As we have discussed in previous blog postings, developing new distribution models while simultaneously improving the core business is a challenging proposition. Insurers need to continue to invest in the core, reducing costs and increasing efficiency to remain competitive and fund growth initiatives. At the same time, however, insurers need to create and scale their new approaches.

While consumers are increasingly moving towards digital channels, a large number of consumers still value personal relationships and advice.  The challenge for insurers is to ensure that the customer experience is seamless as consumers move across both the online and offline channels.  Among other things, this requires sharing customer data across channels and insuring that experiences are hyper-personalized based on full knowledge of context and prior interactions. The same expectations for simplicity and speed that have become norms in the digital channels should be carried forward into the physical channels.

Many insurers explore incremental, low-risk opportunities, rather than the truly disruptive opportunities that require a high degree of agility and quick response to market feedback.  Insurers may need a “phygital” approach combining digitization and enhancements to the insurers’ physical presence.  A focus on cost reduction through continued digitization, for example, can fund additional investment in new approaches and channels.  Insurers can capitalize on customers’ willingness to use automated service options to increase efficiency and reduce expenses while making the most of their physical presence by using remote advisory teams and strengthening contact center capabilities. The combination of the digital and physical presence will be critical to increasing revenues and customer engagement.

Insurers will need to be more competitive in both their traditional and their emerging models. Digital startups, unencumbered by core distribution models and empowered by new technologies, are avidly pursuing traditional insurers’ markets. The challenge for insurers will be to establish clear digital initiatives, balancing the requirements of current and future operations and making the right choices within each.

In the fifth and final blog of this series, I will look at three big takeaways for insurers as they examine their distribution strategies.

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