In a survey of approximately 20 insurance
carriers, distributors, and reinsurers conducted by EY, respondents were clear-eyed about
the shifts away from traditional distribution
models, as well as rising consumer empowerment and the breakdown of the information
advantage insurers have traditionally enjoyed.
Historically, the industry has operated with a
high degree of opacity, due to the “
low-engage-ment” nature of the life insurance business,
where products are “purchased and then put in
a drawer,” as one survey respondent put it.
Overall product complexity means consumers lack visibility into the costs and inner
workings of complicated insurance products.
In this context, the traditional distribution
model made sense, with predominantly face-to-face distribution with commission-based
agent compensation and a general focus on
But today, the playing field has changed.
Customers have unprecedented access to product and pricing
information, thanks to the Internet. Their preferred shopping
methods have changed globally,
with a pronounced preference for
mobile shopping and self-service
channels that are available 24/7.
Today’s consumers are more
comfortable with self-service and
have educated themselves to a
greater extent than in the past.
Further, technology is challenging
the traditional advice model and
facilitating the emergence of new,
low-cost, online-based advisor
models. These so-called “robo-ad-
visors” have had a major impact,
according to survey respondents. Consumers seem especially
attracted to the objectivity of the advice and the continuous
updating of guidance.
It is important to note a few contrarian views among survey
respondents. Some expressed little faith in Internet sales,
questioning whether average consumers understand their own
insurance needs. Similarly, robo-advisors may only be appro-
Insurers Flex Distribution Muscles
The insurance advice model is changing the way life and annuity products are
bought and sold.
By Doug French
priate for select people who are comfortable with the significant
information input required to make such models work.
Still, the overall impact is clear: the insurance advice model
is changing. Customers who still engage advisors may only
seek to confirm purchase decisions, rather than guidance on
the purchase decisions themselves. Further, customers now
expect high-quality, customer-centric experiences and seamless,
high-tech digital experiences. Survey respondents recognize the
industry has struggled to deliver these in the past.
One distinct trend is the shift toward “omni-channel”
distribution. With an omni-channel approach, insurers offer a
The preferred shopping
methods have changed
globally, with a pronounced
preference for mobile
shopping and self-service
channels that are available