Turbocharging Innovation via Digital Direct Distribution
The digital disruption of the insurance industry has brought a new wave of carriers that bypass agents and sell directly to the consumer. Digital direct carriers offer a fast, easy, mobile-first quoting process, often binding coverage in just a few minutes. And without agent commissions to pay, there are potential cost savings that can be passed along to the consumer, although these savings may prove illusory due to the high cost of digital marketing.
A bigger advantage of digital direct might be the way it turbocharges innovation. In a direct model, holistic innovation is quicker and easier. The carrier has end-to-end control of business processes and can redesign them without disrupting the way agents typically work. During quoting, this enables different kinds of data to be gathered from the customer. Carriers can more easily handle supplemental questions as needed, turning the application process into an online dialogue with the customer. Other data sources, such as third-party APIs and telematics, can be more seamlessly integrated into the quoting process. For example, auto insurer Root provides a downloadable app that monitors driving habits for a few weeks prior to issuing a quote, enabling a more accurate price.
Opportunities for innovation in digital direct don’t end once the policy is bound. Direct carriers are finding new ways to deliver value and improve the customer experience throughout the lifecycle of the policy. Homeowner insurer Hippo, for example, delivers smart home sensors to the policyholder, improving safety of the home while enabling future premium discounts.
Of course, direct carriers don’t have a monopoly on digital innovation. For example, there are agent-focused carriers innovating in areas such as telematics. Rather, it is speed of innovation that sets digital direct carriers apart. It’s simply much faster and easier to innovate without an intermediary between the carrier and the customer. Changes to processes and systems do not require coordination with a third party. Training, change management, and problem resolution are simplified.
Even more important, however, is the direct feedback loop between carrier and customer. Product-led organizations continuously listen to customers and study their digital interactions. This feedback drives incremental improvements, often released daily. Like the effect of compound interest, the value of the product grows dramatically in ensuing months. Rapid learning is the key to rapid innovation.
Ironically, agents may be the ultimate beneficiary of digital direct distribution. Several direct carriers are now looking to agents to expand market share, given the continuing dominance of this channel. Carriers are studying lessons learned in direct and adapting their innovations to serve agents and their customers. This means digital direct is more than a distribution strategy; it’s a testbed for innovations across all distribution channels.
At the upcoming InsureTech Connect conference in Las Vegas, I will be leading a panel discussion about digital direct distribution. Come hear lessons learned from leading innovators Hippo and Root and find out how digital direct distribution can be an integral part of a multi-channel distribution strategy.
We’ve also got several other sessions going on at InsureTech Connect. Here’s a description of all six sessions we’ll be participating in – and a link to some pretty deep discounts. If you’re interested in attending InsureTech Connect, we can provide you with a $200 discount. If you’re an executive at an insurer, we can offer you an even lower price of $895. Hope to see you there.