The insurance industry will soon witness new distribution models due to changing customer preferences, regulations and technological advancements, said a report by PricewaterhouseCoopers and the Confederation of Indian Industry titled ‘Assisted distribution: Changing the face of insurance sales’.
These changes are going to impact distribution trends in the insurance business. While face-to-face distribution continues to remain the primary mode of buying insurance, this mode is currently facing challenges due to less attractive career option, low retention and productivity issues.
Joydeep K. Roy, Partner & Global Leader – Insurance Digital Assets, PwC said, “Despite insurers’ efforts to provide sellers with technology driven tools, face-to-face distribution has not changed much. This can be attributed to the inability of seller to adapt and engage with the tool effectively.”
He recommended increasing product offerings to distributors to grow business. “To tackle these challenges, any platform which is provided to seller should cover entire gamut of services ranging from selling process, product information, lead management, appointment planning, scheduler to behavioural analytics, predictive analytics and estate planning and start becoming relevant to the seller.”
Sanjiv Bajaj, Managing Director, Bajaj Finserv said, “Due to changing customer preferences, face-to-face distribution needs to undergo significant transformation and be a complete financial exercise. Further, it has to stay relevant and be compliant with the regulations to generate more interest and trust of the customers. This requires insurers to move from product centric approach to more customer oriented approach.”
According to the study, the future of insurance distribution in India will centre around three prominent models:
Self-directed distribution i.e. direct plan
The growth of a tech-savvy customer base is resulting in a focus on the ready availability of advice/transaction capabilities through multiple channels, especially the online channel. This distribution approach encourages independent decision-making and self-service.
Assisted distribution
Face-to-face distribution models will increasingly move towards tech-assisted models where technology will be significantly integrated with the provision of advice. This approach will ensure the empowerment of sellers.
Affinity-based distribution
Sustained low penetration levels in insurance will lead insurers to further review partnerships in order to provide services beyond the sale of insurance products (e.g. fitness-linked health insurance premium).
The study tells that insurers need to focus on an assisted distribution approach over the next 3–5 years in order to make an impact on existing customers and acquire new customers. Assisted distribution should not be confused with mere ‘mobile and tablet enablement’ of sellers. Insurers will have to work simultaneously on people, process and technology to make this approach effective.
