Many insurers are harnessing the power of digital technology by adopting a multi-channel distribution approach. A handful, however, are going completely digital. They’re using a single direct platform to address the needs of their digital-only customers. To succeed they need a strong mobile platform, a differentiated value proposition and a shrewd branding strategy.

Progressive insurers are quickly readying themselves to meet soaring consumer demand for digital products and services.

Many carriers are rolling out multiple distribution and service channels that enable them to deliver insurance offerings more effectively. Personalized services, connected products and ecosystem alliances, for example, are becoming increasingly popular. The majority of these carriers are implementing several different digital channels, combined with traditional sales networks, which cater for the needs of most hybrid customers. As I mentioned in my previous blog post, this omni-channel approach is especially suited to big, well-established, carriers.

A handful of innovative insurers, however, are going completely digital. They’re doing away with conventional paper-based systems and processes. And they’re cutting out human interaction with customers.  All their product distribution, as well as the bulk of their marketing, sales, underwriting and support, is accomplished using a single digital platform.

This bold, fully-digital, direct distribution model has lots of advantages. It significantly reduces processing costs while improving productivity and risk selection. Furthermore, it enables insurers to quickly launch and modify their products, easily introduce additional services and gather large numbers of sales leads from multiple digital platforms.

An attractive, powerful and easy-to-use mobile platform is vital for insurers that want to adopt a digital direct approach. Mobile devices are already the most popular method of accessing the internet. US internet users in 2014, for example, used smartphones or tablets for 60 percent of the time they accessed online digital media – up from 50 percent the previous year. By 2020 around 80 percent of the world’s population are likely to have access to a smartphone.

A strong mobile presence on its own, however, is not enough. Insurers looking to build a successful business around a single digital distribution channel must also differentiate themselves. They need to provide customers with a compelling value proposition backed by a shrewd branding strategy.

InShared, a subsidiary of Achmea in the Netherlands, emphasizes the transparency of its transactions with customers. Its CynoSure digital platform, tailored for users of mobile devices, allows customers to manage every component of the claims process, from notification and progress reports to the appointment and payment of repairers. Furthermore, customers can cancel their policies at any time and are able to track the value of their potential premium refund. InShared’s combination of transparency and customer rewards has been highly successful.

In the US, AllState’s Esurance is differentiating its digital distribution channel by providing highly personalized services. Customers can use their mobile devices to manage their contracts, lodge and track claims, and make video calls to Esurance service staff. These personalized services have enabled Esurance to increase premium revenue substantially.

Fully digital direct distribution channels are well suited to nimble entrants into the insurance industry that are unencumbered by legacy investments. US on-demand insurer Trov, for example, is one of several insurance technology start-ups committed to a digital direct strategy.

Both InShared and Esurance are owned by major insurers – a sure sign that big carriers are keen to secure a foothold in this increasingly influential method of distribution.

In my next blog post, I’ll discuss another important distribution channel: Connected insurance. Until then, take a look at our Distribution and Agency Management Survey. It’s available on this link:

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