Insurers and independent agents may not like the direction distribution channels have taken of late--particularly the direct-to-consumer model--but both carriers and agents need to realize the push toward the direct channel is coming from consumers.
"Every carrier must realize there is a balance between servicing the agent channel and the opportunities [carriers] need to afford the direct channel," says Karen Furtado, partner with SMA: Strategy Meets Action.
Furtado spoke with Bob Hyle, editor-in-chief of Tech Decisions magazine to lead off the Tech Decisions summer analyst podcast series. You can hear their full conversation by clicking on this link.
Furtado believes the direct channel is becoming inevitable for insurers. "Consumers are assuming they can electronically interface with any type of financial institution from any kind of device," she says. "They assume they can pay their bills online, have access to information, and interact with an agent or a company--not just one or the other."
Furtado believes insurance carriers face a great challenge as they seek to improve their growth strategy. "As they focus on retaining clients, service is a way to empower those customers and customers are looking to be empowered," she says. "As much as the traditional channel has gone on for hundreds of years, the consumer is asking for that model to be different. It's incumbent on the carriers to provide that more responsive model out to the market."
Furtado and her partners at SMA have found a number of the midtier and smaller carriers have become more involved with core systems replacement that will ultimately be an enabler to them to plan out the same type of distribution connections that the large insurers are making today.
"[Smaller insurers] have data that is less disparate and is in a more localized format," she says. "They will be able to start accessing that information and releasing the power of the data in applications to be funneled to a larger variety of distribution methods, whether that is mobile technology, portal technology, or the direct connection. Ultimately we will see the midtier and smaller carriers freeing those applications. It comes down to [carriers] solidifying their core systems."
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