In a recent article on Property and Casualty Insurance News, my colleagues John Cusano and Ravi Malhotra talked about how direct sales and agent channels might converge in the future. They address some of the challenges in the P&C sector today, namely limited growth, increasing competition and changing customer expectations.
Creating a competitive advantage
As carriers have dealt with challenging market conditions, they have looked at ways of differentiating themselves. Primarily, differentiation focuses on two categories: product features and channel distribution. And, in the latter, the choice has been between direct channels or agent.
John and Ravi suggest that the choice between direct and agent channels might soon become a moot point.
The role of technology in Insurance
Direct channels are particularly well suited for commoditized products, but the technology underlying direct channels can be leveraged for much more.
For example, technology enables more opportunities for agent interaction and guidance, at multiple points in the customer lifecycle. Consider the opportunities for mobile interaction or real-time video conferencing. Think of the possibilities to improve the customer experience, retention and loyalty.
Further, by leveraging technology to automate basic functions—bill payments and claims handling, for example—carriers can expand agent interactions to up-sell or cross-sell products.
Distribution strategy for carriers
The question is, how can carriers capitalize on these opportunities? I think it’s incumbent on carriers to analyze and plan their distribution channels for the next 3–5 years, taking into consideration where technology is—and more important, where it is going.
In particular, John and Ravi mention four touchpoints:
- Multiaccess strategy. Strategize across multiple channels, carefully considering customer experience and economics for each channel.
- Nontraditional marketing and branding. Insurers are very good at marketing and branding along traditional channels. New media are no different; in fact, branding is even more important in such a competitive space. Enable lead generation and referral tracking from social media channels.
- Analytics. It’s critical to collect and leverage data analytics, and equally important to develop predictive analytics for better decision making.
- Mass customization. While carriers should definitely have a central website, agents can leverage customized versions of that website (with complementary branding) to provide a more customized customer experience, with specific products that target that agent’s client base.
In short, know where technology is going—and plan accordingly.