Within the insurance industry, a convergence of three elements—new technologies, a financial infusion and rising customer expectations—are disrupting the business. This disruption is changing the nature and source of competition. We can examine this competition on three axes:

  • X axis: How we sell
  • Y axis: What we sell
  • Z axis: Who is selling

In this first post of a three-part series we will look at the X axis: How we sell.

The X or Distribution Axis focuses on how we sell insurance. The channels we choose determine the customers and markets we reach, the products and services we need to offer and the competitors we will face.

Historically, insurance has primarily been sold through agents and brokers. But with increasing commoditization and pressures on pricing, carriers are considering new markets such direct, online aggregators and point-of-sale.

How we sell: 7 different channels through which to sell insurance, including agents, brokers, MGA/wholesalers, direct, via online aggregators, Peer 2 Peer networks, and point of sale

The advantages of these new markets include:

  • Lower distribution costs.
  • Closer connections to customers.
  • Less competition, for now.

But insurers also face challenges with these new channels. First, it has been a while since many of them have moved into a new channel or supported a multi-channel strategy. Second, they may lack the skills and experience to develop the end-to-end strategies and solutions needed to be successful in these new markets. Third, it’s within these new channels that many of the faster and more nimble start-ups are emerging and creating new competition.

In my next post, we’ll look at the Y axis: What we sell.

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