Adapting to distribution changes
My recent discussions with CIOs of general insurers in Europe have demonstrated that distribution remains an important topic. European insurers need to understand the changes affecting the distribution channel landscape and build in appropriate supports to leverage them. Among others, I would recommend insurers to consider the following considerations:
The direct channel requires an appropriate front end: To take advantage of the growing adoption of the direct channel, insurers have to emphasize low cost, highly automated flexible processes on a scalable platform. This goal can be best achieved through the implementation of open and flexible front end systems facilitating interactions with potential customers, integrating modern communication tools for call center officers and allowing a high level of reactivity in terms of product, pricing and discount changes.
Communication with aggregators is key: With the growing adoption of online insurance, aggregators gain more importance and insurers need to make sure that communication with aggregators is optimal (for more on the importance of aggregators, read the following Celent report “The Perils of Success: Rethinking the Maturing Online Insurance Market in Europe, February 2010”). There are two alternatives that can be chosen from. The first one consists in letting online shoppers fully perform the purchasing process on aggregator’s websites. With this alternative, customers and quote data are transferred to insurers via XML files on a periodic basis either daily or weekly following a batch process agreed between the aggregator and the insurance company. The second alternative consists in directing shoppers automatically onto the insurance online platform to perform the last step of the buying process (the effective purchase of the insurance product and its payment). This alternative requires an instantaneous transmission of customer and quote data by aggregators to insurers. I consider the latter alternative to be preferable for online insurers.
Insurers need to improve integration of affinity and bank channels: Banks and affinity channels tend to deal with more complicated insurance products. They offer specific advice to customers through in-person meetings. To leverage the value generated by these types of channels, insurers need to implement relevant portals allowing management and process of sophisticated insurance products.
Use brokers and agents in specific customer segments: Brokers and agents have still an important role to play. However it is important insurers use these channels for specific segments of customers requiring particular attention, products and services. To promote a frictionless communication with brokers and agents, I recommend insurers to implement sophisticated portals with rich functionality to provide point of differentiation.
Responding to multi-channel management: The changes affecting the distribution landscape make it more difficult for insurers to apply an efficient multi-channel management strategy. I believe insurers should prioritize sophisticated portals providing a single view of the customer based on service oriented architecture (SOA) with high level of automation. In addition, as the multi-channel environment evolves, it is important insurers implement all on a scalable infrastructure.
As the insurance distribution landscape is changing fast and drastically, I expect this topic to be part of the European insurer’s top priorities in the coming years.