Embedded Insurance # 5: COVID-19 and the changing face of insurance sales and distribution

Sibylle Fischer
June 3, 2020
Innovation, Startups, Products
Can the COVID-19 global pandemic actually help evolve areas of insurance that have been historically slow to change?

The COVID-19 public health crisis has turned the world economy upside down with devastating impacts to service and work sectors, tourism, manufacturing and the global supply chain itself. The economic fallout of the pandemic has also touched the insurance industry, exposing numerous operational pain points – particularly in sales and distribution. From the sudden challenges of a remote workforce to underwriting and policy-servicing disruptions, distancing protocols have been especially hard on those areas of insurance that have been historically slow to digitize. But in the face of these challenges, will industry players rally to meet the moment, turning impossible circumstances into opportunities for innovation and reinvention? 

Together apart: a new kind of agent-customer relationship

The coronavirus has reinforced the importance of the broker-customer and sales agent-customer relationship, especially in light of the recent spike in claims and business interruption queries they’ve had to field. These intermediaries are proving the true value of personal relationships and good communications between customers and brokers and agents, particularly in more complicated or specialty insurance transactions (where sound advice from a trusted resource may directly influence sales). Shelter in place measures have shown the industry that reps and agents don’t need to risk their physical or cyber safety to sustain these important relationships. In the absence of kitchen table interactions, secure remote channels like video and messaging platforms have demonstrated their effectiveness at keeping sales agents both productive and distanced. Moving forward, we should be looking at additional ways the agent-customer relationship can be enhanced and even fortified by the use of technology.

The technology to eliminate paper largely exists, however doing so remains largely a matter of scaling, security and adoption.

Sibylle Fischer, Strategic Venturing & Startup Scouting

The right time for a digital overhaul

Especially in those insurance areas still dominated by paper transactions, now is the time to facilitate the transition to digital wherever possible – from recruiting and lead generation through applications and binding contracts. The technology to eliminate paper largely exists, however doing so remains largely a matter of scaling, security and adoption. To get there will mean considerable investments in IT and a rethinking of many legacy processes (whatever can be safely and lawfully digitized, should be). In addition, making the home office more efficient should also be prioritized – from improving the security of videoconferencing and document sharing platforms to guaranteeing better home connectivity for remote employees.

Assisted (and embedded) distribution

Some industry players are already encouraging a new kind of “assisted distribution” which leverages technology to support lead generation and conversion, especially in managing more complicated product sales. From A.I. to augmented reality to machine learning and data science, new investments in these areas would support older distribution models with technologies that improve and automate aspects of the distribution channel. At the same time, insurers should be looking for ways to augment and expand existing relationships, as today’s “new normal” demands the need for novel products and protections. Here the emphasis might be on leveraging the embedded model wherever possible in order to develop new engagement methods and value propositions by meeting customers where they already are. 

The road to recovery

In many ways, the coronavirus pandemic is inadvertently giving the insurance industry the occasion to play an essential and pragmatic role in our collective economic recovery. Through out-of-the-box thinking, innovative products and distribution strategies, a smart overhaul of essential operations, and the right governmental and business partnerships, there’s a real opportunity for insurers to lead through these unprecedented and turbulent times.