Distribution Management – New Tools for Strategic Growth

Distribution Management – New  Tools for Strategic Growth

Growth and retention continue to be the top business goals affecting IT investments. Many insurers are focusing on improving their distribution practices as a key technique for driving growth.  Designing, developing, maintaining and managing productive channel relationships can create a sustainable competitive advantage.

Almost every insurer we talk to is focusing on how to grow their book of business.  Some are using underwriting strategies, some are focusing on improving customer service, and others are looking at acquisition.  Virtually every insurer we talk to is also focusing on distribution management.  They’re looking at expanding channels, adding distributors, moving into new territories and working to expand their existing channel in order to improve customer acquisition and retention. 

These multiple channels are effective at targeting different aspects of the market, but add complexity when it comes to channel management. Additionally, the explosion of InsureTech startups carries with it the potential for channel disruption. However, a wide variety of issues creates difficulties for insurers when it comes to effectively managing the distribution channel.

As an insurer begins to focus on managing their distributors more strategically, many put resources towards managing their distributors more effectively in order to extract more revenue from them. Some insurers are focused on managing the compliance aspects of distribution management – assuring the distributors have the right licenses and that state appointments are made in a timely manner.  Others are focusing on using compensation tools and techniques to more effectively stimulate production. Still others are placing their priority on servicing high priority distribution channels and improving service to distributors.  They are utilizing increasingly complex segmentation schemes and tailored programs for preferred producers as a way to retain and grow business.

But in doing so, they often run into a common set of issues.   Standard processes and automation were designed for an environment that has long since passed, one that was much more stable and predictable. In a typical insurance environment today, multiple departments perform separate tasks in the cycle making coordination of activities and integration of information difficult. This is especially problematic since producer management involves large numbers of distributors, different types of distributors, a substantial volume of transactions and data from multiple sources. As insurers expand the number and types of distributors they work with, hierarchies become more complex to manage. This is compounded by multiple jurisdictions, multiple policy admin systems, and limited reporting and analytic tools.

These conditions result in multiple issues including poor service, a lack of insight into producer performance, unreliable data, and high support costs. The inability to link information means that distributors are managed on transactions instead of strategically. Compliance issues continue to plague insurers who find it difficult to monitor licenses and process appointments in a timely manner.

Distribution management systems provide tools and technologies to help insurers with the administrative aspects of distribution management. They are most typically used by insurers with a mixed distribution channel, multiple policy admin systems, multiple jurisdictions, complex compensation programs, or some combination of these factors.  These systems encompass a wide variety of administrative functions that are focused on operational issues such as registering and licensing producers, configuring compensation plans, administering payment and reconciliation, and tracking performance.  They provide tools and technologies to help insurers with the administrative aspects of distribution management.  They are most typically used by insurers with a mixed distribution channel, multiple policy admin systems, multiple jurisdictions, complex compensation programs, or some combination of these factors.

I’ve just published a new report Distribution Management System Vendors: North American Insurance 2017.   It describes what these solutions do and profiles 16 distribution management solutions that are relevant for property casualty and/or life and annuities.  There’s another report that covers all the global vendors as well.  Check it out – or send me a note if you’d like to talk about the report.  And keep your eyes on this space for an upcoming report – Reinventing Distribution – which will give tons of examples of cool stuff that insurers are doing to manage, enable, and shift their distribution channels. 

Digital Insurance and the Customer: Mind the Gap!

Digital Insurance and the Customer: Mind the Gap!

Let’s play Jeopardy together! If the most frequently given answer from a panel of insurance customers is “Don’t know,” what was the question?

It was: “Which UK insurer do you think is the most innovative?”

For those who think that is an exaggeration of the common opinion that the insurance industry is not innovative at all, let me tell you that the second most frequently given answer was “None.”

As Jo Hind – Industry Head, Finance at Google – explained during the first presentation of the Digital Insurance and the Customer: Mind the Gap! event Celent organized in collaboration with Google, the pace of change is accelerating. More and more people are using digital communication means to get information about financial products, including insurance policies, and among others mobile devices are getting great traction. To pave the ground for the rest of the event, Jo left the audience with simple but relevant questions to insurers: How important is mobile to the insurance business? Are insurers optimizing and planning for the four-screen world (computers, TVs, pads, and smartphones)? How can insurers engage better with their customers? Are products offered by insurers meeting consumer expectations?

When Craig Beattie followed Jo’ s final interrogations with the Celent views on the customer, Google, and UK car insurance based on research he and Catherine Stagg-Macey published recently, we – in the audience – could not anticipate that the phlegmatic British analyst would provide the audience with such an insightful and dynamic analysis of the reasons for and consequences of the changing behaviour of insurance online shoppers. After this moment of brilliance, it was time for people to take their breath and enjoy the networking break to exchange about what had just been exposed to them by Google and Celent.

The audience had opportunities to share their thoughts during the discussion panel session which ended the whole event. Ian Morgan – Industry Leader Financial Services at Google – moderated the session, which saw Jem Eskenazi – CIO of Groupama Insurances, Ollie Holden – Solution Delivery Director at LV=, Catherine Stagg-Macey – Head of EMEA Celent insurance, and Jo Hind debate about mobile and digital insurance predictions. The audience was asked to provide its opinion on these predictions before they were discussed in more detail with the panelists.

Let’s play Jeopardy again! What question related to the Celent event summarized above will result in the following answer? “Certainly.” It is: “Are insurers who were present in the audience going to view digital insurance and the customer differently from now on?”

Measuring the value of your web sites

Measuring the value of your web sites
The Guardian newspaper in the UK reported that the UK Government is looking at closing up to 75% of it’s websites. The challenges facing the UK Government in terms of cutting costs and ensuring that they are getting value from assets are no different to the issues facing insurers in these uncertain economic times. Whilst it may not be typical to look at the approaches taken in the public sector to cost cutting there are some interesting features of the approach taken by the Government. Of particular interest was a KPI quote in the report regarding cost per visit. The article cites one website that costs £11.78 a visit versus on that costs £2.75 a visit. Such an analysis and metric would be most useful to insurers – particularly those that are operating multiple brands on different sets of technology. Of course getting to the true cost of running a web site can be difficult, but an educated estimate along with existing web site analytics data would allow a similar analysis – one that could produce the same savings in a direct insurer or any insurer with multiple Internet applications. The other point made in the report is that some government units were competing with each other in terms of marketing and search engine optimisation spend. Having two units in the same organisation bidding for the same search term in Google advertising for instance is simply not cost effective. As above, in any insurer operating multiple web sites or multiple brands this kind of activity could be prevalent but not immediately obvious, perhaps this is something insurers could review and see where savings could be made. I doubt insurers should make the kind of culling of 75% of their websites that the UK Government is discussing but the principle is sound and relevant to Insurance. Insurers should ask themselves how many websites they are running, are they all equal in cost and could any of the services be merged onto cheaper platforms. In these cost constrained times it’s key that insurers not only examine core systems for possible cost savings but also the eco-system of ancillary applications and servers running the enterprise.

Celebrities meet insurance: Is insurance really that cool?

Celebrities meet insurance: Is insurance really that cool?

It is January when Christmas parties are over, belts a little tighter (metaphorical and physical) and you’re running out of recipes for the re-use of Turkey. Here in the UK, the television schedule can often be relied upon to cheer you up with festive specials of your favourite show (and who can forget the hypnotic draw of the Queen’s speech). What one doesn’t expect is to be entertained by adverts for insurance.

I will make a confession to having a little soft spot for the mascots of UK insurance television ads with the notable exception of the talking bulldog who makes me channel swap with alacrity. The animated phone (who now has a cute little friend when selling pet insurance) and the dapper little blue mouse who has unlimited energy and enthusiasm all bring a smile to my face. Do they make me buy insurance? Well, I’ll leave that to the marketers to debate but I will concede that these cute little tykes do help keep the brand on top of mind at renewal.

Not to be out-done by the compelling seasonal schedules of BBC, or perhaps because of these schedules, a handful of the top insurers have splashed out on celebrity based ads. Aviva has outdone themselves and have several big names including Elle McPherson, Bruce Willis, Alice Cooper, Dame Edna, Ring Starr to support the company’s change of name (from Norwich Union to Aviva). Each celebrity poses the question as to whether they would have been successful had they not changed their name. Enough said.

Direct line, Esure have made similar investments in UK celebrities – notably Julian Barrat, Paul Merton, Michael Winner. It is the new advert from Swiftcover with an exuberant and semi-naked Iggy Pop that is the most startling to watch. Does such a pop icon really buy insurance at all, or even on line? Don’t famous people have people who do those sort’s of things? (If you have time on your hands and need a giggle in the dark months of January, check out Iggy Pop dancing to entice you to buy Swiftcover – http://uk.youtube.com/watch?v=yYnydYrZPp8.

Perhaps the choice of celebrities tells us more about the target buyers than the insurance product. With the exception of the Aviva advert where the celebrities could arguably have a broader generational appeal, the other celebrities would suggest the insurers are targeting the baby boomer rather than the generation X’er. This may be a sensible marketing move betting on the fact that the mid-generations will continue to buy insurance in this current climate whilst the generation X and Y’s, who look to be most severely hit by the redundancies, will not be active buyers. Was this prescience on the part of marketing or another pandering to the celebrity culture that envelops us.

But back to the question of insurance and the coolness factor. When the Beckham’s, Paris Hilton, Gordon Ramsey or Prince Harry are enticed to smile and dance for a UK insurance brand, will that surely be the time to declare insurance as the ultimately cool product. Until then, and certainly for 2009, we will have to comfort ourselves with the dulcet tones of middle-aged UK celebrities doing their best to make insurance cool.