The consumerization trend that is reshaping insurance IT is, not surprisingly, also having a huge impact on insurers' distribution strategies. And the industry could have seen it coming.
It's not just about mobile devices. The consumerization-driven expectations of "always on," ease of use, seamless integration and personalization can be viewed as just the latest iterations of the long-standing concept of "anywhere, anytime" service - a concept that 20 years ago was considered radical and elusive within the insurance industry but that provided a foundation for the multichannel distribution models that are standard operating procedure today.
It could be argued that consumerization is proving to be a double-edged sword for insurers when it comes to distribution. The trend has made online sales of insurance a reality - something that seemed unlikely in the mid-1990s, when the online banking and trading revolutions seemed impossible to adapt to insurance. It also has provided significant cost savings and efficiencies, not only by making it easier for carriers to sell directly to potential customers, but also as a growing number of both independent and captive agents have embraced mobile and social tools and sought ways to do business paperlessly.
But at the same time, as consumers take more control over their interactions with insurers and distributors - PIA's recent "Voice of the Customer" study reported that 85 percent of the insurance customers it surveyed said it is either important or very important that they are contacted by their preferred method -- there are significantly fewer opportunities to actually sell people complicated insurance and protection products. In the life/annuities space, according to 2010 LIMRA research, three in 10 U.S. households do not carry life insurance on anyone in the household, and ownership of individual life insurance declined among all markets. This is no doubt a consequence of the economic downturn of the past three years, but it also suggests that a growing number of consumers do not want to deal with a financial services intermediary such as an insurance agent.
Meanwhile, the insurer/distributor relationship is becoming increasingly complicated. It's been a long time since insurance distribution was completely agent-focused.
But, as we report in the February digital issue of Insurance & Technology, even as alternative channels grow in significance, the competition among insurers to be independent agents' carrier of choice is more intense than ever. Forward-looking companies are making significant investments geared toward attracting and retaining agents - meeting the new set of distribution challenges that arise when agents use technology in the same way their prospects use it.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio