Liz Marshall is Director of Product Marketing for the Insurance vertical at Vlocity. Prior to Vlocity she worked in various marketing roles for several large financial services and insurance companies, including MetLife, Prudential Financial, and American Express.
Vlocity Digitizes Traditional Insurance Channels
Having spent several years developing a digital direct-to-consumer life insurance sales channel at a large insurance carrier I have seen first-hand the growth potential of the direct channel for insurance transactions.
Not only are Millennials comfortable doing everything online today, but there are self-sufficient consumers of all ages and demographic segments who would prefer to do product research, get a quote, apply for and purchase an insurance policy on their own free time rather than schedule an appointment with an agent. Robo advisors and virtual agents are taking these online experiences to the next level.
However even as more direct-to-consumer experiences are emerging, the reality is that traditional agent, broker, and financial advisor channels are still generating a large share of insurance premiums. Over 80% of U.S. first-year individual life insurance premiums come from independent and captive producers; in the commercial insurance space around 70% of net premiums comes from agency writers. For some, it will always be easier to have an advisor handle the task of choosing the right policy for you. A McKinsey study found that 50% of affluent US consumers would prefer to buy life insurance through an advisor rather than online. Advisors can build insurance into an overall financial plan and provide personalized advice and peace of mind that may not come from self-service or a chatbot. And since some forms of insurance still fall into the “sold, not bought” category, carriers rely on these channels to remind consumers of the importance of getting coverage.
Traditional Channels are Challenged by Digital Basics
At Vlocity, we speak with a lot of carriers focused on improving technology in agent, broker, or other traditional distribution channels as part of an omnichannel strategy. It’s amazing to hear that many in these channels are still using spreadsheets, e-mail, and even fax machines to complete insurance transactions. Brokers and agents are often required to input the same data into numerous systems to complete the new business process and we’ve heard statistics like it takes several days to produce a quote - another surprise in a world where consumers expect information and service in real-time. Even if a producer is able to get a quick quote from a mobile app, it’s often not integrated into an end-to-end quote-to-issue process. Additionally, brokers and advisors may not be equipped to provide service to their clients, leaving clients to navigate the process for updating an address or adding a beneficiary to a policy on their own. Fragmented legacy systems are the common culprit for the reliance on these out-of-date processes.
Over 80% of U.S. first-year individual life insurance premiums come from independent and captive producers; in the commercial insurance space around 70% of net premiums comes from agency writers.
Vlocity not only provides the functionality to address these problems through digital portals and straight-through processing, but also provides a digital transformation plan, starting with a digital reality check, to help carriers identify where low-tech processes are holding them back the most. Answers to questions related to length of time for a broker to produce a quote and the ability to offer service in real-time are basic but important questions that can reveal a very achievable starting point for digital transformation. We helped a captive agent force move from paper-based processes in the office to the ability to conduct business in the field on tablets and mobile phones in just four months. For another carrier we streamlined and digitized a complex small commercial quoting process for their agents in three months, and we developed a broker portal with digital quoting capabilities for another carrier in a record five weeks.
As long as human advisors remain valuable for a large segment of insurance buyers than the experience in these channels needs to be as good as the direct experience - digital, fast, intelligent, real-time - in order to remain competitive on all fronts. And despite all the buzz around Lemonade-like consumer apps, a focus on these tried and true distribution channels is often an important first step in an insurer’s digital transformation and Vlocity can help carriers reach that milestone quickly.
For more information on the Vlocity digital insurance platform, visit vlocity.com/insurance.