Digital Distribution, the P&C Insurance CXO Imperative

January 12, 2017
By Kathleen Garlasco

January blog #2.jpgPreparing an organization for growth and ensuring returns on shareholders’ investments is a prime responsibility of the C-suite, but leaders in the P&C insurance industry are finding it an increasingly more difficult task as a wave of new technologically-enabled startups storm the scene. Offering the 21st-century engagement customers are seeking, they put added pressure on incumbent insurers as they struggle to squeeze even the smallest efficiencies from aged legacy systems. For CXOs, the answer to maintaining ground and growing their stake of established territory may lie with the digital-savvy new market entrants.

Reaching the 21st-Century Customer

According to J.D. Power, insurers leading in premium growth are those with strong digital capabilities, but C-level leaders of many incumbent carriers remain on the outside of the digital sphere, chained to ever-aging legacy systems, looking into a world of lightning fast distribution where customer acquisition numbers are rising. New startups are taking a place in the emerging environment, and may be seen as a threat to incumbent players, but according to a recent report by PwC, the insuretech movement can open the doors to opportunity for insurers.[i]

By joining forces with new entrants, particularly third-party digital distribution partners, existing carriers can rapidly propel their distribution capabilities into the 21st-century world of customer engagement, without the wait or cost of core systems upgrades or replacements. By partnering with the right provider, CXOs realize several critical benefits:

  • Power to the bottom line: According to J.D. Power, 74% of consumers shop for insurance online, indicating a strong preference for digital interactions. However, only 25% currently purchase through these channels, primarily due to the lack of online purchasing capabilities or the poor performance of agency websites. [ii] And yet, the leaders in premium growth are those with comprehensive digital capabilities.[iii]

It’s a strong statement on how important omni-channel engagement and digital capabilities are to attracting and retaining customers. By partnering with a third-party digital distribution platform provider, insurers gain auto-quoting, -underwriting, -binding and -issuance capabilities for multiple products through the customer’s channel of choice. Top-grade capabilities like these make it possible for customers to receive bundled pricing in a single transaction. Since it happens in a matter of minutes instead of hours or days and through the customer’s channel of choice, carrier’s increase acquisition and retention.

  • Improved efficiency: Offering a single console, leading digital distribution platforms automatically populate multiple back-end systems with customer data. In minutes, a bundled quote can be generated from a single application, freeing up agents’ time for more customer focused tasks.
  • Reduced costs: CXOs shave costs by partnering with the right digital distribution provider in many ways. A digital distribution platform prevents the need for hasty core systems overhauls, giving C-suite leaders the time to ensure that the right solutions are put into place, avoiding failed implementations or interfaces that customers refuse to work with. Leading digital distribution platforms also automate many administrative functions, reducing costs in lost efficiencies and overhead.
  • Improved Business Outcomes: The right digital distribution platform gives CXOs the power to improve business outcomes by enabling them to bundle their offerings to meet more of the customer’s needs. Acquisition rates soar as carriers sell 1.4 more products and gain 4 to 5 more referrals for every bundled solution sold, leading to increased customer retention of 12%. Even greater benefits have been realized in the bottom line with 14% growth in net premiums and 24% revenue improvement over five years.

Digital Distribution Improves Market Share

Given the digital advancements in other industries, consumers are growing frustrated with the lack of modern engagement opportunities with incumbent insurers and are openly embracing carriers with top-line digital capacity. A prime way for CXOs to achieve the organizational results necessary to ensure growth is to meet the engagement expectations of the 21st-century customer. By partnering with a leading digital distribution platform provider, carriers can offer omni-channel capabilities and bundle their products to meet more of the needs of their customers, gaining a 5% greater share of market in the process. To learn more about the advantages of partnering with a leading digital distribution platform provider, download our thought leadership piece,How Insuretech Will Revolutionize the P&C Insurance Industry: Partnering Into  the Future.

[i] Innovating to Grow: A New World of Opportunity for Insurers. Rep. PwC, 2016. Web.

[ii] "Digital Are the Channels of Choice for Today's Auto Insurance Shopper; Digital Leaders Setting the Pace for Premium Growth, Says J.D. Power Study." Digital Are the Channels of Choice for Today’s Auto Insurance Shopper. J.D. Power, 29 Apr. 2016. Web. 23 Dec. 2016.

[iii] Ibid.

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