Life insurers that take a direct-to-consumer (D2C) approach to serve the middle-income market can curb costs and tailor their products to meet the specific needs of their customers. Furthermore, a D2C approach won’t prejudice their agents.

A direct-to-consumer (D2C) approach enables life insurers to earn big revenues from the under-served middle-income market without disrupting their agents.

By using digital channels, such as online services, mobile applications and connected devices, insurers can forge strong direct ties with increasingly tech-savvy middle-income consumers. These channels not only lower distribution costs. More importantly, they also enable insurers to tailor their products to meet the specific needs of the middle-income market. They can even refine their offerings to suit the changing requirements of individual customers. These advantages will increase as insurers use digital technology to roll out increasingly personalized services to their customers.

Concerns about disrupting their agents’ business have deterred many life insurers from reaching out directly to middle-income consumers. However, as I pointed out in my previous blog post, the traditional agency channel has captured little of the middle-income market. By adopting a D2C strategy, life insurers are not going to prejudice their agents. Far from it. Agents can benefit from the new business opportunities created by successful D2C strategies.

Several progressive life insurance companies have already adopted a D2C approach to serve the middle-come market and they’re using digital technology to deliver a wide range of innovative products. The illustration below shows the diversity of these offerings.

International examples of middle market insurance providers and their strategies


Digital channels provide life insurers with a further advantage when they tackle the middle-income market. They allow insurers to pull in partners that can enhance their digital offerings and extend their distribution reach. Ping An, for example, teamed up with Chinese digital giants Alibaba and Tencent to create online insurer Zhong An. The new insurance company has enormous potential.

Our research shows that 46 percent of insurers are looking to external partners to help them increase their digital innovation.

Life insurers can strengthen relations with agents by using them to complement their direct digital channels.  While many consumers, particularly young middle-income earners, are turning to digital channels, lots of them still want to speak to a human being when buying life insurance. According to research organization LIMRA, 71 percent of people in the US look for products and services online but 50 percent still want to work with a financial professional when buying life insurance.

A D2C strategy enables life insurers to serve the needs of long-neglected middle-income customers and also generate healthy returns. Such an approach doesn’t handicap their agents. Quite the opposite. It can create business opportunities for both parties.

In my next blog post, I’ll highlight some key steps life insurers need to take to quickly secure a foothold in the middle-income market. Meanwhile, take a look at this link. I’m sure you’ll find it worthwhile.

Tapping the $12 billion life insurance middle market opportunity

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