5 Factors Driving Insurance Distribution to Digital
March 8, 2016 12:06 PM
The stars are aligning for online insurance purchases, according to a new report from Aite Group, Disruption in P&C Insurance Distribution. Report author Jay Sarzen says that there are five major reasons insurers and agents must be ready to sell policies online.
1. Increased smartphone usage and broadband access
"Years of shopping from online retailers such as Amazon have conditioned consumers to believe everything can be obtained through clicks and swipes, increasing comfort levels of shopping online," the report says. "Additionally, broadband expansion is allowing firms to deploy a more robust consumer purchase experience than was possible at the dawn of the Internet, with its slower upload and download speeds."
2. Consumers self-directing financial services transactions
In addition to increased use of mobile banking and credit card management services, 71% of consumers have reported at least getting an insurance quote online. "As more consumers begin their insurance purchase journey online, it is likely that the number who complete the journey will increase," Sarzen writes.
3. Carriers looking to maximize consumer reach
In the U.S., P&C premium growth is largely stagnant. Being available with a robust digital experience can help insurers siphon off customers more easily from the competition.
4. Increased number of online purchase options for P&C insurance
Many carriers have expanded their sales efforts beyond traditional agency channels into online options, whether that's direct sales, onlne agencies, or aggregators.
5. Increased VC interest in firms attempting to alter P&C distribution
Venture capital firms are spending more money on startups targeting the insurance industry. More than $1.3 billion flowed from VC companies to insurance technology companies in 2015.