In last week’s blog, we discussed some myths and misconceptions about insurance agencies and their willingness to be a part of Digital Insurance 2.0, with its customer-focused service and omni-channel engagement. I enlisted the help of Craig Welsh, from Westfield Insurance and Gregory Bailey, CEO of Denim — recent collaborators in a Majesco webinar on Distribution in the Age of Digital Insurance 2.0. They each brought a unique perspective to the growth of Digital Insurance 2.0 practices within the agency space.
The motivations for achieving Digital Distribution Mastery
Though we covered the basics of motivation at a high level last week, it might be good to revisit the many reasons why an insurer would want to prioritize digital distribution for the benefit of itself and its agency development. Some of these reasons are obvious. Others are related to growing trends. Either way, they should all serve as motivational drivers.
Agency mergers. Agencies are in the midst of consolidation. This means that insurers can gain or lose independent agencies based upon their ability to offer both modern digital service and simplified ways to manage distribution. An Ernst & Young survey found that 60% of independent agents said the availability of better tools affected their preference for partnering with certain carriers. The same survey also highlighted high levels of interest in specific digital tools from carriers. The most attractive insurers will be those forward-thinking and forward-operating insurers who can promise simplified agency service and optimized data and channel management with improved tools.
Agency satisfaction. A related, but separate issue is that Agency/Insurer relationships aren’t considered to be strong right now. In the J.D. Power 2018 U.S. Independent Insurance Agent Satisfaction Study, insurers missed the mark in satisfaction and ease of doing business for the agent channel, scoring just 696 (on a 1,000-point scale) for personal lines and 686 for commercial lines, which are among the lowest scores for business-to-business relationships in J.D. Power satisfaction studies.
Customer satisfaction. Even with the growing importance of digital channels for research and sales, most customers still wish to maintain a connection with a human who is responsible for knowing them, knowing their needs and representing their interests. Agents bring a level of trust and loyalty to insurers that can be difficult to secure with direct-only strategies.
Improved Sales. One of the myths that we covered last week was that if insurers built out their direct channels, it would hurt their agency channels. That logic assumed that all products have the potential to be sold and serviced direct. Now that the doors of data are opening wide, however, insurers and agents are grasping the possibilities for better data-driven prospecting. It would be poor data planning to consider data’s impact upon underwriting, claims and rating, without also considering its ability to mine opportunities within existing portfolios. Many of these high-dollar, high-touch sales cannot be accomplished with only an event-triggered e-mail or a marketing tweet. They need to take a multi-channel, multi-touch approach.
Six keys to achieving Distribution Mastery
Having set the stage for the need and the desire from both agencies and insurers, we can now look more closely at the six keys to achieving distribution mastery and we’ll examine how carriers can construct an agency-friendly framework for growth that accounts for digital engagement at every level.
Here is our opportunity to make the process much simpler for agencies and customers, fitting the needs that they have at the time of the sale. A multi-channel strategy makes things easy on customers through additional ways of researching offerings, purchasing and getting service. This doesn’t cut out the agency. A multi-channel strategy enhances channel usage by creating bridges between the moment of need and the relationship of a trusted advisor.
To enhance their reach and to engage customers, insurers need to build — not a system, but a partnership ecosystem. Startups are proving that the ecosystem models can cut time and costs, while improving capabilities and advancing opportunities. Do you partner or integrate with other startups, comparison sites, social media or MGAs? Are your systems and processes designed to easily plug in new channels and provide data back to those channels? Insurers need to ask themselves what kinds of business they are going after and then determine what kinds of channels and ecosystem they need to integrate into their businesses.
Agencies are here to stay. Not investing in digital engagement in the agency space will cause the brand to look incohesive. One of the goals of digital engagement is to improve customer confidence. That confidence shines most brightly when it is evenly distributed between all forms of communication and engagement.
Insurers who are committed to their agents and committed to strengthening ties to their agencies need to also stay committed to optimizing them. How can your company make its agents more efficient? How can you reward agencies that are working toward their own digital growth and engagement? These are the agencies that will make insurers “look good” to customers. Insurers who digitally optimize agency service, information, key data points, and illustration tools, and those who streamline policy issuance, FNOL and even simple CRM data, will be the ones who keep agents and agencies satisfied
A bad experience in one channel — any channel — can have a bad reflection upon the company. Make certain that the channels you are working with are evolving digitally, so that experiences are consistent across all channels.
Cross-Channel Data and Analytics Framework
One of the clear benefits of multi-channel frameworks and cross-channel consistency is the ability to capture and analyze cross-channel data. How often does direct research result in a follow-up call? Which channel is the best for prospect conversion? Is there a loss ratio difference between acquisition or service channels? Does the agent relationship have an impact on rates of fraud? In order for insurers to understand what is happening within each channel and how to truly optimize the multi-channel strategy, they should mature in their abilities to use cross-channel data. It is one of the payoffs to distribution mastery.
If insurers are motivated to create new digital frameworks and they are committed to following the keys to digital mastery, they will undoubtedly find many added benefits along the way. In our webinar, Craig Welsh pointed out that one of the intangible benefits Westfield Insurance found during its transformation, was that all of the conversations and planning around agencies and digital capabilities, allowed their teams to build governance structures for digital enhancements, as well as governance structures for how to handle agencies. This makes perfect sense. The process of aligning all of the stakeholders creates a source of organization and focus. Plus, the conversations that are needed between insurers and their agencies during these periods of transition are always beneficial. Both sides learn from the process and both sides listen.
This points to perhaps a seventh key to digital distribution mastery — a Deep Understanding of your Customers and Agencies. Digital Insurance 2.0 provides a great model for insurers to follow that will keep both groups satisfied and help insurers gain a foothold in the Digital Era.
Majesco Webinars are a great way to catch up on industry happenings and hear from industry leaders on topics that concern you. You can watch previous webinars or sign up for future webinars by visiting the Majesco Webinar Series link. While you are there, be sure to sign up for Incumbent Insurers are from Mars and InsurTech Startups are from Venus, airing