Advice-led distribution in life insurance (Part 1 of 2)Posted on 24.04.2012 by Michael Costonis
More and more, individuals are facing the prospect of funding their own retirement. In both developed and emerging insurance markets, the ranks of the under-insured are growing. Meanwhile, shrinking profitability, increasing customer expectations and competition from other financial institutions—brokerage firms, asset managers and investment advisors, to name a few—puts life insurers at risk of being just manufacturers.
To address these trends, we believe that life insurers should adopt an advice-led distribution strategy. By differentiating themselves on the quality of their advice, and by offering tailored, multi-channel customer experiences, life insurers can achieve high performance.
The right customers
The first step in delivering tailored customer experiences is to know the customer. Specifically:
- What is the customer’s financial personality?
- What life events are pertinent to the customer?
- What is the customer’s financial ability to act on an opportunity?
Analytics and customer segmentation are critical capabilities. Insurers must understand each segment’s needs, and develop solutions that meet those needs—a task that is often easier said than done.
The right offers and experience
Having identified the right customer segments, insurers should create offers and experiences that will elicit the right reaction from customers. Product bundles and preferred pricing are common examples, but insurers should also consider the tone, messaging and content of the offer.
Furthermore, insurers can create competitive differentiation by optimizing their channels for how customers want to use them.
Next week, I’ll talk about three more considerations for life insurers developing an advice-led distribution strategy: the right operating model, the right talent and the right metrics.
To learn more, download Achieving High Performance in Advice-Led Distribution (pdf; opens in a new window).