The rise of the digital economy is radically changing insurance distribution. Insurers need new distribution models that will satisfy growing customer demands and quickly capitalize on opportunities.
The burgeoning digital economy is rapidly changing the distribution of insurance products and services. Carriers tied to old business models will increasingly lose revenue to tech-savvy competitors, innovative start-ups and expanding digital services companies.
To succeed in the new digital business environment insurers need to implement well-defined distribution models that will enable them to ramp up the quality of their service, quickly launch new offerings and swiftly seize additional revenue opportunities.
The success of these models will hinge on their ability to capture, please and retain customers. This is no easy task. Pervasive digital technology, as I highlighted in my previous blog series, has dramatically empowered customers throughout the world. The new insurance customer is demanding more and more from their insurer. Just look at the graphic below. Customers crave constant, personalized and contextual digital services and experiences. They value advice and insights from others as much, if not more than information given to them by their insurer. And, they’re quick to switch to other providers if they don’t get what they want – immediately.
Our research shows that 84 percent of insurers recognize that the spread of digital technology is changing customer expectations. And 84 percent accept that it will radically change traditional practices. Rather less, 72 percent, believe it will change how insurers will use their distribution channels.
Some carriers have already begun overhauling their distribution systems. They’re investing heavily in digital delivery platforms, implementing omnichannel distribution networks and refocusing their brokers and agents. These progressive insurers, which we call Digital Transformers, are moving quickly to capitalize on the disruption caused by the spread of digital technology. They recognize that digital technology will completely transform the insurance industry. Most of these market leaders have implemented new distribution models. As many as 73 percents of the Digital Transformers we surveyed have defined strategies that stretch across their whole value chain.