Have you heard about the CARE model of insurance Distribution?
There are multiple forces that are an impetus for change in insurance distribution. Agents and brokers aren’t reaching out to customers like they used to do — cold calls and direct mail don’t have the impact they once garnered. Today, customers can search and sign up for policies on the internet in a matter of minutes. Insurance intermediaries have upped their distribution management and they expect to get the right support from insurance carriers. It translates into an investment in digital tools, aggregating more data sources, and even incorporating behavioral economics.
This leads us to the fourth technology trend that the insurance sector is integrating into its business strategy — CARE-based insurance distribution. A report by PwC last year has identified 3 forces that are shaping this new path — the resilience of intermediaries, new expectations from both commercial and individual buyers, and the difficulty in building scale in direct channels.
As a side note, there are 5 technology trends reshaping insurance in 2022 and beyond.
- Intelligent automation in core functions
- Collaboration with ecosystem players
- CARE-based digital tools for improved CX
- The growth of usage-based insurance models
- Chatbots that will take over 95% of customer conversations
The CARE Model as a response to the digital era
Covid-19 might have moved most businesses to a digital-only environment for many months but it only accelerated a phenomenon that was already in motion. The new trends in insurance distribution began to focus on channels that had the potential for greater value creation. This became the new CARE-based distribution model for insurance companies in the US.
The term CARE is derived from 3 values that are dominating the digital age:
Convenience — Make it easy for potential customers to buy our insurance products by enabling them to interact via any channel that is easiest for them.
Advice — Make it intelligent by predicting your customers’ needs. Suggest relevant solutions through AI-enabled services. Give your customers easy access to all the information they need so that they can make confident product decisions.
REach — Instead of customers searching for us, reach them at a point where they most need our products. Enable both interactions and transactions from any device.
The CARE model requires a relentless focus on the digitalization of distribution channels. Customers are demanding CARE experiences, particularly because they are already accustomed to receiving it in other transactions such as banking services.
How the CARE concept is changing insurance distribution
“ Ok, Google Goodnight “ the command can set off a daily schedule of tasks when you go to bed. It can turn off Google-enabled lights, your security system will be turned on, your phone will ask you what time you want to set your alarm, and even play soothing music to which you can drift off to sleep. You don’t need to walk through your home turning off stuff. It’s convenient, easy and accessible. A similar seamless interaction is how the CARE model is disrupting insurance distribution. There are 3 mighty forces (as mentioned earlier) that are driving this change
Force 1: The changing tides in relationships with intermediaries
Capgemini and Efma’s 2021 Global Insurance Report throws more light on the expectations of agents, brokers and even policyholders. A majority of insurance customers still prefer the human touch and experience of professional brokers. This is overwhelmingly true for millennials who are new to buying insurance. For instance, 28% of survey participants said they need extensive professional advice when looking for auto insurance.
70% of insurance executives who participated in the Global Insurance Survey said they interact with customers through direct channels. 68% are investing in enhancements in channel capacity.
It is a wake-up call for insurers and their insurance partners. Agents and brokers realize the need to power up their digital engagement capabilities. While policyholders need their advice and expertise, they still require engagement tools for this conversation. Tools such as digital illustrations and single-screen product comparisons can increase success in sales conclusions. Agents are looking for more support from their insurers to develop these capabilities. Yet less than two-thirds of insurers say that they provide their agents and brokers with such enhanced customer experience tools.
More on the remaining 2 forces in the original publication:
Originally published at https://www.simplesolve.com on August 18, 2022.
