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November 27, 2018

Digital Distribution in Life Insurance

Summary:

The opportunity to catch up to or even lead the industry remains open to all. Untapped digital possibilities in insurance abound.

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It’s not news that today’s consumer has high expectations when it comes to the buying experience and customer support – and this certainly includes the purchase of insurance. As the industry landscape grows more competitive and new players enter the field, insurers need to set themselves apart now more than ever.

A better experience for the customer throughout the process can help insurers grow business volume and lead to increased customer satisfaction and loyalty. While digital innovation within insurance distribution offers the opportunity for insurers to meet the rising bar of customer expectations, as an industry insurance is late to the game when it comes to digital marketing.

To gain an understanding of the level of education and capabilities in digital marketing within the insurance space, RGAX fielded a survey among small-to-medium-sized U.S. insurers. A summary report, “Digital Distribution: 2018 Pulse of the Industry,” features key findings that provide a snapshot of both the current digital marketing environment and future investments planned among insurers.

See also: Digital Innovation in Life Insurance  

How far have we progressed?

If you’re facing challenges when it comes to implementing a digital marketing program, you are not alone:

  • 43% of respondents stated that their level of education on digital marketing capabilities was “some/little”; 11% reported having no education.
  • 64% of survey respondents reported that they have “some/little” overall capabilities for digital marketing; 11% said capabilities were “non-existent.”

What’s standing in the way?

According to respondents, top challenges to incorporate digital marketing to improve customer experience include: lack of resources, lack of expertise, organizational challenges and lack of strategy.

  • 29% of respondents think it is too expensive to introduce or expand digital marketing efforts.

Where do we go from here?

The majority of respondents are currently testing direct-to-consumer digital strategies to determine the best path forward:

  • 64% reported they are currently testing digital advertising.
  • 50% are testing an online e-application journey.
  • 43% plan to begin testing digital lead generation soon (one to two years), but 32% have no such plans.

How do we get to where we want to be?

Lacking sufficient expertise or resources to build a digital marketing program alone, insurers are looking outside to bridge the gap:

  • 21% of respondents have partnerships in place with startups or external vendors to enable digital selling strategies, and an additional 43% are planning to do so.
  • 52% of companies reported partnering or using vendors to advise them on their digital marketing strategy (partners or vendors include advertising agencies, marketing firms, consultants, reinsurers, lead generation partners and tech vendors).
  • Survey results indicate that using data to enhance insurance sales strategies is an area for growth. Currently, up-selling and cross-selling was the most-used application of customer data, with 39% reporting use of this strategy; customer segmentation overall and by product was next at 36% utilization.

Find a need and fill it

No matter where your company fits within these survey results, the opportunity to catch up to or even lead the industry remains open to all. Untapped digital possibilities in insurance abound, creating space for innovators to grow.

See also: In Age of Disruption, What Is Insurance?  

Strategies to leverage data represent a clear area for improvement, with less than half of respondents using customer data for up-selling and cross-selling, models for accelerated underwriting or customer segmentation. Another area in need of development is administration capabilities, including policy e-delivery, do-it-yourself service processing and online policy transactions completed by a policyholder. And although some insurers have already adopted or are planning to adopt life and legacy planning, identity protection or wellness programs, such engagement and loyalty programs represent yet another growth opportunity.

A streamlined, tailored experience based on a true understanding of the customer journey is no longer a nice-to-have – it is a must. With help from companies like RGAX to provide guidance and support around digital marketing, insurers can define and implement their own digital marketing strategies to better reach their target customers.

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About the Author

Donna Jermer is vice president, distribution lead for RGAX. She is setting and building the strategic foundation for development and execution of RGAX’s innovative distribution initiatives.

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