Tag Archives: distribution

How AI Is Moving Distribution Forward

While artificial intelligence can improve almost all of the insurance value chain, most insurers are still not leveraging AI at its full capacity.

Adopting AI and implementing hyper-automated systems can help insurance distribution, in particular, become more efficient, accurate and secure — a benefit that both companies and the end consumer will see. From improving risk analysis and fraud detection to providing more sophisticated pricing and better customer insights for faster, more personalized customer advice and services, there are many ways in which AI helps move insurance distribution forward.

Improving operational efficiency

With today’s low interest rates, insurers can no longer depend on the financial earnings of their assets and need to find new margins in their operating models. They have more pressure to increase revenues while cutting overall operational costs. 

Deploying AI to everyday back-office processes can reduce the number of manual tasks insurers face, freeing them to spend more time on tasks that support their bottom line. Insurers are able to get more done in less time and often with improved accuracy.

Enhancing insurance distribution

According to McKinsey, 80% of value driven by advanced AI in insurance will come from marketing and sales alone (versus only 10% from better risk management and 3% from gains in operational efficiency). Today, insurers face several distribution challenges — moving from physical to remote and hybrid sales networks, learning how to strike the balance between technology and human sales, adjusting multi-channel and omnichannel sales, etc.

AI can enable a more fluid and personalized experience for customers from initial lead prioritization through needs analysis and advice, to automated underwriting. Additionally, integrated computer vision technology automates the underwriting process while detecting fraudulent documents, which drastically reduces the policy underwriting time for the policyholder and the operation costs for the carrier — a benefit for both parties.

See also: Stop Being Scared of Artificial Intelligence

Providing a better customer experience

By creating consumer-specific predictive models, AI helps policy providers enrich their recommendations to both potential and current policyholders, resulting in better synchronization between needs and offers, and superior service across the entire sales chain. 

For example, speech recognition combined with natural language understanding can interpret essential information from customer inquiries in real time. The AI can then provide contextualized and transparent recommendations for both advisers and agents. The result? Advisers and agents can act faster and more accurately, increasing the number of cross-sell opportunities and the win ratio of quotes.

A look ahead

AI will play into several trends that the industry will start to see unfold in the next five years.

Insurance products and service offerings will become more and more complex

As consumers’ needs continue to develop, so will the products and services required to address them. Five years from now, insurers will offer more complex services and, in turn, will need to be able to better explain these offerings to policyholders. This is where AI technology will be vital. AI will help guide advisers, agents or self-care portals in recommending the most relevant products for each individual. We will also see more embedded insurance offerings, with AI helping to pick and pair the consumer’s best options.

Insurance companies will feel the threat of Big Tech

In five years, the insurance business will be even more intermediated through digital platforms and marketplaces. The list of examples is already growing — Airbnb offers renter insurance, Amazon is offering delivery guarantees, Booking.com proposes travelers’ insurance. 

As insurers continue to compete with Big Tech, they need to match the competition’s standards by offering immediate, simple and adaptive policies with AI. Without full process automation on key distribution activities, traditional insurers will struggle to exist in this tech-focused ecosystem and will be challenged by full-digital players.

The industries where the competition is stronger and the insurers are more primed for innovation include personal lines of insurance such as auto, property and casualty and health insurance. In the future, we will need to see these industries take off with artificial intelligence to stay in the game.

See also: Pressure to Innovate Shifts Priorities

At Zelros, we believe that AI-enabled solutions will empower insurance players to keep up with the rising expectations of their customers. AI will give them the acceleration needed to have the real-time experience that everyone now expects when engaging with a brand.

Does Pandemic Signal the End of Agents?

With each new wave of technology over the past few decades, there have been many predictions that this is the end of agent distribution. You know the drill: “Technology can be so much more efficient and remove all that expense related to those human distributors.” I can remember back to the dawn of the internet, when there was all the discussion about disintermediation. I heard that term in all kinds of insurers’ strategy discussions. I never believed agents and brokers were going to be displaced then, and they certainly have not been displaced. In fact, as digital technologies have advanced in the intervening decades, agents and brokers are still dominant. 

Now, we are in a pandemic. It has been world-changing. And it has accelerated the digital transformation of businesses, society and our industry. The inability to meet in person and the rapid shift to everything online has put pressure on the agent distribution model. So: Has the pandemic finally put the nail in the coffin of agent distribution (for all those folks out there who don’t like agents or don’t think they add value)?

The answer is a resounding “no.” I think this idea is a myth. For complex lines of insurance, mid- to large commercial line specialty insurance, high-net-worth on the personal side and other segments, agents will be necessary. There will always be a need for expert advice on risk management. And there will always be a need for intermediaries who deeply understand customer needs and can create that right combination of coverages linked to the right underwriters. These areas will benefit more and more from technology over time. But the agents and brokers are likely to be around for a very, very long time. 

It could be a bit different for simpler lines like personal auto, homeowners, pet, travel, etc. and some of the new, on-demand or gig economy types of insurance. There are strong arguments that those lines will migrate more rapidly to direct digital distribution. But even then it’s not going to happen overnight. There will be a slow evolution. My prediction is that there will still be agents selling all of those lines in 2030.  

See also: 4 Predictions for Independent Agents

Are there people out there who think you should be able to just press a button and get your insurance, so why have human intermediaries? Yes, but they are oversimplifying, and I believe it’s a myth to assume that agents are superfluous. 

In that vein, this is your call to action: Strengthen the relationships you have with various distribution partners and with the technology companies that support you in the distribution space. Agent-carrier connectivity solutions, portals and self-service capabilities all enhance that connectivity. You must form strong bonds and leverage those technologies as much as possible to improve relationships and to provide more value. And, finally, we live in an omnichannel world with many different options. Customer journeys often involve the use of multiple channels, so agents need to be incorporated into the overall omni-channel strategy.  

4 Connectivity Trends to Watch in 2021

A primary goal of insurtech is to simplify and automate the insurance lifecycle — reducing time-consuming manual tasks, improving the agent experience and addressing potential client risks. One of the best ways is to increase the free flow of information at all points in the distribution channel.

2020 was the catalyst for huge advances in connectivity, largely due to the shift to work-from-home. In 2021, four particular areas will experience accelerated growth:

Real automation of commercial submissions will arrive.

The process of quoting and binding commercial lines has a lot of catching up to do in terms of workflow efficiencies compared with personal lines. Commercial insurance continues to suffer from outdated manual data entry procedures and an abundance of unnecessary paperwork. One-to-one quoting with individual carriers is a labor-intensive process, and high-volume, low-revenue risks typically require the same amount of time and effort as larger, more profitable opportunities. 

But there’s good news on the horizon in 2021. This year, the industry can expect general availability of robust, comprehensive insurtech platforms that truly automate commercial submissions. These platforms speed up the process for both agents and clients by pulling end-insured information directly from the AMS and filling as much as 80% of most submission forms without a single click. In turn, these solutions deliver structured, more error-free data to the carrier for accurate, bindable quoting.

Commercial submission automation also allows agents to generate quotes from multiple carriers in near-real time. Consumers have long appreciated quote comparisons as a way to make more informed decisions. By bringing that capability to the commercial side, customers and agents can collaborate on coverage options and reach purchase decisions far more quickly.

Carriers will facilitate better data exchanges.

Look for carriers to expand their data sharing initiatives in 2021. With a more seamless connection among carrier, agency and insured, service will become more immediate, more personal and more competitive.

As connections go deeper into core business platforms, actionable insights grow. For example, if an end-insured makes a change in a policy (like adding a vehicle or a driver), an alert from the carrier could immediately be pushed to the AMS. This alert would not only offer the agent the opportunity to touch base with the customer, but it also eliminates the need for agents to reach out frequently to the carrier for updates.

Integration of third-party data will accelerate, as well, though the industry is in the early stages in the commercial space. The aim is for third-party data to facilitate collaboration across multiple activities such as identifying class codes and linking those to risk, streamlining the underwriting process and optimizing submission flows. The goal is to improve quoting speed and accuracy for commercial lines through third-party data integrations and, eventually, a single application programming interface (API), similar to what is already in place for personal lines.

See also: How COVID Alters Consumer Demands

Single sign-on will make carrier credentialing easier.

For independent agencies, usernames and passwords for carrier websites can be a major concern. The problem is evident when the number of employees is multiplied by the number of carriers; every username and password must be tracked and accounted for. 

When an employee leaves, credentials must be removed or changed — a time-consuming process that can also pose security risks if credentials are overlooked. Onboarding new employees requires provisioning dozens of credentials — also a time-consuming task. Over a year’s time, hundreds of hours can be wasted agency-wide simply due to carrier sign-ons.

Single sign-on (SSO) technology is beginning to solve the problem. SSO creates a single, secure agent identity that is acceptable to all carriers. Some AMS and rating systems already offer SSO, but, where the solution isn’t available in an existing platform, users can look to the non-profit organization ID Federation for an alternative. Expect to see SSO gain wider adoption in 2021 as it produces fewer username/password resets, reduces hassle for agents and increases operational efficiencies. 

We’ll see an improvement in straight-through processing.

Lastly, this year we expect the independent agency channel for both personal lines and commercial lines to see more functionality on straight-through processing with carrier partners. 

In other words, while we’ve been involved over the years with Rate Call 1 and Rate Call 2 (rating and quoting), some carriers are beginning to provide more functionality in their APIs to allow direct binding in the agency’s quoting applications. The benefit to the agency is a single workflow for rate-quote-bind. Carriers benefit from being seen as easy to do business with while providing a major competitive differentiator in the channel. This capability won’t be pervasive through the industry, but there appears to be more acceptance of the process from the carrier side than in the past. As a result, we hope we’ll see more carriers start to think about how they’re approaching this as a potential competitive advantage in the channel as well as the captive and direct markets.

The result: a better-connected insurance distribution channel.

SSO, automated commercial submissions, carrier data-sharing and better straight-through processing will be the most visible connectivity developments in 2021, but not the only ones. In a business defined by personal relationships, connecting well on a virtual basis will be more than a change — it will be a requirement for long-term success. And in a world where connectivity is constantly widening and deepening across industries, insurance workflows, both commercial and personal, have a major opportunity to benefit from modernization and in turn help carriers and agencies increase profitability and better serve their clients.

How Machine Learning Transforms Insurance

We like our insurance carriers to be risk-averse. So it should come as no surprise they are often last to innovate. Insurers need to feel very comfortable with their risk predictions before making a change. Well, machine learning is writing a new chapter in the old insurance book. There are three key reasons why this is happening now:

  1. New insurtech players are grabbing market share and setting new standards. Traditional carriers have no choice but to follow suit.
  2. Customers are expecting Netflix/Spotify-like personalization, and have no problem changing providers — this trend is expected to grow as we see more millennials maturing out of their parents’ policies.
  3. Getting started with machine learning is becoming VERY easy because of open source frameworks, accelerated hardware, pre-trained models available via APIs, validated algorithms and an explosion of online training.

As with any innovation, it only takes two things for widespread adoption:

  1. Potential to improve business goals.
  2. Ease of establishing pilots.

With time, we see that successful pilots become products. Teams are hired/trained, resources are allocated, business goals gain more “appetite” and models are tweaked.

For P&C carriers. we see the opportunity for improving business goals and easily pilot machine learning in the following areas:

Risk Modeling

Given the complex and behavioral nature of risk factors, machine learning is ideal for predicting risk. The challenge lies in regulatory oversight and the fact that most historic data is still unstructured. This is why we often see machine learning applied to new products such as those using data from IoT sensors in cars (telematics) and home (connected home). But innovative carriers are not limited. They use pre-trained machine learning models to structure their piles of unstructured data: APIs to transcribe coupled with natural language understanding (NLU) extract features from recorded call center calls, handwriting and NLP/NLU tools for written records, leading toward identifying new risk factors using unsupervised learning models.

See also: 4 Ways Machine Learning Can Help  


Carriers can get an actuarial lift even without designing and filing new actuarial models. Using machine learning to better predict risk factors in existing (filed) models. For example, a carrier may have already filed a mileage-based rate-plan for auto insurance but rely on user-reported or less accurate estimates to determine mileage. Machine learning can help predict mileage driven, in a less biased and more accurate way. Similarly, APIs to pre-trained chatbots using lifelike speech and translators can turn website underwriting forms into more engaging and personalized chats that have a good chance to reduce soft fraud.

Claims Handling

Claims handling is a time-intensive task often involving manual labor by claims adjusters onsite. Innovative carriers already have policy holders take pictures and videos of their damaged assets (home, car…) and compare with baseline or similar assets. Carriers could easily leverage existing APIs for image processing, coupled with bot APIs to build a high-precision model, even at the expense of low recall. Compared with having 100% of the book handled manually, a triage bot that automates even a mere 20% of the claims (with high precision) can enable carriers to start with a low-risk service that’s on par with new insurtech players and improve ratios over time. Such a tool can even be leveraged by adjusters, reducing their time and cost.


While personalized pricing may be regulator-challenged, personalizing the insurance product offering is expected in this Netflix/Spotify age. As basic coverage is commoditizing, carriers differentiate their products based on riders and value-added services, not to mention full product offerings based on life events. Carriers can (with consent, of course) leverage social media data to tailor and personalize the offering. Similarly, marketing departments can use readily available recommendation algorithms to match and promote content about the benefits of certain riders/value-adds to relevant customers at the relevant time.


The world of insurance distribution is growing in complexity. Carriers are struggling with the growing power of intermediaries, and agents are having hard time optimizing their efforts due to lack of predictability of loss commissions. Point-of-sale and affiliation programs are growing, and with them the need for new distribution incentive models. Both traditional and new distribution channels could benefit from machine learning. Brokers, point-of-sale partners and carriers can leverage readily available machine learning models and algorithms designed for retail, to forecast channel premiums. Carriers can grow direct channels without growing headcount, using pre-trained chatbots, NLU and lifelike speech APIs.

See also: Machine Learning: A New Force  

Machine learning is part of our everyday lives. Innovative insurers are now jumping on the ML wagon with an ever-growing ease; which carriers will be left behind?

Modernizing Distribution – Now

“Fast and now” is what best describes the current insurance market. The internet has single-handedly changed how customers, distributors and even home office employees expect instant gratification in day-to-day insurance transactions. Couple that with increasing market pressures to maximize profit and lower cost, commoditization of products and the ever-increasing speed of business, it is only natural that distribution has emerged as a leading topic among executives at all carriers. Now is the time to modernize distribution.

First, let us begin with understanding the structural drivers that have disrupted or can very quickly disrupt current distribution models:

Customer Needs

Changing customer demographics, expectations and needs have left insurers in a discombobulated state, with unclear strategies to optimize distribution channels, product mix and areas of investments. On one hand, customers today seek holistic financial and health wellbeing advice through a multitude of channels based on demographic and affluence levels. On the other, insurers are constraining distributors with standardized product offerings that make it hard for them to appease customer needs for flexibility and personalization. Customer journeys now start online for almost every purchase–including financial products–and, unlike in other industries, most end with an in-person interaction based on product complexity. This presents an opportunity to improve customer experience, intimacy, and fulfill the customer need using the distribution channel. However, slower product release cycles compound this problem and often leave distributors in a jarred state between cross-selling, up-selling or unfavorably switching carriers. Key events in a customer’s lifecycle–while slower in the P&C space–are much more frequent in the Life and Investments space, and customers are asking for short-term rewards against long term benefits. Carriers betting on closing technology gaps to increase customer intimacy are not moving fast enough, leaving the distributor with an “after-the-fact” and reactive (versus proactive and predictive) interaction. All these drivers continue to impact customer satisfaction and perceived experience, and widen the gap between the customers and distributors, overall slowing industry growth and profit realization.

Distributor Dilemma

A shrinking agent force is perhaps one of the biggest causes of concern for carriers who are heavily intermediated. Lack of succession planning, an older generation of producers coming close to retirement, reduced interest from newer generations to work as distributors, and changing customer behaviors have led to the consolidation of smaller distributors by bigger brokers and wholesalers. This has inadvertently reduced shelf space for carriers and increased pressure on competitive differentiation for product and price. The once-preferred captive channel is becoming cost-prohibitive to maintain as there is a stronger pull to invest in cross-distribution capabilities such as digital and direct. Technology constraints prevent carriers from expediting underwriting or even offering flexibility in product mix or incentive plan design: all necessary drivers to close the sale.

See also: How to Use AI, Starting With Distribution

On top of these impediments, the regulatory landscape is changing. While the recent fiduciary ruling from the DoL benefits customers with increased transparency, it increases pressure on fees, which impacts compensation plans and the need to introduce “advisement fees”. This also impacts the traditional advisory model and distributors must quickly adapt sales processes and carrier relationships to increase or maintain customer engagement as distribution moves from “best-suited” to “best-interest”.

To combat these drivers, carriers have invested in shared service models and centers to allow producers to focus on tasks of higher value, implemented wrappers on legacy systems to provide agility in commissions processing and invested in process automation to increase operational efficiency. However, these disparate efforts do little, even as a whole, to increase the overall value for distributors or help solve for the holy grail of differentiated experience. Despite these factors, there is immense opportunity to improve distribution capabilities and, with the implementation of a new distribution management system, streamlining downstream systems and processes is not as daunting a task as it may otherwise seem.

The Transformation Journey

The pace of change in distribution prompts carriers to look at solving for issues and opportunities with technology, tooling, and platforms. However, it goes beyond just finding the right distribution platform that solves the table stakes business need of managing distributors effectively, processing compensation accurately, and providing a digital portal to improve the producer experience.

There are four phases to this transformative journey, and it begins with defining the distribution and compensation management strategy to discover and understand the biggest roadblocks across people, process and technology.

With the vision defined, it is time for a (b) mobilization or inception phase where business leads select a vendor platform, define the product features for their future state, all of which is supported by (c) the design of an operating model that can scale and flex to meet growing needs of the business with services and processes to deliver that elusive differentiated producer experience. Finally, the vision and future state is realized by (d) implementing the platform and the supporting operating model.

While each carrier’s current and future state needs are unique, there are common opportunities (that often turn into roadblocks if not adequately planned for prior to implementation) to truly think outside of the box and deliver a transformed–not merely updated–distribution experience:

Recruitment, Contracting and Onboarding: The producer’s first touchpoint with a carrier provides an opportunity to make a great first impression. The onboarding process itself must be streamlined and shortened with the highest degree of automation and self-service that lets producers drive the process on their own. There are also opportunities for carriers to provide “white-glove” services to larger distributors for mass-onboarding, or assisted onboarding for new first-time producers. Modern distribution platforms provide a digital, automated experience that can be configured to meet the carrier’s needs for a great first impression and, with a clear channel strategy, can greatly contribute to positive and sticky producer experiences.

Producer Management: This area tests a carrier’s operational efficiency in managing high frequency events–ongoing hierarchy management, broker of record changes, licensing and appointment requests, to name a few–where any delay prevents producers from placing business or worse, increases a carrier’s risk of non-compliance. A clear definition of services associated with licensing and appointments as part of the operating model strategy, combined with the flexibility of modern rules-based appointment processing, alleviates significant bottlenecks and always keeps producers compliant and ready to sell with just-in-time appointing, automated backdating of appointments based on policy effectivity, or even self-delegated hierarchy management for larger distributors.

Compensation Management: Perhaps the biggest area driving producer experience, trust, and satisfaction is compensation management. Producers work hard to earn the business and expect flexibility in plan design, accurate and timely commissions payouts, and incentives. Unfortunately, this area also drives the greatest amount of operational inefficiencies and producer requests or complaints due to legacy systems and processes. Modern platforms provide business-user friendly rules engines that allow for easy design of compensation plans on-the-fly, incentive options such as event or role-based advancing, bonuses, variable-interest loans, campaign management, vesting rules management, retroactive adjustments, splits between producers and producer debt management across channels, companies or even hierarchies. As part the transformation journey, compensation is where carriers must carefully assess, design, and deliver features to ensure minimal disruption to producers for business-as-usual activities while extracting the maximum business value from the transformation.

See also: The Future of P&C Distribution  

As insurance carriers migrate from legacy platforms to flexible, modern distribution management and compensation solutions, the art of the possible becomes infinite. No longer will rigid, crippling legacy systems and manual workarounds hinder a carrier’s ability to flexibly design new compensation plans, roll out new products, perform advanced analytical exercises on consolidated data, or digitize the field’s experience. What previously required heroic IT efforts will become business-as-usual, thus upping the ante for carriers who are beginning to consider implementing a modern distribution management and compensation solution.

In sum, distribution and compensation have quickly moved from traditional back-office functions to prioritized elements of the value chain, primarily due to the impact producer experience can have on a carrier’s production. Such organic conditions provide the perfect ecosystem to undertake the distribution and compensation transformation journey with the aim of increasing distributor production, capturing savings from operational efficiency gains, and establishing an operating model that scales with business growth. Changing the perception that distribution and compensation functions are no longer menial back office functions, but instead, the carrier’s greatest opportunity to attract and retain distributors–and thus, customers–will help business leaders prioritize this initiative at an enterprise level. After all, it starts with carriers empowering their producers so customers can get products or services “Fast and Now.”