The Next Distribution Model and How Insurance Can Prepare

The Next Distribution Model and How Insurance Can Prepare

Globally, people’s engagement with one another is profoundly affected by the COVID-19 pandemic. Increasingly, remote activities have replaced activities once considered vital to be conducted in person, such as physical separation. Despite physical distance measures continuing, this will affect insurance distribution in the short and long term. As we move toward the “next to normal,” society’s relationship with technology and remote interactions is constantly changing.

COVID-19 has already driven many insurance companies to move to a remote setup and expand their online customer service channels to deal with its short-term and immediate impacts. Insurers are now focusing on reimagining distribution in a remote world, one of the biggest challenges they are facing.

It will be necessary for insurers to change their distribution model in three different dimensions: customers, salespeople, and enablers. By preparing for the unpredictable, insurers can remain competitive in the future.

The Future of Distribution

A majority of insurance distribution is handled by physical agents and intermediaries across geographies and lines of business. They remain the primary channels for property, casualty, and commercial lines of business despite shifting customer preferences during the past decade. But, the continued physical distance affects the distribution of insurance in a dramatic and immediate way.

1. A Shift To Digital Tools

Clients with severe health challenges, such as those who are facing unemployment, are encountering serious issues on the job. This requires agents to rapidly recalibrate their skills. Several agents are also rethinking their relationship-building strategy, as they still rely heavily on in-person meetings to build relationships. Due to the COVID-19 outbreak, customers, agents, and insurers are more comfortable interacting digitally and remotely.

2. The Move Towards Self-Service

Digital has only become more important in the current environment due to client demand for self-service. Since the pandemic began, Spanish consumers have begun to access insurance digitally at a rate of almost 30%. In addition, the survey found that digital delivery in insurance was the least satisfied of all the industries surveyed. Among the reasons insurers were dissatisfied, “hard-to-use tools”. In order to support customer and agent satisfaction, insurers will have to invest in improving self-service tools.

3. Converting Offline Processes To Online

Agents currently handle legacy products which, from physical signatures to medical underwriting, sometimes require offline execution. A majority of customers, meanwhile, avoid taking part in physical medical underwriting due to fears of contagion. Therefore, insurers need to find ways of digitally underwriting the business-such as relying on external data, adjusting fluidless thresholds, and making use of external data to extend the number of customers who can avoid a physical examination.

Future Distribution Strategies Will Change

In many cases, insurance companies are already preparing for the next normal during the near future; many of these steps have never been taken before. To support customers, their focus is primarily on digitizing sales forces and using data and analytics in a more meaningful way to support customers.

It is better to move quickly to pilot, test, and learn during the next few months rather than spending time planning and waiting for perfection. In light of the knock-on effects of the virus, it is important to get the business back to scale quickly. Three areas need attention from insurers: customers, sales forces, and enablers.

Provide Excellent Customer Service

We have found that many traditional insurance products are too complex for digital sales because insurers need to understand how customer preferences have changed. And, many traditional insurance products are too complex to be sold online, so it may be necessary to simplify products for remote sales. 

In a virtual environment, it will be critical that successful agents and their customers learn how to recreate an in-person, advice-based relationship. And with roughly half of their customers planning to continue using telemedicine after the crisis subsides, insurers can look to advances in telemedicine-which have seen a huge increase in recent weeks. While protecting the privacy and security of consumers, telemedicine tools (such as video-based appointments and photo- or screen-sharing) can let your patients conduct appointments virtually.

Don't Ignore Your Salesforce

Three imperatives can be focused on by insurers in order to prepare their sales forces for the next stage.

Planning for the Long Term

When reevaluating their distribution strategy and securing shifts toward digital distribution, insurance companies should also consider three steps.

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