Financial advice has never been more important than today, in times of unprecedented uncertainty, geopolitically as well as economically.
However, at the same time, financial advice urgently needs an overhaul to meet rising customer expectations and to stay in sync with all the innovation and transformation taking place at incumbents.
Most digital transformation efforts of insurance companies have been focused on their own primary processes.
In the last few years, we noticed increased interest to also include distribution partners, brokers and agents in scope. And for good reason may we add!

Time to transform distribution channels 

In times of uncertainty, people crave empathy, for institutions that show they care. Insurers must manage the human side much better. 
With thousands of brokers and agents, insurers are perfectly positioned to achieve this objective.
Obviously, this requires that these brokers and agents possess the right set of professional skills and technology, which will result in finer customer service at scale.

The pandemic also exposed the weaknesses and vulnerability of distribution models, namely, that they are not supported by digital means. Digital broker and agent models on the other hand, which are digitally supported, have proven themselves to be resilient and sustainable in those difficult times. 

For many incumbents, brokers and agents remain by far the most efficient distribution method for sales and retention. And if those largest channels also represent a significant share of the profit, it makes a lot of sense to invest in them seriously.

So, the bottom line is that including brokers and agents in the digital transformation is a key success factor for many insurers. 

Efficiency and effectiveness 

The opportunities are clear to see. By removing low-value activities, business processes become more efficient, while also allowing advisors to spend more time on the client relationship. Technology can also increase the effectiveness in sales or help insurers, brokers, or agents deliver seamless customer experience together; which is an important step forward, since the advisor-to-client experience has mostly been neglected by insurers – key parts of customer contact have been outsourced to their distribution partners,

Not that easy

Reimagining the distribution channels, and digital transformation of brokers and agents, is quite the challenge, for several reasons.
Just to pick one; there are so many differences between brokers; in age, size, profitability, the customers they serve, ambition, digital savviness, and much more!
Clearly, a ‘one digital size fits all’ strategy probably is not the solution. 
Instead, all the relevant differences should reflect in the digital transformation program. The key here is a segmentation model for agents and brokers geared to various levels or approaches of digital transformation.
Just like with incumbents, digital transformation is not about implementing new technologies but more so about questioning the innovation culture, the company DNA. 
In our experience, vision, ambition and digital savviness are leading criteria for such a segmentation model – with every segment having its own segment strategy, service levels, also with regard to digital empowerment, and consequently its own approach to digital transformation.
Please note that this is really a different segmentation than used for sales, which is still mostly focused on volume and growth.

Insurtech solutions 

The wider scope of digital transformation attracted a wave of insurtechs that offer solutions for various parts of the brokers and agents process, ranging from platforms for lead generation and client engagement to underwriting, policy administration, or back-office management. But also solutions for remote working, identity verification and data security.

Understanding distribution strategies is key

Whether these insurtechs are successful primarily depends on how insurers collaborate with them.
Collaboration is not one of the typical strengths that get associated with the insurance industry. 

But with regards to the digital transformation of distribution channels, such as brokers and agents, insurtechs need to put extra efforts in there too. Quite a few insurtechs seem so fond of their own solutions that they forget to invest significant time into really understanding the strategies that insurers have in mind for the various segments for digital transformation or the different sales strategies for that matter.
Keeping an open eye for both is the key to really accelerate reimagining the broker and agent channel.

Want to learn more?

Reimagining the broker and agent channel, and improving customer experience, is one of the themes at ITC DIA Europe and is currently top of the agenda in many boardrooms. So, expect speeches, fireside chats and panels around this challenge.

We are honoured that Moritz Finkelnburg is one of the thought leaders who will share his vision on how to cope with reimagining the broker and agent channels. Dr. Finkelnburg was former member of the executive board of BGV Insurance Group in Germany and is currently, Academic Director at the Goethe Business School in Frankfurt.

About Moritz Finkelnburg

Dr. Moritz Finkelnburg is a born ‘Berliner’ with degrees at the Universities of Berlin, Heidelberg and Barcelona. He spent more than 25 years in the insurance business, working in different management and board functions for companies such as AXA, Generali and Helvetia. Currently, Moritz is a board member at BGV Insurance Group, a midsize yet innovative carrier in Germany, and Academic Director Insurance at Goethe Business School in Frankfurt. He is specialized in P&C, Sales and Digital Transformation. 

Moritz also established a rare boutique-style format conference series at Goethe Campus focusing on international seed/pre series A insurtechs.