want to,” said Leslie Kolleda, vice president, agency growth and development, at Brightway Insurance. Insurers are making significant investments … Photo Courtesy of “In the end, the profitability of an insurance transaction is controlled by core competencies.”. Agents must be equipped with knowledge on the business’ competition, too. We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. Life insurance premiums may decline 6% globally through the end of 2020 and by 8% in advanced economies, while a recovery of 3% growth is projected overall for 2021. They are offering innovative products. Thank you! The BCG/Morgan Stanley report looks at the future of human-to-human life insurance distribution globally. A demanding future. Denim® Rivet: Bridging the Digital Divide. Do NOT follow this link or you will be banned from the site! Advanced technologies and data are already affecting distribution and underwriting, with policies being priced, purchased, and bound in near real time. This, in turn, creates greater value for these insurers due to new revenue streams and access to a broader market through the multiplier effect. They’re going to have to evolve. “They know they’re smart enough to make it work anyway, and that’s valid,”, Burand said. A distribution strategy and ecosystem are foundational to bring together a range of distribution and digital capabilities, channels and partners that will exponentially expand reach, brand and customer engagement while meeting the customer expectations of a digital, multi-channel world. “Are they an outlier in the sense that they’re performing better than their peers and, if so, what’s the strategy to help them continue to stay out in front? What is your multi-channel strategy? Multi-Channel Is the Mantra for the Future of Distribution. “The expectation today and in the future will be that if you’re going to prospect and call on a middle market company, that you have a very full picture around that business and how they fit into their industry,” Conrad said. And this disruption is not just digital. The benefit is that we move from needing to constantly go out and “sell” people on insurance to introducing insurance that is ready to be “bought” seamlessly at the point of need. They are experimenting with direct distribution. By continuing to use our site, you accept our revised Privacy Policy. But that is where the commonality ends. In this new era of insurance, market leaders are experimenting with new opportunities. Leaders are expanding channels at a staggering rate of 20% more than Followers and 60% more than Laggards – expanding market reach and the ability to acquire and retain customers and revenue. Will your technology support your strategy? Brightway began franchising operations in 2008 and is now in 21 states but serving customers in all 50 states. “So, they sell or join clusters.”. But this isn’t science fiction! Watch our webinar, The Future of Distribution Management – A 3D View, to learn how P&C and L&A insurers are using a 3D strategy (digital, data, distribution) to manage this changing distribution landscape. “I think more is going to be expected out of agency management systems,” Conrad said. “It’s about control of that customer relationship,” he says. “And the insurance companies are pretty nervous about this.”, Some carriers are smart and they don’t care. The entire insurance industry faces new challenges in a world changed by COVID-19 and a digital revolution. “The onus is on us — as agents — to be there in ways that are meaningful to consumers and that fulfill their needs at the time.”. The Future of Insurance Distribution is Multi-Channel. And if the consolidators, aggregators are too big, then they can maybe place more emphasis back on these insurtech insurance agencies they own.”, It’s an arms race, Burand says. Ribisi predicts on-demand buying and consumer choice will affect other lines the way they have personal lines. “So their idea I think, I can’t speak for all of them, is to invest and partially own these new independent insurance agencies. Technology is creating new opportunities in agency distribution by changing the user experience. “People decided, ‘I liked this experience better and I’m going to use this instead of calling a number for a taxi.’ The company grew enormously and I think that surprised everyone in that industry,” he said. How does your business strategy align to what leaders are doing? Market boundaries are being redefined. “If you look at the profitability of an insurance transaction today, maybe 40 percent or close to 50 percent goes to distribution, [while] the underwriter gets 30 to 40 percent and service has come up to maybe 5 percent to 10 to 15 percent,” Chookaszian said. Here’s what caught our eye as we scoured the headlines. “Typically, it has been brick-and-mortar with a sign,” he said. “So, while we believe a local presence is important and a well-known brand is important, what’s really important is that, as an insurance distribution company, we are committed to helping consumers do business with us in a way they want, when they want,” Kolleda said. “It’s become so competitive that the carriers basically are always out looking for new accounts,” and in their efforts to capture new business, “they’ve got to pay more in commissions.”. Email: info (at) insurancethoughtleadership (dot) com, http://insurancethoughtleadership.com/wp-content/uploads/2014/04/bg-h1.png, The Future of Distribution Management – A 3D View, A Quarantine Dispatch on the Insurtech Trio, A Conversation on Corporate Strategy, with Amy Radin, The Future of Blockchain Series Episode 3, How AI Can Transform Insurance Correspondence, The Insurer’s Customer Acquisition Playbook, The Future of Blockchain Series Episode 2, The Future of Blockchain Series Episode 1, 3 Tips for Increasing Customer Engagement. And we’re committed to creating that future, right now. It draws on more than 50 interviews with senior insurance executives; a survey of 850 agents in China, India, Germany, and the US; and detailed proprietary financial modeling of the interaction among the in-force book of business, new business, and agency economics. The traditional agency brick-and-mortar brand is not as important because more consumers wish to transact and interact via mobile devices and online. For auto insurance, 66% of the younger generation is interested in it being part of the purchase of the vehicle as compared with 52% of the older generation. 64% of the younger generation versus 52% of the older generation would buy from the auto manufacturer’s website or app. For both auto and life insurance, the younger generation is very open to buying insurance from Amazon; 56% of the younger generation would do so, as compared with 46% for auto and only 38% for life by the older generation. Roles that focus on repetitive work and manual processes will cease to exist in their present form, while technology and digitally savvy workers will increase in value. “Consumers are looking for choice” and that’s going to benefit the independent agency channel, he said. In fact, they may be so strong that they are scaring some property/casualty insurance companies, according to Chris Burand, CEO of Burand & Associates and columnist for Insurance Journal’s The Competitive Advantage. “What that business is all about, what they do, their unique signature in terms of their loss profile, what’s happening with claims, what’s happening on the employee benefits side,” he said. “While distribution in the past was kind of sleepy and the insurance agents would make a little bit of money,” industry competition for customers has fueled a “fundamental shift toward distribution,” he told Carrier Management in a 2018 interview. Lead generation refers to the marketing process of building and capturing interest in a product to create a sales pipeline. With these and other examples, market boundaries are no longer clear. SIAA’s Masiello believes the local brand will become even more important than it has been in the past. A number of announcements by some leading insurers about new partnerships will accelerate improvements in the customer experience, expanding distribution reach and the ability to buy seamlessly at the point of need! “If you look at the profitability of an insurance transaction today, maybe 40 percent or close to 50 percent goes to distribution, [while] the underwriter gets 30 to 40 percent … Digital disruption is transforming established models of insurance distribution. Normally the months of July and August are fairly quiet in the insurance industry --- but that has not been the case this year! We’ve got the vision and we’re working to make it a reality by investing in technologies that will bring you results you can see. Two-thirds of all venture capital funding in insurance is going into distribution start-ups. According to the study, the future of insurance distribution in India will centre around three prominent models: Self-directed distribution i.e. That’s a big shift from 40 to 50 years ago when carriers derived most of their profitability through positive underwriting results. In terms of customers, agents who have been lectured for years about adding value, are positioning themselves to offer products and services their customers want when and how they want them. “Profits are passed to charities,” he said. First, Amazon’s India business is now offering auto insurance through a deal with Acko General Insurance (Amazon is an investor in Acko) to cover car and motor-bike insurance in India, marking Amazon’s entrance into auto insurance. What specific plans can you take to improve your odds of success? For futurists, however, the future is taking shape now, defined in part by their systematic exploration of current trends. For AIS, losing some of its brick-and-mortar brand has been a good thing. Insurers must master the science and art of making relevant and timely digital connections with customers who are motivated by life events and make it easy and satisfying for them to purchase insurance. Brightway agency owners receive customer service, carrier relationships, marketing, accounting and technology tools. direct plan The growth of a tech-savvy customer base is resulting in a focus on the ready availability of advice/transaction capabilities through multiple channels, especially the online channel. The insurance industry stands on the precipice of profound change. At Cover Genius, we enable the world’s largest digital companies to protect their global customers, at … As consumers’ and carriers’ behaviors, attitudes and expectations have been changing, independent agents are evolving to better serve both customers and carriers. “I believe that the lines between channels will blur,” he predicts. Thank you! Today, brokers are valued more highly, according to Chookaszian, because they are able to achieve a higher return on equity. Heading further into the future, experts say the lines between agency types will continue to blur and brick-and-mortar agency operations may become less important. Years ago, those middle market firms would never have given a new, start-up agency the time of day. Professor Chookaszian thinks agents are in a strong position. What are the inhibitors to establishing a multi-channel strategy? Insurance Distribution Management Software. We can! Building and maintaining a local identity in a tech-focused global age will be a challenge. A funny thing is happening on the way to the future. “Now they’re taking a look at those agencies and saying, ‘Hmm, interesting. Brightway Insurance, a national property/casualty insurance retailer selling through franchised independent shops nationwide, is banking on the local brick-and-mortar still being somewhat relevant. The lack of digital, next-generation technologies inhibits the ability to easily build a partner ecosystem, embed insurance offerings and more. Future of Distribution in Life Insurance Reliance on tied agents as the primary channel in Asia,3 the emergence of Bancassurance in key European and Latin American markets4 as a prominent channel, retrenchment of poor-perform- ing tied agents in the U.S.5 and the rise of online aggregators6 globally are all indicators that signify the pace of changes occurring in distribution. The consolidation of agencies, especially the very large brokerage houses, is a real concern. Distribution Channels –Future Trends Among the insurance companies that participated in the survey, 89% felt that Agency will continue to be the most successful distribution channel in the Vietnamese life insurance market in the next 3 to 5 years. “Using data from a variety of sources is going to be more and more important when insurance professionals walk into a prospect meeting,” Conrad said. Consumers do not delineate among distribution channels, according to Mark A. Ribisi, president and CEO of AIS Management. It’s their counterweight to the consolidation that’s occurring. Are they having some challenges in areas like claims that are causing them to be less than competitive and then as an agent or as an advisor, how can you fix that?”. “Today, the core competency has shifted primarily to distribution and control of the customer,” he said. Pexels. The future of insurance distribution: New models for a digital customer Steven Gunderson, Claudia Lindsey, Ravi Malhotra, Rohit Reddy, Erik Sandquist 2. Three forces are shaping insurance distribution: the resilience of intermediaries, rising expectations among commercial and individual buyers; and the elusiveness of building scale in direct channels. SIAA’s Masiello sees more evolution ahead in terms of agency relationships with customers and carriers. + READ MORE “Independent agents will be important, but they will need to be more comfortable with consumers that come to them online.”, Human touch will remain important to many. Don’t feel you need to recreate the wheel to have a meaningful impact. In our Strategic Priorities research from earlier this year we found Leaders – those focused on new channels, partner ecosystems and technology – are well out ahead of Followers and Laggards. To counter, carriers are creating partnerships of their own. Something I’m more accustomed to, or that I as a consumer just like better.'”. These are the transformative influences shaping the future of insurance. These insurers lack depth of core distribution capabilities from on-boarding, licensing and appointments, compensation and incentive schemes, automation and data insights to effectively optimize a multi-channel distribution strategy, let alone to be competitive in attracting new partners. “Certainly, in the personal lines space, insurance shopping has become an on-demand product,” he said. “They can’t be the independent agency of the past. Even today, all direct funnels have a call center, he noted. In his view, the industry has experienced a “merger” of distribution channels. Written by Mike Strakhov. Panelists will cover a range of topics relevant to brokers as they survey the current landscape of insurance, including: How brokers can remain relevant into the future, and what tools will help Normally, July and August are fairly quiet in the insurance industry — but was not the case this year! 8. But technology changes all of that as the user experience becomes more and more important, he says. Required fields are marked *. Consumers don’t know whether their insurance is represented by a captive agent or an independent agent. Tesla believes the accuracy of the data from the car and driver behavior is “at the heart of being competitive” with insurance that looks forward, not backward. Agents themselves should enjoy better working conditions and tools. Leaders are Leading and Creating the Future of Insurance Distribution. “Over 40 percent of our staff is home-based and reside in eight states.” That has allowed AIS to have expanded hours of operation while lowering the attrition rate. If you have a smart, interesting, or down right bonkers idea about the future of -insurance distribution the InsurTech Gateway want to hear from you! In the insurance context, because of the high-touch sales process, this historically meant passing interested customers to agents or call-center employees. Changing customer expectations and behaviors are rapidly pushing insurers into a multi-channel world, whether they like it or not. “The reality is that 20 years ago, part of the agent’s value proposition was access to products. The combination of technology and customer expectations is directly affecting insurance by altering the traditional ecosystem of agents and brokers, to have insurance embedded or sold differently across a broader ecosystem, including wellness, health, financial services and other entities. Many insurers remain focused only on the agent / broker channel, and lack plans as a way forward … The Future of Insurance Distribution The first wave of commercial insurtech has crested — and new options for distribution are everywhere. 2 | The future of insurance distribution: New models for a digital customer Amazon had two interesting moves. “Independent agencies that are just sitting there servicing their books of business, that’s not a value proposition to either the companies or consumers,” he said of relationships with customers. That means having data. By 2030, 44 percent of insurance work activities have the potential to be automated (Exhibit 9). This is a sustainable business model, where, instead of perpetually fighting for prospects and leads, we are perpetually making insurance easier and more appealing to buy. Sean Conrad, principal at EPIC Insurance Brokers & Consultants in Irvine, Calif., likens the insurance industry to the transportation industry where tech-enabled firms such as Uber have been able to disrupt a very established industry by changing the user experience. The Future of Distribution Is Multi-Channel. The ones that are scared are scared because of scale, Burand says. He believes large commercial brokers in particular command the power in today’s industry quite simply because they control the customers. Ribisi cited the insurtech insurer Lemonade’s ties to altruism as an example. “There’s going to be a continual push to develop those systems and I think there are possibly changes on the horizon with better versions from an agency operator side.”. It’s not only customers who will enjoy a better user experience. 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The main point about the future is that the power balance in the industry has shifted, with insurance carriers now relying much more heavily on distribution than in years past when underwriting was king. The Future of Insurance Distribution Our purpose is to combine the best in insurance markets and the best in technology. The 12 digital futurists outlined below explore what that future might look like for commercial carriers. Please tell us what we can do to improve this article. The result is that insurers’ ability to expand and effectively support new channels is beginning to redefine new leaders in the industry. This decades-long choice and channel landscape, however, is rapidly shifting and changing, driven by a number of factors, but especially customers and partner ecosystems. about this author ... 'An AI Walks Into an Electronics Store...'. In this new era of insurance, nearly every insurance process is rapidly becoming frictionless, including buying. Many insurers do not have next-generation distribution management capabilities – often still operating with home-grown solutions or multitudes of spreadsheets. Because insurance companies don’t sell tangible items like wine or vehicles, it can be more difficult for insurers to see the future of insurance in terms of sustainability. The combination of technology and customer expectations is directly affecting insurance by altering the traditional ecosystem of agents and brokers – who, yes, are still relevant – to have insurance embedded or sold differently across a broader ecosystem including automotive, transportation businesses, big tech and more. © 2010-[wpsos_year] Insurance Thought Leadership, Inc. All Rights Reserved. “They’ve got to start to evolve into a sales-distribution, community-based, brand-based, both digital and out in the community doing things [organization].”. “The three major forms of traditional distribution — captive, independent agency and the direct channel — as we know it, that’s all kind of gone out the door,” said Matt Masiello, CEO of SIAA. They are shifting and, in some cases, evaporating. Masiello sees the changing focus on distribution as a huge opportunity for all independent agencies, not just for the large brokers. Topics range from distribution and digital innovation to natural disasters and vehicle tech. For life insurance, 54% of the younger generation would buy insurance via a fitness app, as compared with only 38% of the older generation. 176: Is B2B Distribution the Future of Insurance by Spot On Insurance | Aug 4, 2020 Mitch Doust is the Executive Vice President at Cover Genius , a global insurtech company that provides protection for customers of the world’s largest online businesses. “When you have an absence of customer choice, and you have very solidified giants in a space like the insurance brokerage space, it can feel like buyers have limited selection,” he said. As they head into the future, agents are positioned to become even stronger as they continue to evolve to meet the needs of customers and carriers. Dennis Chookaszian, University of Chicago professor and the former CEO of CNA, analyzed the carrier-agent shift at an Insurance Journal sponsored conference in July 2018. Emerging markets once again will likely lead the way while advanced markets continue to struggle (figure 2). Carrier Distribution: The Future of the Independent Agency System. Now, there is unlimited access to product 24/7 online so the agent value proposition has to evolve.”, One way to evolve might be to pay attention to demographics. “The challenge for local independent agencies will be how to remain relevant,” he said. The Future of Insurance shares the first-hand accounts of insurers across functions and lines of business to not just give inspiration, but leave readers with a tangible blueprint for evolving through a new set of modern, flexible and responsive approaches and tools. AWS leverages its cloud platform and consulting to access and analyze Toyota and Lexus vehicle data and driver behavior, another step forward in a program to offer insurance to Amazon customers. AI and its related technologies will have a seismic impact on all aspects of the insurance industry, from distribution to underwriting and pricing to claims.

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