Insurance distribution is undergoing rapid transformation, as carriers strive to improve service, keep up with customer expectations, maintain a steady pace of digital innovation and take advantage of opportunities to grow. The Internet of Things (IoT) is currently the industry’s most significant disruptor, but also provides insurers with the means to improve customer understanding and optimize customer interactions while it also drives a shift from traditional indemnification to prevention and real-time protection.
In its recent distribution and agency management survey, Accenture polled 414 senior executives at more than 400 large and medium-sized life, P&C and multiline carriers in 20 countries for their perspective on how their business and operating models are currently being disrupted.
In its survey report, Reimagining Insurance Distribution, Accenture explains that insurance organizations are in the process of shifting to a dramatically different distribution model. Digital is playing an expanding role in interactions, and agents are looking to add more value. Carriers are increasingly leveraging IoT to define business strategies and pilot or launch products and services. Only 19 percent of carriers reject this model, reporting no plans to move toward a wholly digital sales process, using human interactions only for customers needing advice. Nearly one-fourth (24%) are already doing this.
According to survey findings, insurers are currently focusing on six key distribution areas, each demanding clear strategies – and each that needs to be addressed with the right technologies.
1. Channel digitization.
Every stage of the sales process – from discovery of information to advice and purchase – is affected as insurers move steadily toward a digitally-enabled omnichannel distribution model. Nearly a third (32 %) of P&C personal lines insurance sales advice and quotes are provided through digital channels today, says the Accenture survey results.
“In our research, we found that many insurance companies are investing in capabilities that will enable them to go to digital in a significant way, not just for self-service quotes, but to figure out how to fully enable an end-to-end digital sale inclusive of advice and purchase,” says Erik Sandquist, managing director and North America distribution & marketing services lead for Accenture Insurance, and one of the report authors. “That will have significant implications for the technology investments insurers will make over the next few years, as they continue to see across personal lines, life and commercial increasing in terms of the digital behaviors of consumers.”
2. Insight-driven customer experiences.
Today, insurers’ sales processes are shifting from a product focus to a customer-centric focus. Nearly two-thirds (63%) of surveyed insurers consider needs-based selling to be a high priority. More than half are prioritizing the move to a more customer-centric model, building a customer-centric hub, creating and extending their omnichannel capabilities to ensure a positive customer experience across channels. More than two in five survey participants rank improving their data and analytics capability as their top distribution technology investment priority.
Says Sandquist, there are two technological implications to this trend. “There has been a lot of investment to build a single customer view across product channels, but there’s also an imperative around expanding knowledge of the customer to include data that might not reside within the walls of insurance companies, like third-party data sources, data from IoT taking the customer knowledge to the next level,” he explains.
Insurers also need to be flexible enough to take advantage of those insights to personalize the customer experience and become more highly relevant at the space and time that customers are likely to engage, he adds. The other dimension is being flexible enough to take advantage of those insights to personalize the customer experience and become more highly relevant at the space and time that consumers are likely to engage. “We see more insurers investing where they can flex the experience, not only through physical channels with agents and the contact center, but also through digital channels as well,” Sandquist adds.
3. The changing role of the agent.
Insurers are rethinking the roles of their agents as they transition to a digitally-enabled omnichannel distribution model, with 63 percent of carriers prioritizing refocusing their physical channels to stages of the sales process where they can add the greatest value.
One of the most striking findings, says Sandquist, is the importance of cross-sell. “Insurers will incentivize cross-sell much more strongly in the future. We will see a shift in incentive models to deepen customer relationships. Training, coaching, performance management and support will all need to align with that goal of deepening customer relationships,” he explains.
Insurers will need to assess the compensation plans they have, and the extent to which their current technology enablement from an incentive compensation standpoint are sufficient to support the compensation plans they’d like to have in the future. “We are seeing a shift toward more fee-based selling arrangements, and carriers will need technologies to enable those arrangements,” notes Sandquist.
4. The future of aggregators.
Aggregator platforms that allow consumers to access and compare insurance products across the market will likely become an important part of the channel mix, as more consumers use the service particularly at the early stages of the sales process. As a result, carriers are adopting engagement strategies, with some insurers planning to embrace the aggregator model while others are holding back.
Insurance companies that want to play in the aggregator market need the ability to expose their quoting and issuance capabilities to be invoked by a third party, Sandquist notes.
5. The role of ecosystems.
Respondents to the Accenture survey reveal that insurers are creating or joining new ecosystems that go beyond traditional industry partners to facilitate end-to-end buying experiences and give customers a broader range of relevant products and services.
Insurers are considering how they can better meet customer needs, even beyond the traditional indemnification, and how they can broaden their value proposition, Sandquist points out. “Consumers expect the same experiences with their insurer that they do in other industries, raising the bar for carriers to be able to compete on the basis of experiences customer have across the broader marketplace, which has raised some fundamental questions about the insurance business model,” he says. “We think there are some very important implications around these ecosystems in terms of data.”
6. The Internet of Things.
Nearly half of insurers believe that connected devices will drive revenue growth over the next three years, and the number of carriers piloting or launching connected device initiatives more than tripled since 2014.
There’s tremendous momentum in the marketplace, Sandquist explains. “It’s not just about telematics in auto insurance, but also connected home and buildings, and included health and fitness and wearables. The prospect of insurance companies being a part of the protection business in addition to the indemnification business is very appealing as it relates to IoT. The fact that insurance companies now through IoT can cost effectively help prevent losses or reduce the severity of losses in real time is a game-changer for the industry.”
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