At one time, growing the insurance business was all about selling more policies, but it's become more complicated with multiple distribution channels, customer retention issues, and investment strategies.
In a podcast interview with Bob Hyle, editor-in-chief of Tech Decisions, Karen Pauli, research director for TowerGroup, explains it is no longer business as usual for carriers.
(To hear the full interview, click here.)
Pauli believes the distribution issue is an emotional one for many carriers. "We've had a number of carriers come and tell us they are wrestling with this issue," she says. "They have used independent agents since their inception."
Carriers also realize the value of the Internet is rising. This means finding a way to diversify distribution in order to engage with customers in a way the customers feel comfortable.
"Those carriers have a tall task because they are potentially going to alienate their legacy distribution channel," says Pauli.
There also are carriers who are happy with their agents/brokers and are committed to the 80/20 rule with their top agents. "Some top 15 carriers are saying they want to be easy to do business with and stay engaged with their top 20 percent [of producers]," says Pauli. "Those are the people carriers will focus on. They want to become the carrier of choice [for those agents]."
There also are carriers who do not wish to alienate their current agent/broker channel. The solution for those carriers? "The carriers that want to go in a broader, Web-based, direct-to-consumer channel must do a lot of internal work first," says Pauli. "Distribution is getting way dicier."
Insurers also are looking at the elements of customer retention, such as customer satisfaction points. Pauli explains carriers have been investing in portal technology.
"Those carriers understand they need to develop their back-end systems to make sure they are getting things like straight-through processing from the portal," she says. "I find it encouraging that people really are trying to understand how the consumer thinks and are stepping up to that. Actions speak louder than words."
