The New Paradigm of Insurance Distribution” by Sanjay Nene and Arup Ghosh, Wipro Technologies

Insurance distribution channels have historically evolved to respond to different forces, like catering to new markets or legislations, with the objective of maximizing g row t h a n d e n s u r i n g co m p l i a n c e . H oweve r t h e development of the channels have not always been based on a cohesive over-arching business plan but rather followed disparate strategies which were generally a tactical response to market situations. Insurers have mostly focused on the face-2-face channels (comprising of agents & brokers) operating out of brick & mortar offices as the primary mode of distribution and added other channels (internet, call center, telemarketing, etc) as low cost alternatives suitable only for limited offerings.

With growing competition making a host of low cost alternatives available, and the time and effort to access information becoming negligible, the insurers are faced with considerable challenges in retaining and growing their customer base. The surfeit of channels when added to this mix only exacerbates the challenge of consistently and successfully meeting customer expectations & experience.

The new age consumer has access to a wealth of information, specifications and reviews, that allow them to explore, understand and evaluate choices at their own pace and through their preferred medium. Contrary to commonly held belief, customers when offered a choice of channels don�t pick a particular channel and then stick to it. Instead, their expectation is to be able to transact with multiple channels simultaneously. Research shows that today consumers, cutting across industries, utilize multiple touch points in the journey from product awareness to actual purchase. While a significant percentage of the quotes for P&C personal lines are generated online, channels offering personal interaction like agencies and call centers are the most preferred when converting the quote to a policy. Research also shows that the more channels a customer shops in, the more profitable the customer tends to be.

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