Insurance digitisation: from threat to key leverage

Digitization breaks the traditional insurance distribution model into pieces. But it can also move those same pieces back into place.

Insurance agents are a tough bunch. Even though they’ve been hit by digitization, and hit hard, they’re still in the game. And that’s an understatement – they’re the playmakers.

Granted, their margins have shrunk. The insurtechs are a step ahead of them in terms of service quality. And for automotive and travel insurance, they’re not even needed anymore – price comparison engines do the job well enough.

Yet, data shows us agents remain the key figures of the insurance industry. What keeps them going?

Rising from the ashes

According to the latest findings, agent sales is still a prominent insurance distribution channel in major European markets.

In 2016, as shown by Insurance Europe, 77% of non-life policies in Italy were sold through agents. In Luxembourg and Germany, agents brought respectively 54% and 48% of the total sales in the life segment.

Agents remain trusted advisors of policyholders: according to Accenture, customers from almost every segment consider agents the most important and valuable channel to seek advice with. There’s more: recent behavioural insurance studies from the University of St. Gallen have shown customers very much prefer purchasing lock-in from agents to doing so online.

The fact remains: insurance is an extremely complex field which requires human-to-human advisory. And that’s what keeps agents going. But it may not always be so.

Adapt and win

What’s next then? Some of the winning business models of today are expertise-intensive ones, being characterized by agencies partnering up – to provide their customers with ecosystems rather than solutions. Each agency brings its unique product expertise to the table, and that results in tailor-made advice, richer products and a higher degree of post-sale services. That’s what AXA envisioned as early as in 2015, with other market players following suit.

Now, in order to reach the full potential of such value proposition, agents must rely on digital tools. Customer relationship management is the first example – with new advanced needs analysis models enabling agents to come up with personalized offers. But that’s just a start.

Together we can do it

Further down the road, agents must be supported by insurance companies to face the challenges of tomorrow. Forward-looking insurers will provide their agents with platforms where one can have a 360-degree customer view, analytics to process data being the basis of the view, and insights into customer preferences and needs.

Others will do even more: integrate the said platforms with customer portals, and so enable agents to remain the trusted source to turn to for the new, hyperconnected customers.

Agents who will become all-around advisers, focusing on ecosystems, not solutions – and using digital tools for that – will also successfully navigate the turbulent waters of the digital ocean.