Multi Channel Distribution in Insurance - Whitepaper


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This whitepaper explores the need to develop an effective multi-channel distribution strategy that meets customer demands and delivers differentiating customer experience. Apart from the conventional ways of marketing an insurance policy, which include brokers, agents, kiosks, work site marketing and direct marketing, insurance companies now explore new avenues of innovative and attractive range of distribution techniques that can be exploited to their advantage.

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Multi Channel Distribution in Insurance - Whitepaper

  1. 1. Multi-Channel Distribution in Insurance Challenges and scope Anuja Verma NIIT Technologies White Paper
  2. 2. CONTENTS Introduction 3 Emerging Trends 3 • Customer Segmentation 4 • Social Media 4 The Right Technologies 4 Challenges Faced in Multi-channel Distribution System 5 IT to Improve Multichannel Distribution 5 Multichannel Distribution – Delivering on the opportunity 6 • How does Technology ease the work of insurance companies? 6 - Customers 6 - Channel Partners 6 - Business 6 Conclusion 6 About Niit Technologies 7
  3. 3. Introduction The Indian life insurance sector is evolving and growing substantially and is one of the key drivers of India’s economy. The Indian insurance sector is moving rapidly towards international standards with new and innovative product offerings. With rising income levels, customers are demanding more sophisticated risk solutions. Life insurance was once purchased primarily as a tax-saving tool. A paradigm shift in regulation led to more customized solutions. The number of insurance holders has more than doubled to 5.32 crore policy holders in five years to 2010, with the total life insurance premium tripling to Rs 2.65 trillion during the same period. have a deep, actionable and detailed analysis of the end users or target segments, so the distribution channel can be set up to reach the segment effectively. Inefficient customer segmentatio n and targeting actually ends up delivering less value to the customer and hence to the insurance company also. This whitepape r explores the need to develop an effective multi-channel distribution strategy that meets customer demands and delivers differentiating customer experience. Emerging Trends In the last few years we have seen unprecedented growth in the choice of channels that customers can use to interact with the business. Insurers are now adopting a multi-channel distribution The Indian customer is offered innovative solutions that combine strateg y protection and long-ter m wealth creation. Improved services , demographics of insurance buyers, Insurance companies are also sound advice and innovative products are provided through a using multiple types of distribution systems. Based on the needs range of distribution channels such as banks, agents, direct offices and status of target customer segment distribution systems are and online platforms. The emergence of a more diversified and chosen. A combination of all or most of the following distribution multichannel distribution network has revolutionized the insurance channels make it a multi-channel strategy: sector, with increased access and better service to customers. • Broker to drive operationa l efficienc y. With changin g • Individual Agents Apart from the conventional ways of marketing an insurance policy, which include brokers, agents, kiosks, worksite marketing and direct marketing, insurance companies now explore new avenues • Corporate Agents • Micro-Insurance • Bancassurance • Cell Phone/PDA of innovative and attractive range of distribution techniques that • Kiosks can be exploited to their advantage. Today, an insurance company • Internet leverages multiple channels for distributing its services to target • E-commerce customer segments. • Work Site Marketing • Direct Marketing – Internet Distribution channels not only affect the top line and bottom line of a company but also raise concerns on the cost management of the firm. In this fluid environment, an insurance company needs to • Digital TV/Satellite Selling • Supermarkets and other retail outlets • Affinity Channels and Groups • Insurance specific debit/credit cards • Call Centers 3
  4. 4. Customer Segmentation If any agent has a concern about a new product or program, the Segmentation in marketing is important because it matches a underwriter can proactively reach out to the agent with a relevant customer’s requirement to the offerings. This helps in creating brand communication as well. loyalty as the customer will be happier to purchase a product that is specifically targeted to his or her needs better than competition. This The recent and prolific rise in social media has created an irreversible spells more gains for the business as people are willing to pay more shift in the way the distribution world is changing. Figure 1 lists all the for a product which are tailored to their needs. Segmentation, thus, multichannel choices that are available leads to customer retention as well. TV Here is an example of how different sets of customers can be Radio Facebook Twitter approached using different channels: Newspaper MySpace Market Segment Direct Mail Company Website YouTube Multichannel Choices RSS Wealth • Full Service Brokers Affluent • Brokers • Vendors • Agents Email Friends/Family Blogs Mass Marginal • Insurance Agents • Bundled Vendors • Banks Distribution Online Forums • Banks • Credit Unions Retails Location Customer Service Mobile Figure 1: Multi-channel options The Right Technologies The five key and current technologies that support multi-channel distribution: Social Media • Mobile: Insurance companies will adopt mobile Today, social media platforms have started playing a significant role technologies, particularly tools such as iPad for brokers in the distribution strategy of insurance companies. A Twitter and underwriters. Adoption of this technology is account or company/brand pages on Facebook are various ways to expected to rise in the commercial lines space. reach out to prospective and current policy holders. • Analytics: Leveraging analytics for micro segmentation of customers will help insurers target the most The important element for such platforms is the status update which profitable customers and brokers. This will in turn enables a company to be aware of the activities and intent of a large increase their return on investment and help retain group of people without having to ask them. customers and aid in cross sell and up sell initiatives. • Social Media: These platforms will play an For example, for an underwriter working with 100 agents, it can get increasingly important role in influencing purchase difficult to know about their achievements or updates. Here, tweets decisions. Customers, particularly the youth, or updated status messages on social media platforms can be constantly communicate about their life status captured and used for monitoring performance in almost real time. through social media. Insurance companies need to 4
  5. 5. • Cannibalization : This occurs when one service of a brand is create the technology and service infrastructure to marketed more than the others. As a result, the market share of the listen to relevant 'narrative bits' by establishing other service is affected. effective 'listening posts'. Social media and gaming present a great opportunity to bring a 'fun' element to the sales process. Also gaming can help insurers improve their brand image. For example, Farmers Insurance in the US has partnered with the popular IT to Improve Multichannel Distribution Facebook game called Farmville and lets players buy Technology is a transformation agent and its processes and systems 'protection insurance' for their online 'crops'! have ensured efficiency in customer service and operations . • Collaboration: Increased collaboration between Technology can be deployed to make multichannel distribution more underwriters, customers and brokers is possible effective. The various tasks that technology can simplify include: through the effective use of collaboration technology. • Data warehousing These technologies also help to personalize the • Providing access to accounts, services and assistance online: conversation between the underwriter and broker Customers can view the premium, tenure and other terms related and cement long term relationships. These help in to their insurance policies. reducing the sales cycle. • Product Configurators: These help insurers create • Analytics: Insurance companies can analyze behavior patterns, needs and desires of the customers. the building blocks for effective multi-channel infrastructure. Product configurators also help insurers launch products quickly into the market, bundle product offerings and customize quickly based on changing market demand or competitive pressures. The figure below depicts the channel integration using information technolog y, which allows smooth flow of informatio n across the different elements. Role of IT in multichannel distribution Challenges Faced in Multichannel Distribution System customers via the right channels at the right time are facing challenges on two main fronts. Independent agents/broker Customer Organizations striving to deliver the right products and services to Third Party Network Web based channels Insurance Providers Internet IT Systems Tele Sales Direct Sales Product Policy/ Customer/Agent Internet • Brand dilution : Brand dilution can happen when insuranc e companies choose inappropriate channels for different customers. Product Infromation New offers & promotion Customer enquiry Underwritting App Processing Cust. Servicing Policy issurance 5
  6. 6. The product information, new offers and promotions, and online. Customers can calculate premiums, bonus amounts, tax customers’ enquiry on new offers flow from the insurance and communicate with an insurance advisor. They can also check company to the customer. The third party channels such as the status of their policies and calculate the amount of loan they insurance agents/brokers, web based channels, tele-sale can avail on their insurance policy. They can also download forms executives etc. coordinate with the customer as well as the for purchasing other policies and pay their premiums online. company to get new business. Customers can also give details such as change of address right at the website. Once a case has been logged in, the entire process of underwriting, customer servicing and policy issuance and Channel Partners application processing is done through complex systems which Online portals can be developed for channel partners such as are developed as per the requirements of the insurance brokers and agents. These portals will allow them to check their company. After a policy is issued, technology is used to regularly commissions and payment status. It will also give them the interact with customers and provide efficient service. advantage to check claims position and track the status of the case deposited. Business Multichannel Distribution – Delivering on the opportunity as well. Some of them are: NIIT Technologies has evolved multi-channel distribution strategy to • Gain economies of scale from a common set of data and optimize the opportunities that social media revolution and multiple • Lower costs: Insurance companies have moved from distribution business rules. • Reduce agent-based administrative tasks to maximize sales channel choice present and offer: single-channel The insurance company can see benefits in various other spheres strategies to multi-channel distribution as the market evolved and competition intensifies. These changes have shown a significant decrease in the average cost of distribution services. Sophisticated well trained wealth activity • Provide analytical support to manage the producer and customer life cycle • Track distribution partner activity and establish key performance metrics management consultants target high value customers. Insurance is treated as just another financial product for others at the lower end of the customer spectrum. • Personalization: Insurance companies can work on more Conclusion customized selling by adding a technical sales force for selling The growing insurance market offers scope for better penetration complex products or providing personal assistance to high and accessibility through diversified channels. Insurers have an net-worth individuals. The various factors here are trust, opportunity to differentiate themselves through their distribution customer servicing, multiple and accessible service points, good channels. There is substantial value to be gained in each channel. IT support and the comfort factor. Innovative and customized products can be offered to customers through multi channels. Incremental investments over a sustained How does Technology ease the work of insurance companies? period of time across multiple channels provide the best solution. A company’s ability to offer an integrated multi-channel experience will be the key to customer satisfaction and profitable growth. Customers The portal of an insurance company can offer a plethora of services to customers that can be save their time and also purchase policies 6
  7. 7. About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterpris e Solution s includin g Managed Service s and Busines s Process Outsourcing to organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors. With employees over 7,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat business from them. NIIT Technologies has been able to scale its interactions with marquee clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information security management certification. Its data center operations are assessed at the international ISO 20000 IT management standards. NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida – 201301, U.P., India Ph: + 91 120 7119100 Fax: + 91 120 7119150 Americas NIIT Technologies Inc., 1050 Crown Pointe Parkway 5th Floor, Atlanta, GA 30338, USA Ph: +1 770 551 9494 Toll Free: +1 888 454 NIIT Fax: +1 770 551 9229 Europe NIIT Technologies Limited 2nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: +44 20 70020700 Fax: +44 20 70020701 Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore 417818 Ph: +65 68488300 Fax: +65 68488322 Write to us at D_17_120413 A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2 ISO 27001 certified | Level 5 of People CMM Framework