Other parts of this series:
The rise of digital technology has dramatically empowered consumers throughout the world and insurance customers are clamoring for credible advice. Brokers and agents need to make sure they can meet their needs.
The rapid spread of digital technology throughout the insurance industry is prompting brokers and agents to change substantially how they conduct their business. The quality of advice they provide their customers is fast becoming one of the most important gauges of their performance.
There’s little doubt that brokers and agents will continue to play important roles in the distribution of insurance products. However, it will be their ability to inform, advise and guide customers that will distinguish them from their competitors. Such qualities will be especially important in southern Africa, where big carriers are looking to win the confidence of the many consumers who have little or no cover. Fewer than 30 percent of the 11.4 million cars in South Africa, for example, are insured, according to the Automobile Association. While the Institute of Race Relations reports that only 16 percent of South Africans have medical insurance.
How’s digital technology raising the importance of insurance advice? The answer’s clear. Digital technology has dramatically empowered consumers throughout the world. They’re more informed, more demanding and more discerning than ever before. Furthermore, advances in digital technology are enabling consumers to take far more responsibility for their insurance and wealth management. Around 90 percent of the financial advisors we canvassed recently in the US confirmed that their clients are better informed than five years ago. Local insurance customers are certainly becoming more knowledgeable. And, knowledge is power. Policyholders are increasingly challenging their insurance providers about the costs and benefits of their products. A third of the advisors we surveyed said their clients have questioned their fees. Advisors in local markets are experiencing a similar quizzing.
Tech-savvy insurance customers are demanding digital channels that give them around-the-clock contact with their insurance providers. They want quick and easy access to information as well as the ability to review their policies and portfolios and make changes to their cover. They’ve become accustomed to searching online for other products and services and comparing prices and features. Now, they want similar transparency and service when assessing insurance offerings. If they don’t get it, they’re quick to switch to an alternative provider. We found that 30 percent of a global sample of P&C insurance customers, for example, were likely to change their provider within a year. More than 80 percent of dissatisfied policyholders were expected to move. The illustration below shows what our survey found to be the most important components of a successful client-advisor relationship. Access to the advisor is the most important criteria. Around 75 percent of respondents ranked it as important to the client-advisor relationship.
The new generation of digitally-empowered consumers, which ranges from young first-time insurance purchasers to retired annuity-beneficiaries, are particularly hungry for advice. Such consumers are able to call on a wide range of insurance providers as well as a multitude of digital platforms and social networks for insights, first-hand experiences and recommendations from their peers.
Insurance brokers and agents are operating in a market where demand for good advice has rarely been stronger. But competition for the attention and trust of the consumer, and access to information about them, has never been so fierce.
In my next blog post, I’ll discuss how brokers and agents can meet the challenge presented by the emergence of intelligent robo-advisors. Until then, take a look at these links. I think you’ll find them useful.