Brokers and independent agents have always been the key to delivering consumer-centricity, and digital solutions only enhance that. (iStock)
With the recent acquisitions of digital technology firms by the major carriers Berkshire Hathaway and Allstate, a new type of digitally enhanced, consumer-focused insurance distribution model is beginning to take shape, offering a better way of doing business for the entire insurance industry — carriers, brokers and independent agents alike.
It is clear that insurance distribution channels are rapidly evolving, as the legacy systems of web-based lead generation used by the insurance industry for years no longer works for today's fast-paced business climate. A new, digitally enhanced model increases the customer-centricity of the industry and promises to help agents together with customers manage all of their insurance needs from a single source.
See also: Signs of an insurance industry digital master
|An alternative to disruption
Web-based tools and InsurTech solutions are positioned to make the lives of carriers, brokers and independent agents easier. The opportunities for digitalization to improve insurance distribution channels are very clear. In the current environment, the typical consumer has 10 or more insurance policies from multiple carriers to meet their specific protection needs. Improving the product experience for only one of these policies doesn't have a significant impact on that customer, and can even be a negative impact if a customer needs 10 separate digital portals to manage their entire insurance portfolio. Digital portals that bring brokers and independent agents closer to consumers, on the other hand, are the real value-added evolution of the insurance distribution value chain.
Brokers and independent agents have always been the key to delivering consumer-centricity, and digital solutions only enhance that. Prior to digitization, independent agents and brokers provided an analog version of a consumer-centric model through relationships with millions of consumers. That role will remain essential as the insurance value chain digitizes; and technology solutions that allow agents to create a stronger bond with their clients — as well as capabilities for commission generation by cross-selling additional products — provide the digital experience that today's always-on consumer expects.
Speed to market is the driving force behind the customer-centric focus of digitization. Insurance solutions today need to move as fast as the market moves, and that means implementations measured in days and weeks, not months. Most players in the market are very focused, looking only to improve and bring technology to their component of the insurance value chain or their specific product. Lead-gen companies are focused on better ways to source and distribute leads. Term life, auto insurance and dental carriers are focused on improving sales of term life, auto and dental insurance products. It takes a vision and the technology, resources and desire beyond one's own niche to see things differently, from a consumer's viewpoint across all products and insurance relationships.
See also: Agent Study 2018: What technology devices does your agency use
|Today's business standards
A report from Ernst & Young, The Future of Insurance in a Digital World, puts this insurance industry conundrum into context: "Consider the fact that online social networking services amassed 50 million users within 18 months; notably, it took one retail giant 5 to 7 years, and an auto manufacturer 20 years, to reach that milestone. The rates of change and adoption are much steeper than ever before. Insurers have to build compelling capabilities via digital models in order to be relevant in the marketplace."
"The insurance industry is changing," according to Digitalist Magazine. "This once product-driven industry is seeing an increasing need to become consumer-driven. Today's average insurance customer has dozens of choices in providers. While they still understand that insurance is essential, they also know they have many savings options available. To compete, insurers must create a customer-driven model that's designed to incorporate their customers' needs, while also addressing loss prevention and better protection services. To facilitate this, companies are moving towards digitization."
While digitization is driving the evolution of insurance distribution to be more consumer friendly, the role of the important contributions of the independent insurance agent or broker remains relevant. The end-customers for guidance from an advisor will remain. Agents who embrace the technology can focus on what they do best — advise — and let the technology support them.
Brian Harrigan is founder & CEO of InsurIQ, the Connecticut-based provider of insurance technology solutions. Connect with him on LinkedIn, or send email to [email protected].
The opinions expressed here are the author's own.
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