How Insurers can Digitalise Broker and Agent Channels
Financial advice has never been more important and at the same time, needs urgent transformation to meet rising customer expectations and to secure sustainable operation. Having access to professional skills and technology to give a better customer service at scale is something every one of 15 million advisors across the world need, in order to give a better customer service at scale.
Generali’s former Chief Digital Officer Moshe Tamir and his team at Axell spoke to thought leaders across insurance, as well as to technology and industry experts. They combined their findings with their our own experience in their report ‘Human touch in a digital world for financial advice’. A must read for decision makers to digitally transform the financial advice industry. We spoke Moshe Tamir from Axell-Hub about this. Scroll down to read the interview.
When we read your report ‘Human touch in a digital world’ we were really excited. Especially today, in times of uncertainty, people crave for empathy, for institutions that care. Insurers need to manage the feelings side much better. With the thousands of co-workers, brokers and agents they are perfectly positioned to do exactly that. What made you do this research and write this report?
Moshe: “We embarked on this research report before covid-19 as we felt the central theme of bringing humanity to the client relationship has never been more important in our increasingly digital world. For many years I led digital transformation programs at large, multinational insurers, such as Generali and Migdal, experiencing first-hand the challenge of reimagining the distribution channels. Today, it’s a theme that resonates globally across Axell’s client network of incumbents. The pandemic has only amplified this need as the world has accelerated years of digital transformation into a few months.
The report is aimed at providing insurance and wealth management executives with strategic insights and actionable steps to improve advisor ways of working to ultimately deliver a better customer experience. We spoke to global leaders in insurance, wealth, FinTech, financial advice and industry bodies, as well as conducted hours of research to provide a comprehensive playbook for today’s leaders.”
When governments put a halt to face2face meetings, in many countries the sales of traditional insurers, brokers and agents collapsed. Covid revealed the weaknesses of traditional models. Many incumbents have always viewed their face2face channels as an important differentiator. During this crisis they did not even appear to be a qualifier. Even worse, it made them vulnerable. The digital models on the other hand, have proven to be resilient and successful in these difficult times. So, is covid the beginning of the end for brokers and agents?
Moshe: “Absolutely not. In fact, it’s more the other way around. We believe there has never been a more important moment for financial advice as the world grapples with the economic fallout from the pandemic. They perform an important social role, helping customers’ financial wellbeing.
We need to remember that traditional insurers have never needed the advisor more and they will invest in them now more than ever. They understand that in a digital world where they can’t compete with the new digital only plays in the digital space they have to differentiate, and financial advisers are differentiating.
However, we’ve observed through our research that many global finance markets were already experiencing a generational shift in financial advice. Bans on commission, regulatory scrutiny on conflicts of interest and unbundling of products were already threatening the sustainability of traditional financial advice models.
For incumbents, advisors remain one of the most efficient distribution channels to achieve scale and manage retention. However, advisors need support to reimagine how they serve clients. Creating efficiency by removing low-value business processes, allows advisors to focus on bringing their humanity to the client relationship. It’s this “last mile” of engaging with customers that requires investment.
Traditionally, incumbents have focused on optimizing the delivery of products and services to advisors but neglected the advisor to client experience. This has resulted in a fragmented and one-way system with missed opportunity in offline processes. By putting technology at the core, all stakeholders are connected to deliver a seamless experience with great opportunity to access data.”
Being digital is paramount. More and more insurance executives are realizing this. The current crisis is a wake-up call to many. They see the strategic importance and there is a clear sense of urgency. Simple digital products, online services and customer experiences, delivered at lower cost; becoming more connected and agile – they have become essential for continued growth. For many also essential for survival. It is no longer an option to press the snooze button once again.
What are in your view the key levers to accelerate digital transformation?
Moshe: “Incumbents have to move from an ego-system to an eco-system and partner in order to confirm their leadership position. Amazon was not created from a traditional retailer like Tesco. And just like Tesco, traditional incumbents cannot reinvite their businesses from the inside. By opening up to external partnerships, it allows them to prepare the business for the partnership with the eco-system. Ultimately, the traditional financial services industry needs to compete beyond product and price to meet rising customer demands of the experience. Incumbents must role model best practice digital in their own processes and systems.
On the advisor side, we see the future successful advisors will be built around relationships and trust – empowered by technology to bring together insurer, advisor and client in the eco-system.
We see transformation going beyond implementing new technology. It’s a whole-of-business approach where an innovation culture is embedded in the organisational DNA. The basis of innovation is accepting some of your ventures will fail, so to make sure that you have a few alternatives running in parallel. Start fast and fail fast is the mindset we help incumbents to adopt. Also, by fostering collaboration and bringing together the right internal teams, organisations can maximise the chances of success.”
Including brokers and agents in the digital transformation is a key success factor for many insurers. But obviously, there are so many differences between brokers; in age, in size, in the customers they serve, in ambition, in digital savviness, … ‘One digital size fits all’ is probably not the solution. How should these differences reflect in digital transformation programs?
Moshe: “Over the years I’ve lost count of how many times I’ve heard how financial advisors are old; financial advisors don’t understand new technology; financial advisors refuse to change. Yet, through the transformation projects I’ve led, it became clear that financial advisors are not a single, homogenous cohort. They are made up of unique individuals, just like customers.
Therefore, we developed a segmentation model that identifies four categories of advisors – Leaders, Learners, Traditionalists and Skeptics. The model distinguishes existing digital capabilities and willingness to learn. It allows us to work with our clients on providing focused, strategic support to each advisor segment. Because, when you take a “one size fits all” approach, you set your programs up to fail.”
“This ‘support’ can be more than just new technology. Incumbents can strategically invest in the education and training of advisor networks as they help the industry transition into new ways of work. As regulators put pressure on commission structures, it will be these strategic value-add services that deepen the incumbent relationship with advisors and ensures it remains and attractive profession to new entrants.”
We have noticed an increase in demand for insurtechs that offer solutions allowing for remote transactions; from video call solutions to applications to replace wet signatures. In your report you coined this ‘AdviceTech’. In your view, which parts of the brokers and agents process offer significant opportunities to benefit from new technologies?
Moshe: “The advisor desktop is already a crowded space. Whether it’s platforms for lead generation, client engagement, policy administration, product research or back-office management, advisors are engaging with digital tools, daily. Therefore, it’s important to consider this ecosystem to understand how new solutions will integrate to existing systems and ways of working.
We believe in starting with a clear strategic roadmap that prioritizes technology investment according to overarching business goals. New AdviceTech should align to these objectives, not be the objective. It’s a top-down approach that allows you to invest strategically.
Undoubtedly, the focus for most businesses worldwide is facilitating remote working. Cloud-based infrastructure and new digital communication channels for customers and employees have become urgent investments overnight. But there are a number of secondary considerations that have arisen as a result. Solutions for identity verification and data security will be the next wave of strategic priorities.
Finally, the FinTech market is an incredibly crowded space with new solutions coming to market every week. To navigate and assess these solutions for business fit requires deep understanding of the technology and financial services industries. At Axell, we’ve built our value proposition around bridging the gap between incumbents and FinTechs. We exclusively work with insurers and wealth managers, applying our innovation methodologies to design digital solutions to business challenges across the value chain. Our network of technology partners has real world application and have proven success in markets globally.”
Among the 2,500 tech companies in the DIA Insurtech Database around 80 percent are ‘enablers’. They focus on assisting stablished carriers, to improve or renew specific parts of the value chain or help them to create new ones. This ranges from offering platform solutions to allowing a specific part of customer interaction to take place remotely. Will a quicker adoption of new technologies lead to a bigger role for insurtechs that enable the acceleration of digital transformation and innovation – since the time frames to achieve this have been compressed?
Moshe: “Collaboration is not one of the typical strengths that gets associated with the financial services industry. Usually, money is not a problem in this industry. So why collaborate if you can buy it? Why partner if you can own it? Why share a part of the value chain with someone else? Connecting the legacy (tech and culture) of traditional players to a 21st-century digital company became a huge challenge. This is also where it becomes an opportunity. The future, successful, financial services companies will be the ones who partner with the right digital-native companies, at the right time to drive their digital transformation forward.”