Insurers’ digital initiatives: EY analyst offers mixed view

From the back office to the front office, insurers are investing heavily in technologies to bring efficiencies to operations long overdue for an overhaul.

High on their list of priorities are digital platforms that enable smoother servicing of producers’ day-to-day needs, from account and event management to sales leads.

This was a chief takeaway of a Dec. 7 break-out session, “Agents of the Future, Digitizing Distribution,” which took place at National Underwriter’s 2016 Annual Insurance Executive Conference. Presented by Ernst & Young Executive Director Melanie Henderson, the session explored technology and channel initiatives underway in the industry, producers’ view on them, and where carriers are coming up short.

Related: LexisNexis shifts life insurance underwriting into high gear

The need for product innovation

The last, she said, extends to a core component of the carrier-producer relationship: product.

“Producers are increasingly looking for customized products to meet changing market demands,” said Henderson (pictured here at the conference). “What’s interesting is how much product innovation will play in determining what they want to sell. And right now, agents are telling carriers that what they have isn’t as attractive as what they want to go to market with.”

That’s evident in research she detailed at length from a 2016 report from Ernst & Young that polled property and casualty/personal agents (58 percent of the survey’s respondents), life and retirement agents/advisors (15 percent) and small commercial lines producers (27 percent).

When asked how much product innovation will be a driving factor behind the “producer of the future’s” expanding portfolio, nearly half of the agents and brokers surveyed (45 percent) think that innovation significantly facilitates new business. Just over 50 percent agree that developing “new and innovative products” should be a key focus of carriers.

Many producers are also looking for improvement on the underwriting front. Nearly half (50 percent) told Ernst & Young they want greater access to underwriters and favor using the same underwriter. More than one-third (35 percent) want to “formalize or improve the process” for reviewing or appealing an underwriting decision.

Related: Innovative thinking vs. innovation: key differences uncovered 

The value that producers attach to social networks — Twitter, Facebook, Instagram and the like — is most pronounced among property and casualty/personal lines agents, the Ernst & Young survey finds. (Photo: Thinkstock)

Gauging the D-to-C threat

Direct-to-consumer initiatives and digital insurance models are a mounting concern to a solid majority of agents, said Henderson.

Among the life and property and casualty agents polled, more than half perceive carriers’ direct-to-consumer and digital endeavors as at least “somewhat” of a threat. Nearly 1 in 10 life producers (8 percent) view them as a “full threat.”

Whereas carriers are exploring alternative distribution, producers believe they still add value. About three quarters of the survey respondents view the agent/advisor channels as “important for insurers.” Much smaller numbers are “neutral” as to the value added (22 percent) or “fail to see” their importance (3 percent)

Related: 5 things you need to know about the future of life insurance

Conversely, producers have certain expectations as to their involvement in carriers’ direct-to-consumer initiatives. The largest percentages — 40 percent and 52 percent, respectively, of life and property and casualty agents selling personal/individual lines; 37 percent of commercial lines agents — say that insurers should “work with me” and clients to resolve issues during the sales process. In most cases, between 20 percent and 25 percent of agents across all lines expect that carriers will:

• Manage customer interactions but “keep me informed.”

• Facilitate a servicing or claims/benefits request, but defer to the agent as the “sole point of contact” (among personal property and casualty agents, the figure is 17 percent).

Turning to how producers aim to balance new customer acquisition and cross-selling initiatives, about half of producers (49 percent of life agents, 53 percent of property and casualty agents) prefer a balanced approach to increasing “wallet share” and the number of clients. One in four or fewer favor “more wallet share and fewer customers” or “more customers with less wallet share.”

Related: Here’s why digital life insurance sales are growing

“What’s interesting is that the level of sales focus varies by product line,” said Henderson. “On the life insurance side, producers prefer to acquire more customers and let carriers handle servicing, which is understandable given the difficulty in selling ancillary products. But they do want to stay involved in existing relationships.”

As to those customer connections, more agents are seeking to engage clients and prospects through social media, the research indicates. The value they attach to social networks — Twitter, Facebook, Instagram and the like — is most pronounced among property and casualty/personal lines agents (5.7 on a 7-point scale, where 1 is the lowest score and 7 the highest). Among commercial lines and life agents, the values are 5.4 and 4.6, respectively.

Often, said Henderson, producers are uncertain as to which social networks to use, and the messaging to convey over each, to achieve sales and client relationship objectives. Insurers thus have a role to play in communicating social media best practices.