Future models of insurance distribution.


This is an age of disruptive technologies. First it was internet and now Internet of Things (IoT), Big Data and Artificial Intelligence (AI) that are set to take the world by storm. People are getting increasingly tech savvy and started exploring digital space for their information and buying needs. Companies, whether they offer products or services, are banking less on traditional distribution channels and embracing digital technologies, and insurance distribution is no exception.

Today’s tech savvy customers expect choice, convenience and transparency when they buy products and services online. They even want personalized advice on the kind of products and services that could cater to their exact requirements.

Internet and digital media:

In this rat race-laden materialistic world people are hard-pressed for time and they don’t even have the patience to meet an insurance advisor and get exposed to his sales pitch. Digital technologies enabled the business organizations, especially the social media sites and search engines, to track the behavior of the netizens, especially their tastes, preferences and habits. The digital footprint left by the users is an invaluable source of information for the insurance companies that want to distribute their products effectively. If all this data is analyzed properly through Big Data technologies, the resultant insights can empower the insurance companies to offer personalized insurance products and instantly generate quotes for the customers.  And also, the Big Data-based predictive analytics help the insurance companies to optimize claims and detect frauds to increase their profits.

Mobile apps:

An increasing number of people are discarding their desktops and even laptops and going mobile. The conventional practices such as text search are becoming obsolete and giving way to voice search and app-based technologies. People, while they are on the move, are opting for mobile apps to buy the products and services they need. Even the insurance companies jumped on the bandwagon and started offering their products through mobile apps.  These mobile apps enable the insured to take pictures of their assets and create a catalogue that contains asset details and their worth. If any of the assets get damaged they can share the images of the damaged property and claim the insured amount.

Once the IoT technologies are fully deployed, the gadgets and appliances people use in their day to day lives will get connected and start exchanging data. The information gathered from these devices could help the insurance companies in accurately assessing the risks involved and deciding the premiums.   The IoT enabled automobiles and the wearable wellness devices track and transmit data with regard to the driving behavior and the health condition of the insured and the insights that could be derived from the data prove to be beneficial to both the insurer and the insured.  The policyholders can get discounts for keeping in good health and implementing safe driving practices and even the insurers can minimize the risk.

Insurance e-commerce:

Conventional wisdom says that don’t put all your eggs in one basket. Excessive dependence on direct distribution not only involves a lot of expenditure but also may prove to be ineffective. Therefore, offering insurance products through multiple channels is advisable. The e-commerce companies, banks, travel agencies, hospitals, and even retail outlets can become effective modes of distributing insurance products. As far as insurance e-commerce is concerned the Insurance companies can build an online platform for insurance, where Insurers, brokers, agents and intermediaries such as corporate agents, web aggregators, and insurance marketing firms can sell the insurance products and can even attend to the policy service requests. Insurance e-commerce not only lowers the cost of running insurance business but also results in increased efficiencies and wider reach. Deployment of biometric technologies and the usage of single-factor authentication such as PAN (Permanent Account Number) card and unique identification cards such as AADHAAR could be used to minimize the risks of fraud.

Social media:

Social media platforms such as Facebook, twitter and LinkedIn are gaining prominence and wield considerable influence among their users. Most of the netizens are active on the social media and share their views and opinions on a wide-range of topics. They even seek opinion and share their feedback on the products and services they used or want to acquire. Therefore, insurance companies can effectively use social media to build their brands, execute marketing campaigns, build social communities and generate leads. Closely monitoring social media is very important to retain customer loyalty and pre-empt negative publicity from the disgruntled customers. As social media is continuously evolving and gaining maturity, it is also emerging as the most effective way to advertise and distribute insurance products. At a time when even state heads are carrying out a considerable part of their diplomacy and governance through twitter, the importance of social media in the distribution of insurance products can’t be underestimated.

Peer-To-Peer (P2P) Insurance:

This model allows the like-minded people who know each other and seek similar coverages to form a pool. These pools not only impose less burden on the members but also bring about greater transparency in the claim settlements. Insurance companies can mine the social and digital data to identify the people who seek similar coverage and bring them under the umbrella of P2P insurance. An insurance start up, brings together communities of people who have similar, but niche, insurance needs.

To conclude, insurance distribution is set to go hi-tech and is gearing itself up to provide customers with cost-effective and personalized products. And also, the emerging technologies such as IoT and Big Data will make the entire process of insurance distribution transparent and hassle-free.

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