قالب وردپرس درنا توس
Home / Insurance / Use insurance channels to expand and meet customer expectations

Use insurance channels to expand and meet customer expectations



Trivia question. Which well-known brand managed to place its name in a popular song sung by hundreds of thousands of people across the country, almost every day, except in winter? Keep reading!

Since 1908, during every stretch of the seventh round of every MLB ball field, fans have been shouting the words “Take Me Out to the Ballgame” and asking someone to buy them some peanuts and Cracker Jack. This is product marketing placed in an eye-catching way in an ordinary everyday event. You can not sing the song without singing the brand Cracker Jack. How fitting it is that it is Cracker Jack, the product that for 104 years included a free prize, “embedded” in every box! It̵

7;s ingenious marketing.

There is a bit of a marketing sense in the insurance companies as well. We have a history of innovative marketing. Gerber Life’s launch with bands for healthy baby food, MetLife and the Peanuts characters and Geico’s gecko are just some of the highlights. Nevertheless, the most profitable innovations in marketing were also linked to the expansion of marketing channels, such as Homesite, Progressive and Esurance’s status as first movers with B2B, B2C and partnership channels.

Today’s insurance company is, however, faced with a puzzle. How do they market their products to become well-known, reliable and appreciated bestsellers, but at the same time place some products where they can be purchased through other partners or channels, even if they are unknown? This type of brainstorming and networking is part of the insurance’s new methods for innovation. Partnerships are formed within and outside the insurance industry. The insurance companies sell each other’s products, use new marketplaces to expand their reach and strengthen the traditional agent / broker channel with new digital opportunities.

A powerful, new distribution ecosystem places insurance directly in the way of a customer’s life journey, where insurance is relevant and needed. Ecosystems have a greater impact on sales because they are an “outside” customer approach instead of an “inside” product / process. This is the transition from selling to buying that is so crucial to today’s insurance company growth. It is an approach that naturally reduces infrastructure, operations and capital expenditure while taking in more business. It is a “high touch” for the customer and often a “low touch” for the insurer.

Majesco and PIMA will soon release a jointly written report based on primary research with PIMA members, Expanding Channels for Insurance: A Spectrum from Traditional to Affinity and Embedded. In it you will find a comprehensive look at today’s insurance channel options, and you will see how these channels develop. It is an excellent conversation material for your next strategy meeting. The results are eye-opening and valuable because the channel spectrum is wider than you think and there are great “white space” opportunities for growth.

In today’s blog, we provide a brief overview of the insurance’s channel spectrum.

The channel spectrum

Distribution options fall across a spectrum of channels, including directly to the customer (B2C and B2B), agent / broker, other insurers, other financial entities, marketplace exchange or platform, and embedded according to Figure 1 below. Embedded insurance is among the newest options and expands the traditional affinity model by leveraging technology and an ecosystem of new partnerships. Many interesting examples of partnerships between insurance companies and other industries are emerging at this end of the spectrum, including GM, Ford, Tesla, SoFi, Petco, Airbnb, Uber, Intuit and more. Built-in insurance is offered through three different modes:

  • Soft embedded: Coverage is offered at the time of purchase that the customer must choose to purchase.
  • Hard embedded: Coverage is included at the time of purchase which the customer must opt ​​out of if they do not want to buy.
  • Invisible Embedded: Coverage that is automatically included in the purchase and cannot be removed / removed.
[Figure 1. The insurance channel spectrum.]

Do insurance companies belong “in this space?”

Of course, each insurer must look at its overall strategy to help decide whether or not to expand and how to expand. If an insurer does not include a wider range of channels, in its strategy, a key component is missing that is crucial for growth and market relevance. Why? Here are just a few reasons:

  • Buyer’s expectations Today’s buyers do not necessarily associate with traditional channels and they will look to buy insurance through other channels or devices.
  • Reliable and loyal relationships – Units such as Gig Economy groups, health and fitness organizations, large dealers and car manufacturers have strong relationships with buyers. Embedding makes sense because it is linked to what they buy from them.
  • Easy to buy multiple channels – If distribution channels are easy to use with products that are easy to understand, then insurance has an opportunity to grow through a friction-free multi-channel distribution. The less traditional options on the channel spectrum may also require much less traditional marketing to get much better results.

PIMA Community Distribution Spectrum Use

In the survey of PIMA members, the PIMA community uses more options across the entire channel spectrum to offer L&AH products compared to P&C products and other products and services.[1] In many ways, this is not surprising, given that the L & AH segment has been operating in a multi-channel world for decades – B2C, agents, brokers / dealers, banks, BGAs and more. As shown in Figure 2, among those offering L & AH products, 72% use D2C / B2B, which is 13% more than P&C products and 30% more than other products and services. The biggest gaps are in the use of an exchange or platform, where L&AH leads by 19% and 27% over P&C and other products and services.

PIMA Affinity Relationships, which is part of the Embedded category, is widely used for all products and is seen as a targeted area. Each of the three product groups (L&AH, P&C, Other Products & Services) has the highest proportion of offers through Affinity relationships, which reflects an important distribution role. Once again, L & AH’s products are leading the way in utilizing this channel.

Digital channels and agent / broker channels are also widely used. Digital channels in particular reflect a similar approach as embedded, using digital technology to reach customers at the moment they want to buy. Interestingly, partnerships with other insurance companies are underutilized with less than 30% usage, providing an opportunity to maintain and own the customer relationship, by offering products that are not manufactured, as well as increasing revenue. With more customers seeking a simplified and more holistic approach to buying insurance, insurance companies must seek new partnerships to meet these expectations if they do not offer specific products that customers want.

Figure 2: Net current channel usage of companies offering L&AH, P&C or other products and services

Overall, L&AH leads significantly in the use of embedded. Of the three embedded alternatives, Soft Embedded is the most widely used for L&AH (50%) and P&C products (35%), as the “opt-in” strategy is similar to traditional affinity marketing (Figure 3). Interestingly, Invisible Embedded is the second most used option for P&C, but the most used option for other products, which is not surprising since products such as roadside assistance and financial planning have been included with other insurance products for several years. Hard Embedded, with the exception of L&AH, lags behind both embedded alternatives.

Figure 3: Net current embedded use of companies offering L&AH, P&C or other products and services

Significant growth in the use of groups and organizations

A key finding in this year’s research is the significant acceleration in the use of a larger number of groups or organizations, especially new relationships compared to the 2020 survey, which is seen in Figure 4. New relationships that stand out with growth are car manufacturers (+ 19%), farms / agricultural groups (+15%), retail groups (+12%) and service groups (+10%). These increases reflect growing partnerships with companies such as GM, Petco, Ford, Amazon, IKEA and others working with insurance companies to offer insurance at the time of purchase of their products. Also noteworthy is a 7% increase in Gig economy groups, reflecting continued growth in this segment.

Figure 4: Changes in distribution through groups and organizations, 2022 vs. 2020

It should be noted, however, that “traditional” relationships saw little or no movement and in some cases had declines, such as non-profit (-8%) and small employer groups (-10%). The only exception with strong growth was through Colleges & Universities Groups with an increase of 23%. This lack of growth indicates that these partnerships lack growth and may not be as valuable with a new generation of insurance buyers compared to previous generations.

We established “zones for adoption” based on use or consideration / planning on using the various partner alternatives, which further reflects market opportunities for growth. All 50% or higher are table bets, 30% -49% are approaching table bets and less than 30% are considered to incubate. Based on these zones, all traditional relationships continue as table bets, even with the limited or declining growth. However, three new relationships moved to table operations: gaming economics, retail groups and internet groups.

More importantly, the remaining options for new relationships are all in the zone approaching table bets, reflecting the rapid growth of these options which reflects potentially declining options for insurers who are not considering these partnerships.

The time frame is close for these partnerships, potentially putting those who are not actively involved out of the game, limiting market reach and growth, especially for the new generation of buyers who value these relationships.

Majesco’s research on strategic priorities for 2022 identified significant gaps between leaders and followers (19%) and lagging behind (27%) in their use of partnerships and ecosystems. Although this view was product-diagnostic, looking through the lens of the three products in this research, those offering L&AH products appear to be the leaders in using partnerships and ecosystems, as seen in Figure 5. Although the gaps are wide less, the results are directional.

Figure 5: Use of partnerships and ecosystems of companies offering L&AH, P&C or New Products & Services

Innovation: Where to start?

When it comes to channel spectrum options, it can be good to look at companies, both InsurTechs and traditional insurance companies, that are already using these different channels successfully. In the upcoming report, you will find lists of sample companies that fit into each channel category across the spectrum. You can then compare their products and concepts with the opportunities you have considered for your organization.

For today, however, it can be good to review the channel spectrum diagram above and think a little about each channel. What is your strategy for reaching both today’s and tomorrow’s buyers? Would one or more of these channel options fit your organization’s market growth goals? Which combination of products and channels provides better growth opportunities? Which ones in particular can be easier to implement with your current technologies, and which ones can be easier to implement using an agile cloud-based system?

Where can you position yourself so that your insurance products will be the price that awaits in someone else’s Cracker Jack box? What kind of SaaS, digital, platform solutions will make you a marketing challenger with customers meeting them when and where they want to buy?

For a preview of the upcoming report and an in-depth discussion of the distribution channel’s landscape, you can listen to Majesco’s latest webinar, Finding the White Spaces in the Product / Distribution Channel Landscape, today.


[1] Includes: Care, roadside assistance, legal services, discount programs, money management, financial planning / financial well-being, absence management, risk management, risk monitoring, home health care


Source link