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Accenture publishes its last report dedicated to the transformation of insurance distribution . The ambition is Reimagining insurance distribution. The latest version of this report was from early 2016.
Digitization transforms insurance distribution
The report is based on a survey of 400 industry managers around the world. The first lesson is that the vast majority of actors are working or planning to work on a restructuration of the distribution model, including by leveraging the benefits of digital. Only 1 in 5 actors do not think about it.
Accenture brings out six trends:
- Digital channels
- User experiences improved by customer knowledge
- Changing the role of the agent
- Future of aggregators
- The role of ecosystems
- The Internet of Things.
Besides, Accenture gives insights on what they call the “living services”, all the services that the insurer can provide in addition to its customers based upon collected data in particular.
1. Digital channels
All stages of the distribution chain are affected by digitization and a search for omnichannel. Thus, this trend does not question traditional networks, but questions what should be the respective place and added value of each. Accenture also confirms the rise of selfcare, which has two objectives: satisfaction of customer demand and a desire to reduce distribution costs.
2. Customizing the customer experience
Insurers are clearly switching from a” product-oriented” posture to a” customer-oriented” one. ( Note: By the way, it will be necessary for Accenture to explain the difference between the concept of sales of products based on the needs and the notion of customer-oriented model, because I am not sure to understand… ).
This involves mastering the collection and use of data for:
- To estimate correctly the potential of each one
- Choosing the right channel for each customer
- Identify the best time to initiate a contact
- Choose the best offers and the right messages.
This involves the use of predictive models to adapt to a changing population.
3. Changing the role of the agent
Almost 2/3 of insurers work with their agents to ensure the best positioning in the value chain. It is about bringing them in when their added value is the most important. Another essential element with these populations, 79% of insurers rework the models of remuneration in a digital and omni-channel context.
Thus, the remuneration should aim to encourage a certain number of activities, around the customer relationship.
Finally, this type of questioning brings another trend, heavier and longer term. This involves reviewing the profiles sought for new recruits. ( Note: a legend in Figure 8 would not have been a luxury to ensure understanding … )
4. Future of aggregators
The aggregators confirm a dominant position and still growing. Respondents believe that they will be even more used, especially in the upstream phases of the distribution (search for information or tariff).
Therefore, the question is to choose the strategy to adopt against these actors: use the brand to generate commitment or use a dedicated brand or sell white label. The answer is very variable according to the geography and the penetration rates of the comparators. There is therefore no single answer. On the other hand, we still see a tendency to favor the use of a secondary brand for these channels. ( Note: One nuance, it does not seem relevant to me to treat in the same way the respondents who say they may be ready to do it within 3 years, and those who do not know. It affects seriously the result).
Finally, last step observed, the creation of proprietary aggregators. ( Note: I do not dwell on this point, too few details are given by the report on what is understood in this terminology, it is too vague to be exploitable! )
5. Ecosystems: end-to-end experiences
One point on which I agree with the conclusions of the report: the future of insurance goes beyond insurance. It is the emergence of service ecosystems that aim to improve the response to customer needs by offering new services or products. It’s about building partnerships and thinking more about what can generate engagement.
Note: This point is a really insufficiently treated.
6. The Internet of Things: The New Paradigm
Whereas the focus was previously on the embedded telematics (of which I speak regularly), connected objects now move the lines. In 1 year, investments have exploded and the number of services or associated products has been multiplied by 2 or 3. It affects all types, including smart homes, health or other wearables.
This allows a change of posture, from the role of indemnifier to the role of prevention, more positive. In addition, insurers can now offer their clients self-assessment of their risk, thanks to tools whose prices have fallen significantly.
Digital leaders show the way
Accenture reveals a difference between digital leaders on one side and followers on the other. Where the former seek to truly transform their profession, the latter are more willing to catch up.
By comparing the relative positions of each one, it makes it possible to better appreciate the differences between the most advanced actors and the others.
On the question of connected objects, we can also better measure the difference in taking into account the problem.
A recommendation: become a digital insurer
Accenture’s recommendations focus on four areas:
- Choose your business and distribution models, and stick to them!
- Define the desired position in ecosystems, models of cooperation or partnerships (yes!)
- Switch from a compensation mode to real-time protection
- Make innovation and customer focus the cornerstones of distribution strategies
- Seeking simplicity first and foremost for access, transactions or offers
- Emphasize the human contact of agents on advice, value-added and more complex customer relationships.
Conclusion of Reimagining insurance distribution: Transforming to Secure the Future
Conform to the standards of all reports of this kind, Accenture does not know how to close a report! To write:” The only thing we are sure of is that the insurance company of tomorrow will be different from today’s” is of an appalling banality …
In short, since the results are based on studies and surveys, it provides a confirmation / disregard of a number of concepts. In this sense, this report brings real interesting points. However, being too hand-to-mouth, swallowing the analysis and for all that depriving oneself of carrying convictions is very disappointing for this type of player on the market. If Accenture hopes reimagining insurance distribution will be that simple, they’re wrong: it will take a little more.