Consumers and insurers alike may be online and virtualized and digitized to the hilt, but when it comes to locking in policy sales, the personal touch still matters a great deal, apparently. For the insurance industry, brokers and agents add value and build key relationships with customers that websites still can't touch.
That's the conclusion of a recent study conducted and published by the IBM Institute for Business Value and the I.VW Institute of Insurance Economics of the University of St. Gallen, Switzerland. Survey researchers gathered the responses of 8,592 consumers and 1,360 intermediaries—captive or independent agents and brokers working with one or many insurers—from 17 countries globally.
The bottom line is “customers don’t trust the insurance industry as a whole,” the study's authors, Christian Bieck, Peter Maas and Tobias Schlager, point out. In their survey, only 44 percent of consumers said they trust the industry. However, three-fourths expressed trust in the intermediaries they dealt with for insurance policies. “This makes it important for insurers to address the relationship between intermediaries and customers to slow the decline in trust and loyalty.”
When comparing web-based interactions when searching for insurance plans versus those with intermediaries, the differences are stark. “In our current survey, tied agents have 80 percent lock-in and brokers 59 percent, compared to 49 percent lock-in for direct websites and 35 percent for aggregators,” the researchers note. “These numbers have hardly changed over the past two years.”
However, this doesn’t mean cutting back on online or digital initiatives. Rather, the best approach is a blended, multi-modal strategy that incorporates both digital and human assets. “In the age of the active and informed customer, intermediaries cannot simply be a selling channel anymore. They need to become trusted advisers—and insurers have to enable them to reach this goal. Indeed, all relationships in the triangle—insurer, intermediary and customer—need to adapt.”
The IBM survey data shows that insurers who have better channel integration immediately sell more: “high channel integration led to 10 percent more sales with the company respondents searched from. Or put differently: customers do not want to be forced to buy where they search. The easier it is to switch channels, the less likely they are to switch companies. Customers want insurers who are easy to do business with.”
The survey found that 65 percent of customers still bought their insurance through either traditional personal interaction points such as tied agents (26 percent), brokers (14 percent) and banks (8.6 percent), or the less personal, more “modern” interaction points such as telephone (11.6 percent), retailers (1.5 percent) or direct mail (1.7 percent).
However, the researchers also spotted changes in the way people shopped for insurance. “Traditional interaction points were used 12 percent less, with the majority of change going to direct websites and aggregators,” the report states. “Smartphone app usage for information gathering rose almost threefold, albeit from a low starting point (up from 1.0 to 2.9 percent).When new interaction points get added, the others lose without disappearing completely.”
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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