As the insurance industry is pushing its efforts to increase the digital footprint, the moot question is, ‘what is the future of the oldest channel, the insurance agent?’
Agents contribute less than one-third of the new business premium of private sector life insurers against more than half accounted for by banks, who act as corporate agents. Overall, agents contribute over 50% of the total new business premium in life insurance, which is thanks to agents accounting for nearly all (over 90%) of the public-sector insurers’ business.
Online channels have so far failed in making any major dent in insurance distribution. Only about 0.5% of life insurance is bought online, and only about 2.0% of health insurance is as well, despite insurers paying so much attention to digital. Banks too have not been able to do much health insurance business.
Having said this, digital will transform the insurance industry landscape considerably. Agents will be no exception to it. But how will the agents be impacted? The more likely scenario will be where the agent’s role is enhanced with more technology.
The business of agents will be unsettled by digital but the human intermediaries will continue to enjoy a valuable role in continuing the growth of insurance, though the impact of technological changes on agents in India is yet to be felt or comprehended.
The tasks of agents and insurers which were once clearly divided, now have an overlap with each other. The tasks are still divided but insurers are beginning to directly interact with consumers. The insurers are expanding their role and are now thinking about reforming the role of their agents.
The approach of insurers should be to integrate agents into their increasingly digital sales and marketing framework, and task them with the responsibility of deepening relationships with consumers, and cross-selling and up-selling to existing consumers.
It would be beneficial for insurers to move towards a more omni-channel strategy with agents continuing to play a significant role. Agents will continue to be the sales feet-on-street for insurance and will remain a significant mode for insurers to have a rapport with consumers.
Data can play a key role in enabling this change and ensuring its success. Insurers and agents need to make efforts together to enhance the role of agents and integrate it with new channels, to evolve an omni-channel structure.
What insurers can do:
- Collaborate with the agents as digital operations are planned and executed
- View agents as your team members and through them have a holistic view of consumers
- Provide training and skills development as the recruitment objectives are fine tuned
What agents should realise:
- Insurers expect them to deliver a much greater value, not just in terms of profitability but by creating opportunities for cross-selling and up-selling, and enabling the insurer to have a comprehensive view of consumers
- Skills enhancement is key to augmenting their scale and operational efficiency and excelling in an omni-channel environment
Agents are not a species in danger of disappearance. Agents who adapt to the evolving demands of the job, driven by digital technologies, will prosper, not just survive. Insurance agents are in a similar situation as the travel agents, who not long ago were indispensable for every air traveller. Those travel agents who evolved as they faced the onslaught of online travel booking sites have continued to prosper.
Private sector insurers do want to have a robust agency force, as established by their efforts to continue increasing the number of agents. Agents contribute less than one-third of the new business premium of private sector life insurers against more than half accounted for by banks, who act as corporate agents.
In summary, agents are the sales channel who literally push insurance, unlike banks which largely tap their existing banking customers. Digital is gradually transforming many of the tasks agents have traditionally performed. Consumers too are becoming highly demanding.
Consumers expect always-available personalised services, which is possible only with the use of digital technologies. Insurers will increasingly look at agents as the perfect foil to digital and maximise the human attributes of being able to understand consumer needs and concerns, build trust, and express empathy.
A cross-channel excellence cannot be achieved in seclusion. Agents will continue to be an important component of the omni-channel sales structure as insurers endeavour to obtain a 360-degree view of consumers.