Technology is quietly revolutionising insurance distribution
Swiss Re’s latest sigma study, Digital distribution in insurance: a quiet revolution, has found that technology is rapidly changing the way insurers and consumers interact.
Based on extensive global analysis, the study shows that the internet and mobile devices are empowering consumers. Today, people can search, review and purchase insurance policies without relying solely on the services of intermediaries.
At the same time, developments in big data are facilitating access to a rich source of information about customers’ wants, needs and behaviours, which insurers can use to enhance sales and marketing strategies. Digital transformation overall can help insurers become more consumer-centric.
"A quiet revolution is underway," explains Kurt Karl, Swiss Re's chief economist. In many countries the share of premiums accounted for by online sales is still small, but it is rising. "The statistics on e-commerce insurance mask the profound impact new technologies are having on the distribution process," Karl continues.
Surveys indicate that consumers increasingly research online and that the internet has become a trusted source of advice for insurance. Price comparison websites (PCWs) and social media are playing a growing role in the pre-sales process.
Ginger Turner, co-author of the study, notes that "with mobile and telematics technology, consumers can now interact with their insurance provider anytime and anywhere." Furthermore, relatively simple insurance products are being sold online more readily. This is most obvious in personal motor and property insurance, especially in developed markets.
The example of the UK motor market, where e-commerce sales have come to dominate in just a few years, shows how quickly consumer buying habits can change. Likewise, in emerging markets, innovative mobile platforms are rapidly expanding access to insurance.
Although many consumers will continue to value the personal interaction and expert advice of agents and brokers, the challenge for intermediaries and insurers is to adapt their business models to meet the varying needs and preferences of customers.
Not all insurance sectors are at the same stage of this digital transformation, and not all will proceed along the same adjustment path and at the same pace. But the direction is clear: eventually, customers will be able to arrange most of their insurance needs through remote digital channels, at the click of a button.
