Insurers throughout the world are enhancing their business models to improve their efficiency and reach. Insurance advisors need to closely align themselves to these digital business models.
Sweeping changes in the insurance industry, triggered by far-reaching digital disruption and rising competition, are placing big demands on traditional advisors. To succeed in an increasingly digital environment, advisors, such as agents and brokers, need to bolster their technology skills and align themselves closely to new business models that are substantially different from those of the past.
Insurers throughout the world are refining their business models, particularly their distribution networks, to secure efficiency gains offered by new technology and to satisfy growing consumer demand for personalized digital services. Our recent global consumer study of 32,715 consumers across 18 markets lead us to identify five new distribution models that are likely to help insurers push up revenues and greatly enhance the customer experience.
Virtual Insurance Advisor: By aggregating and analyzing customer data, insurers can deliver personalized advice through intelligent automated advisors that policyholders can access using online, mobile and voice-based platforms.
Everyday Risk Coach: Insurers can use digital technologies such as big data and the Internet of Things to help customers improve their personal and financial wellbeing and reduce their risk of loss or injury.
Plug and Play Insurer: By embedding their products and services into the offerings of strategic partners, such as car manufacturers, retailers and internet service providers, insurance providers can extend significantly their sales and distribution channels.
Ecosystem Orchestrator: Insurers can build close relations with their customers by using a variety of digital ecosystems to gather data about their needs and preferences and then providing them with a variety of risk-related services and other offerings.
P2P Network Operator: A peer-to-peer model allows insurers to distribute services to pools of customers with similar affinities. This would reduce the cost of distribution and allow insurance providers to reach new customers.
Each of these new models can be implemented as a single adjunct to existing sales and marketing channels. Alternatively, several of them could be combined to create a broad, highly-personalized, digital distribution channel.
To complement such distribution channels, and remain relevant to insurers and their customers, advisors need to become digitally sophisticated. They’ll need to use an array of digital tools to efficiently manage routine tasks as well as to service increasingly demanding and knowledgeable customers. This will give them more opportunity to deepen customer relationships, develop multi-product solutions and provide advice on complex issues.
The advice provided by advisors will need to stretch beyond product information. It is likely to include strategic guidance and address risk management as well as wealth and retirement planning. Advanced digital tools will also enable advisors to provide customers with greater transparency as well as more control over their insurance cover. Furthermore, innovative data analytics systems will be able to give advisors valuable sales and service information such as the potential value of specific customers, the best time to contact them, the messages that are likely to be effective, and the products and offers that are most suitable.
Many major insurers are already preparing advisors to operate in a multi-channel environment where they are closely integrated with digital services and systems. Around half the carriers we surveyed last year, for example, expect their agents to be able to use digital and social media for marketing, prospecting and lead qualification by 2019. Nearly two thirds of them described the refocusing of agents to higher-value tasks as a key priority.
In my next blog post I’ll discuss how advisors can use new digital tools and services to build stronger ties with their customers. Meanwhile, take some time to look at these links. I think you’ll find them worthwhile.
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