Insurance has existed for hundreds of years, but it never stops evolving. Digital transformation has accelerated in recent years and iInsurance companies and MGAs today must continually assess and adapt every aspect of how they work to stay ahead and maximise profitability. That includes the insurance distribution channels they use to reach and sell to their audiences.
How customers research and purchase insurance is constantly changing, as technology drives greater personalisation and convenience. Many customers no longer have the time or the patience for face-to-face meetings, and lots of form-filling. At the same time, inflation means that costs are rising, so companies must try to do more with less, simultaneously increasing efficiency in their insurance distribution strategy, while also driving greater ROI.
Updating insurance distribution models will be vital in 2024 to overcome these challenges and align with policyholders’ evolving preferences and expectations. And with new technology and channels emerging all the time, MGAs and insurance companies have even more scope to innovate.
Insurance distribution trends
There’s no one-size-fits-all solution to insurance distribution. What works depends on the type of insurance, the customer segment, and the geographical market. While some products lend themselves to a fully online, self-service approach, others are still too complex for digital sales. Taking a tailored, omnichannel approach is key, and every insurance company or MGA should be constantly reassessing their balance of distribution channels and the technology they have in place to maximise conversion.
Here are the key trends they should be focusing on:
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Customer-centric distribution
Effective insurance distribution starts with a deep understanding of the customer, through collecting and analysing the right data. The risk and customer landscapes today move fast, and companies will only stay relevant by understanding the risks customers face, how they behave, and where they go for insurance information. That enables MGAs and insurance companies to design their entire product and distribution strategy to maximise the rate of conversion, constantly testing and learning to see what works and what doesn’t. Plus, data isn’t just invaluable for winning new customers, but also for cross-selling and upselling amongst existing customers to improve customer lifetime value.
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Tech and data-enabled broker relationships
Brokers have always been the most popular distribution channel for riskier insurance products; 79.7% of commercial insurance premiums were written through brokers in 2022, an increase from the previous year. But how insurers and MGAs are supporting brokers is changing, as data and technology enable them to target the most profitable customer segments and utilise digital tools to generate quotes quickly and efficiently, with minimum legwork. For example, with Insly, MGAs can set up a customised broker portal, so brokers can retrieve quotes, documents, sell and amend policies from one dashboard.
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Highly personalised D2C approach
While brokers still dominate much of the market, there is a significant opportunity for businesses to invest in selling direct, particularly for consumer and SME insurance which are simpler and driven by life events and growth milestones. It means no commissions to pay and gives companies the chance to own the whole customer relationship to drive cross-sell and upsell opportunities, as well as renewals. However, companies should be aware that selling directly is a big investment, with significant marketing spend required to drive sales.
Insurers and MGAs in this space are competing to offer the most flexible and personalised approach, with on-demand and usage-based insurance currently coming to the fore, enabling customers to switch their cover on and off as required. Meanwhile, providers are increasingly drawing on AI and automation tools to streamline the buying process, making it as easy and convenient as possible with minimal form filling.
Insurance management platforms like Insly can streamline the customer onboarding process from start to finish. For example, you can integrate your insurance underwriting tools into CRM systems, notifying customers when it’s time to review or renew their policies. Plus, you can use automated underwriting platforms to reduce the time it takes to underwrite a claim by up to four hours.
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Embedded Insurance and partnerships
Embedded insurance is nothing new, for example, the idea of buying travel insurance with a holiday booking, or gadget insurance with your phone has been around for years. What has evolved are the types of insurance products being sold this way, so it is now possible to purchase car insurance when you buy a car, or home insurance when you take out a mortgage. As a result, the sector is expected to own $722 billion in gross written premiums (GWP) by 2030.
Embedded insurance software enables insurance carriers and MGAs to reach a whole pool of new potential customers, and manage these policies through low-touch, automated systems. However, it’s important to keep an eye on the risks, with regulators currently looking at how to handle compliance when sales go through a partner company. Platforms like Insly can help to ease this concern, by ensuring that policies are adequately maintained through the customer lifecycle.
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Buy-and-build distribution models
Private Equity has shown an increasing interest in the insurance sector in recent years and, for insurance companies, accepting external investment to drive M&A can be an effective way of reaching new markets. Investors see numerous opportunities to employ buy-and-build strategies to merge several mid-sized companies with synergies across product types or vertical sectors. They can also achieve economies of scale in software and technology solutions, to automate insurance distribution and policy administration.
Facilitating innovation in insurance distribution
Maximising existing and new distribution channels demands the right IT infrastructure for collecting data-based insights, building new products quickly, integrating with partners, and tracking results. With Insly’s low/no-code platform, MGAs and insurance companies can quickly begin exploring a whole range of distribution channels, while maintaining complete control of their critical business data and IT costs. With a low/no-code, modular setup, and API integration, businesses can optimise their distribution channels, without the need for coding experience or extensive time, resources, and R&D costs.
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