Technology will not replace all agents and brokers but it will force agents, brokers and carriers to adjust how they handle consumers’ preferences.
That’s according to the latest sigma study by Swiss Re, “Digital distribution in insurance: a quiet revolution.” The study is an analysis of research from different countries and discusses how the internet and mobile devices are empowering consumers to search, review and purchase insurance policies without relying solely on the services of intermediaries.
At the same time, developments in Big Data are facilitating access to a rich source of data about customers, which insurers can use to enhance sales and marketing strategies. Digital transformation overall can help insurers become more consumer-centric, according to the study.
“A quiet revolution is underway,” said Kurt Karl, Swiss Re’s chief economist. In many countries the share of premiums accounted for by online sales is still small, but it is rising. “The statistics on e-commerce insurance mask the profound impact new technologies are having on the distribution process.”
Some surveys indicate that consumers increasingly research online and that the internet has become a trusted source of advice for insurance. Aggregator or price comparison websites (PCWs), as well as social media, are playing a growing role in the pre-sales process. As Ginger Turner, co-author of the study, noted, “with mobile and telematics technology, consumers can now interact with their insurance provider anytime and anywhere.”
Moreover, relatively simple insurance products are being sold online more readily. This is most obvious in personal auto and property insurance, especially in developed markets.
Direct marketing of term life insurance and some insurance for small businesses is also becoming prevalent. Swiss Re analysis shows that even in emerging Asia, where most sales occur via intermediaries, insurers have developed advanced capabilities for direct online platforms.
Meanwhile, the buying journey for insurance is becoming fragmented across multiple touch-points.
Not all insurance sectors are at the same stage of this digital transformation, and not all will proceed along the same adjustment path and at the same pace, according to report. But, the report says, the direction is clear: eventually, customers will be able to arrange most of their insurance needs through remote digital channels.
Digital transformation does not spell the end of intermediaries, according to the study. Many consumers will continue to value the personal interaction and expert advice of agents and brokers. The challenge for agents, brokers and their insurers will be to adapt business models to meet the varying needs and preferences of customers.
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