Why are Insurers not improving online distribution?
What I’ve learned from working with insurance distribution partners is that these distributors are increasingly demanding support for the digital distribution of insurance products. Despite this high demand, they keep running into the same problem: very few insurers are equipped to facilitate digital sales.
Moving away from insurance-centric partnerships
Insurers have an insurance-centric view of distribution partnerships. Sales flows are not designed with the (online) end-customer in mind but instead focused on the insurance company’s offline sales processes.
This is no longer tenable, and for two reasons.
First, we have seen a jump in consumer expectations. Rather than being content with whatever their insurers have to offer and how they want to sell it, consumers now demand great customer service throughout the entire buying process and the option to purchase insurance products digitally.
Second, there is a diminishing number of worthwhile alliances with distributors. Leading insurers are quickly securing the best distribution deals, leaving their slow-moving competitors with fewer and fewer options. Speed-to-market is now key for any insurer who hopes to win this game, but many of them are still lagging.
Bridging the gap in digital distribution
Distribution partners are much more digitally-oriented than insurers. This creates a gap in their partnerships. While distribution partners want to sell insurance and want to add insurance cross-selling to their existing online customer journey, few insurers are able to make this happen.
Part of the problem is structural: many insurers are burdened by legacy systems that prevent them from offering digital cross-selling. However, the problem is also due to the old-fashioned and stodgy culture at many insurance companies. Insurers tend to have little (if any) knowledge of online sales or how to facilitate them through distribution partners, nor do many of them have much interest in learning how to do it.
At Penni.io, we are working to bridge this gap and help insurers meet the expectations and needs of their distribution partners. We recognise that professional application programming interfaces (APIs) are now one of the core components of a successful insurance partnership, and we work with insurers and their partners to put them in place.
Implementing APIs without overhauling your entire system
Many people in the insurance industry are unfamiliar with APIs, but the concept is really quite simple. APIs are a way to exchange information digitally. For distribution partners, having an API means being able to retrieve basic information about the product in real-time (such as its price and deductibles). This feature is essential for cross-selling insurance products online.
For many insurers, implementing an API seems daunting. Digitizing their offerings and processes would mean overhauling their entire system and changing the way they conduct business. There is no need to take such a drastic step, however. Insurers can take an incremental approach instead by digitizing only limited insurance products and gradually digitizing more of them. They can also focus on the steps in the customer journey where digital support is most important (typically, getting a quote to the customer in real-time) while keeping the rest of their sales process intact.
What distribution partners can do
As a distribution partner, you no longer have to let insurance companies drive the partnership. Instead, you can lay out your expectations clearly and insist on an API to support your digital sales channels.
This is what’s best for you. It’s what’s best for the consumer. And even if they don’t know it yet, it’s also what’s best for the insurer (successful digital partnerships will result in lower cost per sale and higher revenues).
It’s important to recognise, of course, that insurers are not experts in online sales and, in many cases, this distribution channel is entirely new to them. They are ill-equipped to make this transition on their own. So, you will need to bring in your own online sales experts to help them develop efficient and effective digital sales tactics and implement an appropriate system.
The new digital insurance market
Digital insurance sales and the APIs that support them are quickly becoming essential parts of doing business for insurers. It’s not too late to adapt, but providers that don’t will soon find themselves bleeding customers and losing revenue.
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Special thanks to our expert Esben Toftdahl Nielsen.