The COVID-19 epidemic is having a significant impact on how individuals interact with one another across industries and geographical boundaries. Physical separation and other quarantine procedures have shifted activities that used to need in-person participation to digital and distant channels. This shift will have an impact on insurance distribution both now and in the future, as physical separation measures persist. As we progress toward the “new normal,” society’s relationship with technology and remote contacts is constantly altering and accelerating.
Many insurance agency businesses have undoubtedly already made steps to handle COVID-19’s short-term or immediate effects, such as relocating workers or increasing online customer care channels. Insurers are now concentrating on the next set of difficulties, which includes rethinking distribution in a more remote environment. According to a study of German insurance agents performed in April 2020 (four weeks after the lockdown), more than half of the agents experienced a 40% decline in new business. 1 A poll of US agents conducted in May 2020 found a similar effect: over half of the agents regarded remote client relationship building as the most difficult problem during COVID-19. 2 Meanwhile, online insurance is becoming more popular.
Insurers will need to rethink their distribution model in three dimensions to solve these issues: consumers, sales force, and enablers (such as investment in data and digital tools). As a result, they will be more equipped to deal with the unexpected.
The evolution of distribution
Across regions and types of business, physical sales personnel and intermediaries are responsible for the majority of insurance distribution. While the proportion of business handled through these channels has shifted over the last decade as more clients migrate online, they continue to be the key channels for life, commercial, and personal lines property and casualty insurance.
However, persistent physical separation has a significant and immediate influence on insurance distribution. You can also search insurance agency near me.
The use of digital tools is becoming more prevalent. Agents who are used to in-person contacts are quickly recalibrating to give consistent support to clients who may be dealing with serious health or financial issues. Most of these agents rely on in-person interactions to create relationships with potential clients, so they’re rethinking how they do it. Approximately 90% of life insurance agents’ sales engagements and nearly 70% of their ongoing customer conversations were performed in person in our January 2020 US agent survey. 3 Only around 5% of agents had any in-person conversations, according to a follow-up poll conducted in May. According to a study of European insurance executives conducted in late April 2020, 89 percent of respondents foresee significant acceleration in digitization, with the majority also expecting a shift in channel mix. Customers, agents, and insurers are more comfortable with digital and remote-interaction models and tools as a result of the COVID-19 epidemic.
Self-service is becoming more popular. In today’s context, client desire for self-service has only increased the relevance of digital. According to a recent consumer survey in Spain, digital insurance access has increased by over 30% since the pandemic began. However, the same poll indicated that across all industries, insurance had the lowest degree of customer satisfaction with digital distribution. The most common source of frustration was “difficult-to-use equipment.” 4 To further promote customer and agent satisfaction, insurers will need to invest in expanding and strengthening self-service options.