A new report by McKinsey & Company has identified three actions it says insurers must evaluate when it comes to longer-term distribution methods and lock in shifts toward digital.
The report states the COVID-19 pandemic has brought about physical distancing and other quarantine measures that will affect insurance distribution, particularly in the longer term and some changes should be made.
The first action the report suggests is for insurers to maintain their in-person agent forces, especially when it comes to life and large commercial sales. But they must also put together a setup that includes digital- and remote-sales-force options to serve customers who prefer digital or remote interactions. Setting up a remote agency can be done quickly through a pilot-test-and-learn approach, getting remote agents to interact with customers and refining the process based on feedback, said the report.
Identify new technologies
Next is that insurers should identify new technologies to support the “next normal” that has come about because of the pandemic. Tools will be needed to increase digital prospecting and build trust in initial conversations to help agents replace their typical offline interactions. “To develop the tech road map to the next normal, insurers should work with agents to identify the biggest obstacles that currently impede productivity and rapidly develop the most viable product solutions to close those gaps,” the report stated.
Finally, insurers must be ready to make strategic M&A decisions to add to their distribution. “Fintechs and insurtechs are likely to be more open to conversations with insurers with large balance sheets because of the financial impact of the crisis,” said the McKinsey report. “Insurance companies should proactively identify gaps in their distribution ecosystem as well as potential partnerships and acquisitions that could offer avenues to new customer types … new product types … or new geographies.”
