COVID-19 has changed the way we work and interact for good, in more ways than one. Within the insurance industry, new and existing customers are pushing insurers to change and modernize at a pace they’ve never experienced before.
In most major markets, insurance companies are already finding ways to sell their products through digital platforms or are actively looking into it. Digital distribution and accelerated underwriting are two of the most crucial digital capabilities that most insurers require in order to reach a digital-forward customer base.
While this shift may feel like it’s been a long time coming, it does raise important questions within the insurance industry. One of the most obvious is, with an increased focus on digital distribution platforms, what role will brokers and agents play?
The future role of insurance brokers and agents
It’s hard to argue with the fact that insurance products must be available for consumers via digital platforms. According to the recent World Insurance Report 2020 by Capgemini and Efma, there’s an adoption of a ‘millennial mindset’ across all age demographics, specifically with regards to customers trusting their individual research to help them find the right insurance products for their needs. For agents, this self assured independence on behalf of insurance customers is a clear threat to their business model.
“Digital adoption is no longer a function of age; for those with access to the web and social media, researching and directly procuring insurance online has become mainstream across all generations,” Capgemini said.
There are other factors to take into account as well. Physical applications or taking hours to sit in an office to work out the right insurance policy isn’t something the average customer wants to do for many forms of insurance. Given the choice between the standard approach to purchasing an insurance policy versus a streamlined and clear digital application, few wouldn’t choose the latter. There’s also been an increase in digital services and platforms, like PolicyGenius, that allow customers to search a user-friendly platform to compare quotes and shop for policies across life, home, auto, health, disability, and more - all from the comfort of their home.
Despite these changes, and this accelerated shift in customer attitudes brought upon by COVID-19, there’s a reason the traditional brokerage model has existed in its current state for so long. Agents and brokers play a vital role in helping customers better understand their options and what they are and are not covered for under their existing policies. They also play an important role in helping individuals and businesses manage their broader insurance portfolio, and advising them on the right questions and actions to take with regards to their policies and options.
The intersection between agents and technology
So is there an opportunity for the traditional insurance broker and agent to evolve in a digital-forward market where insurers distribute their products and services across user-friendly digital platforms? The short answer is yes, but not without significant changes.
“The opportunities are marvelous for brokers to consider how to increase the amount of capabilities they have in-house through the use of discrete insurtech solutions, and they shouldn’t have to shy away from that. But they do have to do their due diligence around the scope, the functionality, and the benefits they get from that,” says David Kerr, a technology consulting partner for Deloitte Canada.
Insurance agents and brokers must clearly identify and communicate the value their service brings that cannot be substituted by an application and AI-based platform. Some of the ways they can accomplish this involve leveraging new technologies, some don’t.
There are a number of steps agents and brokers can take in order to do this:
- Insurance customers are rarely insurance experts - it’s important that they receive updates and advice with regards to their existing policies when they might be impacted by industry and market changes.
- Educate customers, and ensure they’re informed about existing and potential risks and opportunities.
- Find the right tools and platforms to help increase the value provided to the customer. There are many insurtechs that offer solutions that could enhance a broker’s offerings, but research needs to be conducted into which ones are right for customers.
- Find ways to be there for your customers, even though face-to-face isn’t available.
Insurance is a vital product for many individuals and businesses when it comes to financial security. While an emphasis on digital-forward offerings is absolutely on the rise, the traditional person-to-person comfort of a trusted advisor is one many are comfortable with and rely on. Agents and brokers should recognize and lean into the personal nature of this relationship while ensuring they have access to all the tools and technologies available to them to provide the maximum value to their customers.
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