The topic of ‘Life Insurance Distribution’ quite possibly conjures up stereotyped images of an overly cheerful and persistent door-to-door salesman in your customer’s minds and may even bring about feelings of dread and confusion. Like it or not, the adage remains true: Life Insurance is a product that is sold, not bought.
The door-to-door salesman image may only come to the minds of your older customers, the baby-boomers and perhaps Gen-Xers, for whom this was far more of a reality. Sales made in face-to-face meetings with customers was the method of Life Insurance distribution. Agents cultivated personal relationships, aided by telephonic initiations and meetings in-person, where the complexities of life insurance products were explained, customer queries could be immediately addressed and concerns allayed.
Today: Changing customer needs accelerating digital adoption
Source: TDI PoV: Industry Warning - digital tipping point is approaching insurers faster than expect
It goes without saying that we are living in times of rapid change. Technological innovations and the landscape these create are changing what customers want, and how they want it. Customers want to make purchases online from the comfort of their own home, and are no longer as comfortable speaking on the telephone as they once were. Customers want interactions that are quick, simple, and with minimal disruption to their lives.
By now, insurance can be distributed online, via website forms and robo-advisors. This progression from human agents and time-consuming engagement with customers, to simple, speedy, online sales, all done with a few clicks, was primarily driven by innovative InsurTechs and led to a huge disruption in the industry. Additionally, the impact of COVID-19 increased consumer expectations further. According to TDI, the tipping point of digital adoption has now been reached, thus reaching not only early adopters, but already the early majority of customers.
Life insurance, however, remains complex. The range of different life insurance types, and differences within each type, is of course only the start of it. The number of variables that can be involved when determining premiums, adds a whole new level of complexity, and that is before one even considers product customisation. Today’s customer not only wants a clean and clear interaction, they also want a personalised product, and the products are being adapted accordingly. As a result of these complex developments and accelerated customer demands, the human agent still plays a key role in the sale of life insurance.
As a result, hybrid model of life insurance distribution has risen, where digital leads, marketplaces and comparison engines are involved early in the process, to be replaced further down the line by an actual person who can take over where the algorithms stop, and a personal relationship is picked up, to answer questions and provide guidance through the process.
Sales agents themselves are of course also operating in the digital world, with their own drive towards less paper work and more integrated online processes in order to fulfill customer expectations. Pen and ink client signatures are being replaced with voice-recorded approvals and electronic signing, as agents interact ‘live’, but not necessarily in direct contact with customers. As this sort of functionality becomes available, it further extends agent-reach for efficient life insurance distribution. An e-signature makes life easier for an online customer, but it also allows agents to reach entire demographics, not online at all, but rural and previously too far from the corporate infrastructure and the paper-based processes they supported, to be reached. Life insurance distribution to deeply rural populations has become possible. Agents armed with digital devices that can record images and e-signatures, and allow ‘forms’ to be filled in for later upload to databases in the cloud, are reaching new markets and driving further changes in the process.
Outlook: What can we expect in the future?
Changes are driving changes. As technology evolves and changes the world, customers, insurance products, agents - and life insurance distribution - evolve alongside it. A year ago, we may have considered our biggest unknown to be how far technological capability will reach, and how our lives will continue to change in the digital era.
Today, we are experiencing the unexpected reality of social distancing and seeing how the cultural and economic worlds are shifting rapidly beneath our feet. The uptake of digital operations has accelerated across industries. We are more remote, and yet more connected, via a multitude of digital umbilicals - across our business and personal lives. Life insurance sales via digital channels appear to have kicked up with the arrival of COVID-19, as people faced their own mortality and face-to-face meetings became nearly impossible. Digital distribution of life insurance is becoming the new normal. It's hard to be sure of exactly how it will change, but what we can be sure of is that it will change. It's difficult to prepare for changes we can’t be sure of, but what we can prepare for is change itself. Fortunately, embracing the digital future is embracing the responsiveness, adaptability, and lightness of foot needed to keep your distribution channels current.
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