In recent years, life insurers have begun the process of adapting to a distribution environment which encompasses emerging technologies such as mobile, social media, digital marketing and online sales. Right now, however, life insurance distribution strategies still depend heavily on a network of captive or independent agents and brokers.
Accenture conducted large-scale survey research in January and February of 2011 which indicates that while, at least for the foreseeable future, multiple distribution channels will continue to co-exist, agents will continue to play a central role. The question becomes how to use emerging technologies to best support the existing network, while offering the kind of experience and interaction that consumers seek.
The survey of 2500 consumers of life and property and casualty insurance in the U.S. and Canada indicated that customer loyalty is stabilizing, for now. Less than a quarter of respondents that plan to renew or purchase their insurance products in the next 12 months will switch or are considering switching to a new provider.
Respondents also pointed to the importance of a consistent multi-channel experience. A large majority (84 percent) said it is important that insurance products and services be identical across channels, including call center, online or through agents. The top criteria for consumers choosing a new insurance provider are speed of problem resolution (68%), insurance products and services that meet their needs (67%) and competitive prices (65%).
Customers are also asking for more tailored experiences; 23% of respondents would be ready to pay more to get personalized advice or assistance when purchasing insurance products and services, and this proportion increases to 39% among those 18-24 years old. Insurers need to be thinking about whether what they offer is distinctive enough to merit customers paying more for it.
Among other key findings:
–The agent is still the preferred channel, but online purchase and interactions are developing. Consumers most commonly purchase insurance products through exclusive agents, but the proportion of renewals or new purchase online via insurers’ websites will slightly increase in the next 12 months. Among those having purchased a policy online, 50 percent did so for the first time online in the last 2 years, with 33 percent doing so in the last 12 months. Again, the percentage of younger customers planning on buying insurance (all insurance, not just life) online is much higher.
–The use of social media in the insurance sales and service process will accelerate over the next 2-3 years, with increased interactions through insurers’ websites but also aggregators, mobile devices and social media. Social media in particular is growing in importance. A total of 21 percent of respondents said they either currently use or plan to use social media to do research on insurance products and services, reaching 36 percent among those age 25 to 34. Life insurers need to be ready, not only to connect with their customers through social media, but to “wow” them with high-quality content and readily available information.
–The role of banks in selling insurance – particularly life insurance – is yet to be determined. While 28 percent of respondents said they were undecided on the future role of banks as their insurance provider, six percent said they would do more insurance business with their bank. Nearly half (47 percent) said banks were a one-stop-shop for financial services, and 39 percent identified banks as their preferred financial advisor. Clearly, life carriers need to map out a strategy to deal with banks, either as partners or competitors.
Another key survey finding identified customers’ reasons for planning to renew or purchase a new life insurance product or service in the next 12 months. Slightly more than a quarter (26 percent) of respondents said they had been planning to purchase insurance for a while, but had not had the disposable income to do so. Another large segment (24 percent) wanted to complement other investments they made, while 19 percent cited changes in their family situation.
As the research indicates, consumer attitudes are changing and life carriers must keep up with and anticipate new customer demands and behavior patterns. In particular, insurers need to adopt more of what might be called a “retail mindset” requiring the application of analytics to better understand channels, talent and operations. With this information, insurers will be in position to drive more innovation into customer, agent and channel experiences.
This innovation can take a number of forms including:
1. Delivering tailored experiences for target customer segments and for the agents and/or channels representing the insurer’s brands;
2. Increasing the use and leverage of digital marketing to generate more education and engagement among customers;
3. Better leverage of analytics to match the right offer, channel and experience to the right customer; and
4. Integrated planning and investment in the five disruptive technologies (collaboration, digital marketing and gaming, social media, mobile and analytics) that make it possible for insurers to really transform distribution.
The life insurance industry is ripe for innovation. Insurers can make better use of the digital channel to enhance communications with customers, engaging customers when they want to engage and not following the old industry model of formal, scripted meetings. As the Accenture research indicates, there is growth potential for life insurers able to create simpler, more customized offers that match up with customers’ life events, financial personalities, and personal P&L statements.
The agent network will remain important, but digital capabilities can not only provide agents with more information about the customer before the crucial first call or meeting, they can educate customers about their own financial needs and the implications of acting (or not acting) on specific product offers.
Kevin J. Kraft is a managing director responsible for the Distribution and Growth offerings for Accenture’s Life Insurance practice.