Evolving retail insurance market

The disruption caused by the COVID-19 pandemic has resulted in a reimagining of the retail insurance sector. With an international survey finding that 40% of insurers expect to increase investment in direct online sales and the related pressure of enabling a remote sales force, the industry is on the precipice of a fundamental change in business operations.

The hard lockdown conditions in many countries around the world last year meant it was difficult to continue with the traditional broker-led insurance sales model. What was once a channel driven by face-to-face engagement suddenly had to find a different way of reaching out to prospects. Even managing existing customers became challenging as brokers had to use e-mail, mobile and instant messaging environments as the primary means of keeping in touch.

Going direct

From a client perspective, this more digital-led way of doing business has been welcomed as end-users have been embracing digital solutions over the past several years. There is now an expectation that their service providers must deliver self-service options as well as be available on the platforms that customers use in their personal lives. Even though lockdown restrictions have eased, the increasing variety of touch-points now mean insurers must think differently about their sales strategies.

Insurtechs have long gone for a digital-only route. And while the incumbents will never be expected to completely forego broker models, they need to integrate more sophisticated options into processes to remain relevant and competitive. Using digital steps throughout the customer journey from the start of the sales process right through to its maintenance and management phase become a critical enabler to success. It is especially younger customers that are most comfortable to switch to a more direct form, while the older generation will continue to be reliant on a broker-based approach.

Insurers can consider three approaches to address this multi-access customer environment. First, they can digitise the existing agent channel that includes focusing on providing advice for customers and generating leads for agents. Secondly, they can integrate agent and direct channels. This brings a new collaborative environment to play and creates uniformity of the customer experience regardless of whether they are going direct or through a broker. Finally, the insurer must consider enhancing the direct channel with human components that better explain complex products with personal advice.

A remote world

Of course, direct sales are just one part of the new environment. Remote work is quickly becoming the status quo, requiring insurers to ensure employees have secure, reliable access to systems, data and the means to effectively engage with customers.

The new normal of remote work means insurers must re-examine their own risk portfolio as well as that of their customers. If people spend less time driving and more time at home, their risk profile will change. And then there is the potential of COVID-19 related claims. From loss of income to health issues, there is a variety of claims that must now be considered, many of which have not been covered by existing policies.

How insurers adapt to this new environment will become critically important to chart their path for a more digitally driven landscape and help meet (and improve) on customer expectations and experiences.