Creating the Future of Distribution

Having partnerships and an ecosystem becomes very strategic as insurers expand their reach and presence to where their customers will be.


Normally, July and August are fairly quiet in the insurance industry --- but was not the case this year! Bold moves are abounding, by both new and traditional insurers alike, setting a new pace in creating the future of insurance and distribution. 

In this new era of insurance, nearly every insurance process is rapidly becoming frictionless, including buying. If channels are easy to use with products that are easy to understand, then insurance has the opportunity to grow through a friction-free experience. The benefit is that we move from needing to constantly go out and “sell” people on insurance to introducing insurance that is ready to be “bought” seamlessly at the point of need.

This is a sustainable business model, where, instead of perpetually fighting for prospects and leads, we are perpetually making insurance easier and more appealing to buy. 

Multi-Channel Is the Mantra for the Future of Distribution

Changing customer expectations and behaviors are rapidly pushing insurers into a multi-channel world, whether they like it or not. This requires a rethinking of their strategy and how they partner with others to reach customers in new ways – creating a porous market, where engagement is everything and the relationships among partners, insurers, customers and channels is crucial. 

In our newest thought leadership based on primary research with buyers of auto and life insurance, the agent and broker channel is still a top choice for both the younger generation of millennials and Gen Z and the older generation of Boomers and Gen X, with 74% to 80% indicating they would still use this traditional channel. But that is where the commonality ends. 

Unsurprisingly, members of the younger generations are open to buying insurance from a wide array of options. For auto insurance, 66% of the younger generation is interested in it being part of the purchase of the vehicle as compared with 52% of the older generation. 64% of the younger generation versus 52% of the older generation would buy from the auto manufacturer’s website or app. 

For life insurance, 54% of the younger generation would buy insurance via a fitness app, as compared with only 38% of the older generation.

For both auto and life insurance, the younger generation is very open to buying insurance from Amazon; 56% of the younger generation would do so, as compared with 46% for auto and only 38% for life by the older generation. 

The interest and acceptance of a wider range of purchase options underscores why insurers must consider when, how and where they interact with the younger generation, and to be there with timely purchase prompts. This is where having partnerships and an ecosystem becomes very strategic in helping insurers expand their reach and presence to where their customers will be.

Leaders Making Bold Moves

A number of announcements by some leading insurers about new partnerships will accelerate improvements in the customer experience, expanding distribution reach and the ability to buy seamlessly at the point of need! 

John Hancock announced the integration of its Vitality Program with Amazon Halo, allowing Hancock’s Vitality customers to use the Amazon Halo Band to earn vitality points based on their daily efforts for a healthier lifestyle that should mean a longer life. The Amazon Halo Band, a wearable health and wellness device, will measure and analyze users’ activity, heart rate, sleep and tone of voice to provide individual health insights and help encourage healthier habits – thereby earning users Vitality points. 

State Farm announced a partnership with Ford for usage-based insurance (UBI) using the auto telematics and connected data from eligible connected Ford vehicles. Ford vehicle owners will be able to opt in to State Farm’s Drive Safe & Save program, which aligns premium to miles driven while also rewarding safe and good driving behavior with potential discounts.

Tesla announced plans to harness the data from its cars and drivers to build a “revolutionary” insurer that provides better insurance value and also to help adjust the design of cars to make them safer and less costly to repair. Tesla believes the accuracy of the data from the car and driver behavior is “at the heart of being competitive” with insurance that looks forward, not backward. Uniquely, Tesla wants to assess the vehicle damage data to create a continuous loop of adjusting the design of the cars to make them safer and less costly to repair, which will further drive down the insurance cost.

Amazon had two interesting moves. First, Amazon’s India business is now offering auto insurance through a deal with Acko General Insurance (Amazon is an investor in Acko) to cover car and motor-bike insurance in India, marking Amazon’s entrance into auto insurance. Second, Amazon Web Services (AWS) and Toyota's Mobility Service Platform (MSPF) announced a collaborative mobility insurance program. AWS leverages its cloud platform and consulting to access and analyze Toyota and Lexus vehicle data and driver behavior, another step forward in a program to offer insurance to Amazon customers. 

See also: Digital Distribution in Life Insurance

Expanding Partner Ecosystems Separating the Leaders from the Pack

With these and other examples, market boundaries are no longer clear. They are shifting and, in some cases, evaporating. The combination of technology and customer expectations is directly affecting insurance by altering the traditional ecosystem of agents and brokers – who, yes, are still relevant – to have insurance embedded or sold differently across a broader ecosystem including automotive, transportation businesses, big tech and more. 

By doing so, these partners are breaking down business and market boundaries to make the ecosystems operate fluidly, based on the customer needs and expectations for both the risk product and other value-added services. This, in turn, creates greater value for these insurers due to new revenue streams and access to a broader market through the multiplier effect. 

The Future of Distribution Is Multi-Channel

For decades, agents and brokers have been the channel of choice for P&C and L&A insurers. This decades-long choice and channel landscape, however, is rapidly shifting and changing, driven by a number of factors, but especially customers and partner ecosystems. Customer expectations are shifting to a multi-channel world, challenging insurers to provide channel options and choice, whether directly or through partners. Multi-channel distribution options enhance customer interactions on the customer’s terms … not the insurer’s.

What are the inhibitors to establishing a multi-channel strategy?

  • Current business models remain aligned with older generation buyers, not the younger generation. 
  • Many insurers remain focused only on the agent/broker channel and lack plans as a way forward to a multi-channel world in terms of strategy, technology and partnerships. 
  • Many insurers do not have next-generation distribution management capabilities – often still operating with home-grown solutions or multitudes of spreadsheets. These insurers lack depth of core distribution capabilities from on-boarding, licensing and appointments, compensation and incentive schemes, automation and data insights to effectively optimize a multi-channel distribution strategy, let alone to be competitive in attracting new partners.
  • The lack of digital, next-generation technologies inhibits the ability to easily build a partner ecosystem, embed insurance offerings and more.

The result is that insurers’ ability to expand and effectively support new channels is beginning to redefine new leaders in the industry. In our Strategic Priorities research from earlier this year we found Leaders – those focused on new channels, partner ecosystems and technology – are well out ahead of Followers and Laggards. Leaders are expanding channels at a staggering rate of 20% more than Followers and 60% more than Laggards – expanding market reach and the ability to acquire and retain customers and revenue.

Market success increasingly depends on multi-channel strategies, including how to support the traditional agent/broker channel and new strategic partnerships are crucial to insurer’s ability to maximize growth strategies today and in the future. Insurers must master the science and art of making relevant and timely digital connections with customers who are motivated by life events and make it easy and satisfying for them to purchase insurance.

A distribution strategy and ecosystem are foundational to bring together a range of distribution and digital capabilities, channels and partners that will exponentially expand reach, brand and customer engagement while meeting the customer expectations of a digital, multi-channel world. Watch our webinar, The Future of Distribution Management – A 3D View, to learn how P&C and L&A insurers are using a 3D strategy (digital, data, distribution) to manage this changing distribution landscape.

See also: Modernizing Distribution – Now

In this new era of insurance, market leaders are experimenting with new opportunities. They are establishing new strategic partnerships. They are offering innovative products. They are experimenting with offering insurance when and where customers want it. They are experimenting with direct distribution. They are still committed to agents and brokers, but they are evolving to a multi-channel world. 

Market boundaries are being redefined. The combination of technology and customer expectations is directly affecting insurance by altering the traditional ecosystem of agents and brokers, to have insurance embedded or sold differently across a broader ecosystem, including wellness, health, financial services and other entities. 

How does your business strategy align to what leaders are doing? What is your multi-channel strategy? Will your technology support your strategy? What specific plans can you take to improve your odds of success? 

Denise Garth

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Denise Garth

Denise Garth is senior vice president, strategic marketing, responsible for leading marketing, industry relations and innovation in support of Majesco's client-centric strategy.


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