How Technology and Economic Trends Could Change the Way Insurance is Bought and Sold
By David Greenfield, Managing Partner
For decades, the insurance industry has relied on a very similar model to sell its products. An individual representative, the insurance agent, became the face of the brand to the consumer for many insurance companies throughout history. It has become common for consumers to develop lasting relationships with an agent they can trust, whether as a direct representative of the insurance carrier or through banks that have formed partnerships to sell insurance products to the bank's clients. In these cases, if a consumer already trusts their bank, it gives them more reason to buy from a specific insurer. However, as technology becomes more innovative and prevalent, those in the industry see many of the traditional insurance sales methods going to the wayside, and many predict that insurers will be forced to think more outside the box to sell their products in today's technologically advancing world.
As anyone who studies current trends can attest, it has become a cliché to state that today's younger generations are more acclimated that ever before to technology as a central part of their lives. This has been stated and studied ad nauseam. But what does this trend mean for the insurance industry? As the reach of ecommerce broadens to allow consumers to purchase a greater variety of goods and services, more people are looking for the faster, most efficient method to acquire products that might usually require more time (and human interface) to purchase. In light of this, the relationships that drove insurance sales in the past may now be irrelevant for most consumers who can buy policies online for cheaper and less hassle. They want quotes and prices on their schedule and a policy tailored to their requirements—and here is where the insurance companies should sit up and take notice—many of their customers (or prospective customers) are willing to change carriers; not just for the best deal but also for the most user-friendly experience.
The market is changing. Consumers are in control and technology is driving this shift. To survive, insurance carriers will need to take several steps:
Change the Internal Structure
Insurance companies will need to choose leaders who are adept with technology; gone are the days of promoting your top salespeople solely as recognition for their achievements. In fact, agents as they are currently defined will either need to drastically evolve or become obsolete. They will no longer be the face of the brand; instead they will be the IT guys guiding consumers through the online purchasing process, answering questions when a user hits a stumbling block. In Hong Kong, more than 30,000 agents have already left the industry in the last decade. In China, becoming an insurance agent is no longer seen as a desirable job; people are now choosing higher paying career options. Whereas in the past, the agent relationship was the primary link to the carrier's brand, it seems that consumers are not pledging their loyalty to an agent anymore; at most, they align with a brand at large, and even more likely, they put their trust in the opinions of online communities and social media.
Focus on the Customer
The insurance companies' focus will need to shift to greater intimacy with the customer, and they will need to gain an understanding of their customers' habits, demographics and the buyer's journey —and they will need to know where to find that. Social media has begun to give businesses access to an outstanding amount of analytics, which is allowing for stronger, more specific customer profiling. Once an insurance company can identify their audience, they will need to strategically plan to reach that audience through new channels. Insurers will need to put themselves in front of their audiences where they are spending most of their time. For example, recently it has become commonplace for insurance companies to promote flashy marketing campaigns at events like rock concerts. Prudential Asia sponsored Rolling Stones' concerts throughout the Asia-Pacific region and AIA Group Ltd splashed their name all over Justin Bieber's last concert in South Korea.
Form Strategic Alliances
For many insurance companies who want to continue to reach a mass audience, these new trends will eventually point them towards partnerships with companies that are attracting the most traffic from their desired audience. In the future, you might see Google, Apple, Amazon or Facebook become some of the biggest providers of insurance products. They have the database and the technology and already have relationships with a large percentage of consumers in developed markets.
While this may seem inconceivable, consider the trends we're already seeing in the market. Holding companies like Pacific Century Group (PCG) are already investing in insurance and technology. PCG owns not only FWD Insurance but also PCCW, the largest telecommunications and IT provider in Hong Kong. PCG is using its knowledge from PCCW to fuel innovation with FWD who regularly uses mobile apps and online marketing to reach its target audience of 20-35 year olds. What is the next logical step for PCG to sell insurance products to their customers?
If proper regulation and taxes are put into place, many of the online companies that consumer interact with every day could have an open door to insurance sales. But one thing seems certain: If insurance companies want to remain competitive in this environment, the right internal structure, strategic partnerships and a primary focus on customer analytics are just some of the ingredients for success.
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David Greenfield is a Managing Partner at Allegis Partners. He is an Insurance sector specialist and has been instrumental in the design and delivery of some of the most successful senior management teams within Asia Pacific and Japan during the past decade. David Greenfield can be reached at +852 3628 4663 and at firstname.lastname@example.org.