What will insurance product distribution look like in a decade? I know three things: (1) it will look very different than it does now; (2) it will have high levels of customer service at the centre; and (3) I am going to listen carefully to some very smart people at ICEF2015 on August 31st.
We are definitely not going to be in Kansas, Dorothy
I have written or read what feels like a library’s worth of words on the the topic of insurance distribution. There are trends and theories that have come to fruition. For example, the entry of direct writers and direct marketers has diminished independents’ personal insurance market share. Canada, generally, and Ontario, specifically, have a higher percentage of brokered personal lines business than elsewhere, but the trend has been downward.
Where’s the floor? If the US market is a gauge (and I think it is), there seems to be stable support for independents at 35%, all things being equal.
But all things are not equal. Distribution does not get defined on its own. We have changes in consumer requirements which will push changes to the business model.
Back in January, our colleague, Catherine Kargas introduced a strategic excellence position (SEP) model to determine a business’s best competitive positioning. The business must offer:
- Something of value to customers;
- Something that the organization does well; and
- Something that competitors don’t offer and have difficulty offering.
SEP trumps product and distribution channels. These elements will morph to meet the customer’s unique requirements. Maintaining agility to deliver the right product at the right time in the right form depends on strong analytics, customizable products, and omni-channel distribution schemes.
Let’s look at automobile insurance – the product that consumers love to hate. Insurers and brokers have done the best they can with a heavily regulated, low margin product.
The advent of telematics has brought new challenges and opportunities for distributors. Initially, getting an understanding of rating mechanisms, different insurer appetites, E&O exposure, etc. are time and resource consuming.
However, the opportunity to elevate the SEP is large. for example, we blogged on InsureMy, an Alberta based broker which specializes in telematics. The principal, Hugh McTavish, says his missions is to change “the way Canadians think about insurance” by applying telematics and demonstrating “how data could be used to the customer’s advantage.”
Working with insurer partners, McTavish developed a ‘Time-Based’ insurance product for small commercial fleets. It is elegant in its simplicity. The product and technology reduces the time a client has to spend to realize premium savings for parked vehicles.
As technology extends into personal and commercial activity, there will be no end to opportunities. I believe these will succeed to the extent that distribution is able to carefully focus on the individual consumer’s particular situation; viz., realize the elusive ‘market of one‘.
But don’t just listen to me …
At the 2015 Insurance-Canad.ca Executive Forum, you will find several sessions which will provide important input from leading practitioners on product and distribution trends.
The Distribution 2025 panel will include seasoned practitioners who have responsibility for planning and executing the future: Eileen Greene, VP & Partner, Hub International; Brenda Rose, Technology Champion for IBAC; and Bernard McNulty, Head of Claims, Allianz Canada.
At the Specialist Channel 2025, Heather Masterson, President, Totten Group and Sean Murphy, President, Lloyds Canada will address the process required to provide highly customized solutions for emerging risk requirements.
Additional details and registration information can be found at the ICEF2015 Overview.
Join us and help define the future.