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Covid 19 affected the insurance industry more than other industries. Mandatory physical distancing and other safety measures put businesses in a spot as most of them were not ready with a continuity plan. Moreover, processes that once needed in-person interactions were now unthinkable.
Insurance companies have already put measures to counter the short and medium-term effects of the pandemic. For example, they rapidly moved their workforce to become effective remotely and expanded online customer service channels.
If anything, the pandemic was a jarring reminder for insurers of the prominence of digital channels and the risk they incur should they choose to stick to their incumbent ways. As a result, insurers are now focusing on the next set of challenges, including reducing technical debt to digital distribution for its products.
In this post, we take a look at how digital distribution is helping insurers accelerate their business value.
Digital distribution is a quiet revolution in the industry
While the insurance business has been steadily increasing through digital channels, most insurance distribution came from intermediaries and physical sales. However, with distancing measures here to stay, agents are rapidly re-calibrating to use digital channels. In McKinsey’s January 2020 survey of US insurance agents, more than 70 percent of their ongoing conversations were in person. In a few months, that number flipped and is now less than 5 percent.
The rise and need for self-service tools have only risen multi-fold since the pandemic and highlight the importance of digital in the insurance industry. Agents are pushing their clients to initiate transactions online and pushing platforms to evolve with the times.
The rise of Chatbots has been significant in the insurance industry too. Insurers are turning to chatbots for real-time customer service and even equipping them with Artificial Intelligence capabilities, helping customers get their problems resolved much faster than before.
However, customer satisfaction depended heavily on the ease of use of these tools and hard-to-use and access tools. As a result, customers have quickly shunned these tools.
Data and Analytics is driving change
Insurers are quickly focusing on transitioning their sales force to digital channels, especially ones that drive leads. Data and analytics can help drive this change.
In McKinsey’s January 2020 survey of US insurance agents, nearly half mentioned that their lead generation strategies were ineffective. Customers spend longer on a site before converting, and this insight should help insurers increase conversion rates with ease.
Insurers are also investing in developing a data-driven business through digital channels to understand customer needs, warm leads better, and use insights to personalize their customers’ digital experiences.
The rise of Artificial Intelligence is an excellent tool for insurers looking to target a specific set of customers within a particular geographical area or who have a specific set of interests, etc. Using AI tools helps insurers understand customer needs better and utilize them to refine the customer experience further.
For instance, if a customer is looking for life insurance or health insurance, an insurer can automatically begin helping them find the right product. These are just some of the many ways digital distribution can help insurers connect with their customers better.
Digital distribution accelerators
Tools and technologies that help both agents and customers have become the most infested areas in the industry. An essential enabler for this investment is data. Insurers must understand the gaps in processes for their customers and agents and identify a plan to bridge these gaps using technology tools.
Insurance companies have massive amounts of data locked away as paper assets in a warehouse. The faster they can harness insights from this data, the sooner they can identify upcoming trends and build serious grunt into their digital distribution outcomes.
Using data models, insurers can help their agents drive digital lead generation (something that financial services companies have a first-mover advantage in) and segment their customers based on their lifetime value. They can then upsell and cross-sell these segments with products driven by data and current needs.
Furthermore, insurers can build feedback mechanisms into how agents reach customers to refine the analytics model further. This continuous learning helps identify the precise needs of the segment with pinpoint accuracy.
A data-driven strategy starts to close the gap between what customers want and what insurers can provide.
Planning for digital distribution success
Partnerships with technology integrators and product makers are vital for insurers. The right partner can not only help leverage technology as an enabler but turn it into a key differentiator.
The sheer availability of tools and tech coupled with their decades of experience working with similar enterprises makes technology companies ideal for driving this revolution. The right tools help bring agents closer to customers. Post the sale, it helps customers get closer to the insurer.
However, a poorly designed experience can shun customers away from using these tools. It may also lead them to churn to another brand.
Technology expertise at scale is a valuable ally for insurers in today’s times.
A vast range of channels are available for digital distribution, and getting the right mix is essential. We previously talked about customer segments, and going a level deeper to understand which channels customers are most comfortable with enables more precision targeting.
Insurers are increasingly turning to digital distribution channels as a way of connecting with customers and building loyalty. With this many advances in technology, insurers can create an experience tailored specifically to each customer or segment they’re targeting. However, the right tools can only be successful if your company has the expertise to use them effectively.