Despite significant change in other product segments due to digital disruption, face-to-face channel of distribution channel continue to dominate the insurance industry, finds a recent report released titled ‘Assisted Distribution: Changing the face of insurance sales’ by PwC and CII.
In fact, face-to-face distributors like insurance agents, banks and insurance brokers account for 99% of the total life insurance sales. This holds true in non-life sector as well where most clients are corporates.
The report said, “In terms of premium, more than 99% of life insurance policies are sold through face-to-face distribution and for the remaining 1%, premiums are paid through web aggregators or online channels. In terms of number of policies, the share of face-to-face distribution reduces to 98.75%, and online and web aggregator channels contribute 1.25%. For the non-life insurance sector, the major contribution is from face-to-face channels such as agents and brokers.”
Of the total 99% life insurance policies sold by face-to-face distributors, individual agents have sold 66% of the life insurance policies. Banks and NDs followed agents with a market share of 26%. Share of online distributors, web aggregators and online channels put together was less than 1%.
In terms of non-life insurance sales, agents sold 30% of non-life policies. While banks and NDs accounted for 12% share, brokers had 22% contribution to the non-life business. Direct selling in non-life sector was 28% due to participation of large corporates.
The report further said that these figures establish the importance of face-to-face interactions with the customer in the insurance sector. “Today’s customer has access to several digital and technological platforms for purchasing products. This behaviour is becoming increasingly pronounced and it will have an impact on how customers and sellers interact in the future.”
The report attributed this to use of technology by face-to-face intermediaries. “A significant way in which insurers are transforming themselves to adapt to the digital world is by enabling distribution partners and changing the way the traditional face-to-face sales model works. The evolving insurance sales process now encompasses a customer-centric approach instead of a product-led approach. Such an approach requires extensive understanding of customers’ financial needs and their current financial situation, ease of use and the ability to analyse data in order to identify a solution that caters to the customer’s requirement.”
