Thanks to the increased technological sophistication of end-users, insurers must find more innovative ways to engage with their customers.
Additionally, the growth of insurtechs has created a new market dynamic where incumbents must adapt or lose their relevance. According to Annalie Terblanché, product manager at SilverBridge, this has resulted in the diversification of insurance distribution channels.
“Fortunately, insurers do not have to reinvent the wheel. They can capitalise on the greatest asset at their disposal – the large amounts of historical data they have access to. While insurtechs are seen to be agile and more adaptive to change, the incumbents can draw invaluable insights from customer data to identify channels with the highest likelihood for success,” she says.
Already, some of the fastest-growing channels worldwide are affinity and retail partners as well as a burgeoning bancassurance (the selling of insurance products by banking institutions) segment. Furthermore, mobile and Web have become fundamental in reaching insurance customers.
“These are all areas where insurers can leverage their data analytical capabilities and carefully target existing (and new) customers using the channels most relevant to them. Of course, mobile and Web must be the foundation on which many of these engagements are built. But by starting to think outside the box, an insurer will diversify the number of channels it uses and how it uses them to drive the business bottom-line.”
Tradition no longer
Fundamentally, a distribution channel allows customers to access and purchase products in the most efficient way possible for the business. There are direct (i.e. call centres and the Web site) and indirect (a broker) channels available. However, as consumer needs change, there will be an increasingly reliance on going direct and cutting out the middle-man completely.
“The real-time nature of people’s lives mean they want immediate responses to queries, want their policies to suit their unique requirements, and want to be more in control of their policies than was previously possible. This can only happen if the insurer is willing to take customer data and analyse it for better insights. It must also be able to harness those learnings and offer people solutions that fit into the channels they are most comfortable with.”
Potentially, this could see the development of more niche products that cover specific risks for short periods of time. In many respects, this talks to the lack of brand loyalty many companies face today. It is all about capitalising on short-term gains while relying on an existing customer base for more long-term potential.
But tying all these channels (and distribution models) together is a reliance on digital technologies. An insurer simply cannot remain focused on what has worked for it before. It must be able to adapt to the fast-moving technology-led environment and reach customers more effectively.
“This is why insurtechs are finding such popularity amongst consumers. It is time for the incumbents to do this as well and build momentum with the Fourth Industrial Revolution around the corner,” she concludes.