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Distribution Debunked (PART 2)

In a previous article, we discussed how there has been a rapidly accelerated emphasis on insurance technology, data and distribution. But are we as an industry spinning our wheels? The answer is a big “yes.” Why? Because we haven’t asked the right questions and aren’t trying to solve the right problem.

Here’s how distribution breaks down:

A Painful Process

Our customers have many issues around running and growing their businesses. Insurance empowers customer to do just that — hire employees, comply with regulations, etc. — but the way we go about it is asking endless questions (multiple times over). We focus on what we think doesn’t work instead of what DOES work about their businesses. We are the Negative Nellies. We turn little things into big things, over-analyze them and then use them as reasons to charge higher rates. An evolved distribution would:

  • On the back end:
    • Draw on information in data bases and simply ask the customer to validate that nothing has changed.
    • Handle everything electronically ONCE. (And, no, email doesn’t qualify!)
    • Use publicly available information to fill in the blanks.
    • Leverage class and big data to price and only use underwriting to manage exceptions.
  • On the customer-facing side:
    • Stop sending apps we have to print out, fill in and fax back or, even worse, writable PDFs that don’t save (we have to fill it out over and over until we get it completed on one run through) and then come back and tell us we need to fill out yet another app for another market. It’s like Groundhog’s Day, and we don’t have time for it.
    • If we DO have to fill something out, let us know what information we will need ahead of time so we can have it ready. Right now, we have to stop and start as we have to go look for stuff — and, frankly, we just don’t have time for it.
    • Let us know what the cost is ahead of time. We know you don’t want us to shop our policies — we don’t want to either — so do us a favor and don’t make us. We don’t like being painted into a corner, and we’ll continue to look for a partner who respects that.

See also: 3 Skills Needed for Customer Insight

Pain About the Purchase

Have you ever bought a house and thought about the real estate agent collecting a fat check? Have you gotten a knot in your stomach because you know you paid to fund that? What about the finance guy at a car dealership? You sign on the dotted line because you need to, but you know he’s pulling down a check for that signature, and it bothers you.

Insurance buyers feel the same way. Even though we will tell you we are their “trusted advisers,” the reality is that customers more often than not (and no matter how much they like their agent) can’t answer the question, “What do I pay my agent for?” That’s a problem. Distribution should look at ways to be more transparent, to help customers clearly understand what they are paying for and what they can expect to receive and when. More importantly, customers should feel like we appreciate their purchase. Often, they ask us to bind, and the next thing they see is a bill (even before a binder). How about a “Welcome to our company,” “Thank you for your trust” or, even more importantly, “Tell us about your experience.”

Allow customers to benchmark costs and give them a level of comfort that what they are paying is in line with others — and, if not, why. It’s a simple question that deserves a simple answer. For us to have the vast data stores that we have and not be able to answer a simple benchmarking question is nothing short of unforgivable.

Just a Promise to Pay?

Customers want more than just a promise to pay, and distribution could provide meaningful value to the customer beyond the policy placement.

Does the customer have conditions that are raising their price or limiting their ability to get coverage? Educate them, provide tools, help them become a better business and, by extension, a better risk. In that way, we drive value to them instead of wasting valuable time.

Look for ways your products could help them sell more and gain a competitive advantage. Take risk out of growth and provide overall out-of-the-box solutions. Provide them with tangibles, even if it is as simple as a portal where they can manage what they have, manage their exposures and communicate with their account team.

See also: How to Redesign Customer Experience


It’s clear that customer experience is the key to success. By giving your customers some control over the process, you can remove the typical painful buying experience and make your customers feel good about their purchase.

Distribution Debunked (Part 1)

Over the past two years, there has been a rapidly accelerated emphasis on insurance technology, data and distribution. But are we as an industry spinning our wheels? I think the answer to that question is a big yes. Why? Because we haven’t asked the right questions and are not trying to solve for the right problem.

All of the major technology, big data and distribution initiatives out there have a few common origination points, namely, underwriting profitability and transactional efficiency. There is a ton of money and resource spent on this, then we charge distribution with leveraging them in existing channels and in line with current transactional norms. In other words, we are trying to apply technology solutions to distribution channels that are not motivated or prepared to accept them – we then scratch our heads and wonder why we are so far behind as an industry.

See also: Fast and Slow: the Changing Landscape  

Asking the right questions:

To fully leverage our capabilities and move our industry forward, we fundamentally need to start asking different questions – we need to go at the problem from the customers’ perspective and then drive the solutions backward. This means having the courage to understand that a distribution infrastructure that is unwilling to change will have to be shelved in favor of distribution outlets that embrace change. Without that realization, there can be no progress. The only technology advancements that can take hold are the ones that support the traditional avenues and solidify the position of the stagnated channels. Until we understand this, we will never improve. Don’t believe me? Let’s look at the landscape:

Why are we being commoditized?

Insurers battle the commoditization of their product – yet distribution insists that the primary customer decision point is price, even though study after study shows that customers will pay a higher price when there is value and convenience provided. Because of this, the traditional distribution channels insist on building comparative quoting infrastructures and “get a quote now” facilities that escalate the commoditization.

What does value mean?

We insist on defining value in our own terms instead of on the customers’ terms. We continue to hear from insurers that they will not be the lowest price but that they provide significantly better coverage. That’s all fine and dandy, but the reality is that other insurers can mimic your offering in less time than it takes for you to educate your distribution, and then get them to start selling the product. In other words, your competitive advantage is hijacked before it ever gets to market. We fail to recognize that DISTRIBUTION ADOPTION TAKES LONGER THAN CUSTOMER ADOPTION. That has been OK for a lot of years because everyone has been looking at things the same way, but what happens when your competitors wake up and finally “get it”?

See also: A Practical Tool to Connect to Customers  

What does the customer want?

Isn’t it fascinating that this is what is at the bottom of the list? Ok let’s dig in…

  • Customers want a process that is not PAINFUL.
  • Customers want to feel like they are buying the right thing from the right company and feel good about the transaction.
  • Customers want more than just a promise to pay.
  • Customers want to get their questions answered quickly and clearly.
  • Customers want to communicate in a way that works best for them.

It’s important to ask the right questions so you can solve for the right problem. In our next installment, we’ll look at each of these and how distribution breaks down.