Two recent reports are suggesting that the independent broker channel may have positive prospects, if (big ‘if’) its members can embrace rapidly emerging trends in business and technology. We’d like your thoughts on this possibility.
The channel needs to change as fast as the consumer …
A recent Swiss Re Sigma report, “Digital Distribution in Insurance,” sees digital technologies as a two edged sword: “For traditional intermediaries, many of whom fear being squeezed out by direct sales, digital distribution need not lead to channel conflict. Customers will continue to value the personal attention and expert advice of agents and brokers.”
But this is not a mandate for business as usual. The report says, “Technology-led shifts in distribution increase transparency, empower customers and lower barriers to entry in some markets.” The key here is understanding the markets’ needs and desires and designing strategies to meet the needs.
The report suggests a few specifics. For example, telematics and a shift to more usage based insurance will allow “personalised cover and more risk based pricing” and provide a competitive differentiation for insurers and brokers able to implement this effectively.
The treasure is data, the key is analytics …
The Swiss Re report notes that the increase in digital interaction with consumers facilitates capture of a wide and deep amount of customer data. Turning data into actionable information requires two components:
- Analytic tools to allow deep, comprehensive analysis of operational and supplementary data; and
- Skilled planners and executives who can translate analysis into insights and actions.
This assumes investment of money and time, but the results can be wins for all concerned,
And J.D. Power provides a case study….
Recent research from J.D Power demonstrates the power of understanding and exploiting market segmentation, noting that Gen X and Gen Y consumers may be helping to stem the insurance price race to the bottom. However, success with these cohorts requires continually meeting or exceeding current standards for digital marketing.
The J.D. Power 2014 Insurance Website Evaluation Study found that while price is important in selecting insurance, the younger generations are less likely to select the lowest price brand than Boomers.
According to Jeremy Bowler, senior director of the global insurance practice at J.D. Power, this has important implications for insurance marketers: “Understanding the preferences of different generations, especially Gen Y consumers, is of utmost importance to ensure that shoppers are having the best experience possible,” he said.
What are those preferences? Ease of web navigation and attractiveness were key elements. Gen X and Gen Y shoppers more more likely to select brands with easiest navigation than Boomers and Pre-Boomers.
So, how is this good news for brokers?
Bowler reinforced the importance of providing information in a manner that consumers can digest quickly. “The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler.
This should be red meat for brokers. Satisfying consumers’ need for simple to understand information is part of the independent channel’s DNA. The trick is knowing how to present the information to the right prospects in the right way.
What do you think?
There has been lots of discussion about the diminishing market share and opportunities for brokers. We agree with J.D. Power and Swiss Re that there are tools and techniques that can allow the broker to uncover and exploit undeserved segments, but it will take work and investment.
Our question to you: Are Canadian brokers making the investments and taking advantage of opportunities?