Building a Collaborative Multichannel Insurance Distribution Strategy


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The insurance industry must embrace a hybrid multichannel distribution system for selling policies, one including sophisticated deployment of CRM analytics capabilities and social Internet media and requiring carriers to choose agencies carefully and collaborate on cross-channel insurance marketing and sales.

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Building a Collaborative Multichannel Insurance Distribution Strategy

  1. 1. Building a Collaborative MultichannelInsurance Distribution StrategyA CRM-enabled agency management solution can help improve agencychannel productivity and enable multichannel collaboration, thusadvancing carrier abilities to achieve sustainable profitable growth.Executive SummaryDespite the faltering economy, during whichinsurance companies might be expected to hunkerdown and concentrate on survival, profitablegrowth has nevertheless held steady as theindustry’s polestar. In fact, Celent’s 2012 survey ofthe U.S. insurance industry1found that increasingprofitability is the key business goal identified byCIOs as the primary component of their strategicagenda over the next few years.Meanwhile, the distribution channel has emergedas a key focus for transformation — one that, ifproperly executed, can enable insurance carriersto generate improved efficiency and realize theirgrowth objectives. Insurance distribution channelstraditionally have been dominated by agenciesand brokers. These channels remain the preferredchoices for customers, particularly since manycontinue to seek face-to-face interaction to helpthem buy complex insurance products.According to LIMRA,266% of customers prefer topurchase life Insurance products from insuranceor finance professionals.However, with the increased adoption of theInternet, which provides faster access to companyand product information, customer behavior israpidly changing. Customers now often initiatetheir product research through direct channels(e.g., the Internet and contact centers) and thenpurchase policies from traditional channels.According to the Insurance Information Institute,354% of consumers obtain quotes for autoinsurance online, and about half of customerspurchase policies from agencies. Thus, theinsurance industry must embrace a hybrid distri-bution system, which combines the best of bothworlds and also improves the overall effective-ness of the agency channel.Challenges: The Collaborative Agencyand Emerging Distribution EcosystemsThis change in customer behavior is forcinginsurance companies to set up multiple-channeldistribution systems to improve customer inter-action. However, the companies face severalchallenges in order to create and profit from thesynergy among the various channels. As a result,traditional agencies are increasingly worriedabout their long-term viability.• Agency motivation and loyalty: While theagency channel will continue to be the preferredone for insurers, the elevated presence of directchannels have agencies worried that sales will• Cognizant 20-20 Insightscognizant 20-20 insights | march 2013
  2. 2. cognizant 20-20 insights 2increasingly be cannibalized by the Internetand call centers. Insurers, therefore, must takesteps to motivate the agency channel.• Cross-channel consistency: Providing asimilar cross-channel experience is crucial tocustomers completing the entire purchasecycle. The transition between channelsshould be seamless, with each mode offeringthe ability to retain information captured inpreviously used channels to provide a satis-factory customer experience. Communica-tions inconsistency often leads customers toabandon the sales process.• Servicing/upscaling direct customers: Thecriticality of the agency channel increaseswhen customers move up the product valuechain, particularly as they require personalguidance to choose the correct insuranceproduct. Carrier efforts to cross-sell and up-sellwill not succeed without hands-on assistancefrom the proper agencies.• Non-value-adding agency tasks: Of course,the increasing number of distribution channelsalso increases the complexity of the distribu-tion structure. In today’s complex distribu-tion landscape, carriers and agencies struggleto gather reliable and actionable data. As aresult, they spend more time on administrationand data collection rather than focusing onproviding consultation services to customers,which is where they add the most value.Recruit and Retain the Right PartnersIn developing multi-distribution scenarios, carri-ers need to recruit and retain agencies that canleverage technologies and appreciate multiplechannels. Carriers must deploy CRM systems foracquiring, servicing and effectively managing theiragencies’ sales forces. It is incumbent on carriersto establish efficient on-boarding processes forchoosing agencies that are the right fit for theirorganizations by leveraging CRM systems’ leadand opportunity management functionalities. Forexample, carriers can set up advanced algorithmsto estimate prospective partner quality and evalu-ate their fitness to the organization’s objectivesand strategy. Strong on-boarding systems canalso help carriers comply with insurance regu-lations by placing a strong governance systemthrough rules engines and alert mechanisms.Insurance companies can benefit from socialCRM by gaining valuable insights on prospec-tive agents who are active on social networkingsites and use this technology in their businessoperations. For example, carriers can mine pro-spective agent profiles and interactions containedin social networking sites such as LinkedIn andTwitter and on-board suitable candidates. Agentsthus acquired through social media channels arehighly likely to leverage emerging technologiesto connect with their customers and advance thecarrier’s objective to set up multiple distributionchannels.As part of ongoing agency management, aCRM-based system can be leveraged to effectivelycoordinate agency sales forces. Agency managerscan use the system to track key performanceindicators for each agent such as opportunityconversion ratio, retention ratio, policy portfolioand customer satisfaction index, and enablethem to create an annual plan tailored for eachagency to support the carrier’s strategic goals.The agency management system can also helpagency managers schedule various tasks, such asdevelopmental activities and sales promotions toimprove agency and carrier engagement.CRM-based agency management can also be usedto conduct agency-specific events and multichan-nel campaigns to communicate new productlaunches, key features, sales promotions, etc. Forexample, carriers can schedule sales promotionalevents to explain key points to attendees ratherthan apprising them individually. This approachensures that communication is consistent amongagents and avoids duplication of the carrier’sagency management efforts.Agencies prefer to conduct business with thosecarriers that resolve their issues transparentlyand promptly. The CRM system can enable carriersto set up dedicated service processes for agenciesand help them prioritize and resolve queries.To improve collaboration, carriers can leverageCRM-based agency management systems todeploy social platforms such as agency communi-ties, groups and blogs. These social platforms canbe used to discuss and resolve common problemsand to share best practices and latest industryinformation. CRM systems like those offered byOracle (Siebel, Fusion CRM) and Microsoft supportsocial CRM features that enable communitycreation, idea sharing and networking.Enhance Agency’s Ease of BusinessAgencies prefer those carriers that can helpthem improve sales productivity. Tools such assales analyzers, quote generators and benefit
  3. 3. cognizant 20-20 insights 3illustrators both enhance agency productiv-ity and are appreciated by customers. Carriersneed to transform B2B CRM platforms to B2CCRM ecosystems by extending these systemsto agencies to more effectively track andresolve customer requirements and managesales operations. The CRM system would enableagencies to efficiently plan and conduct theirsales activities (see Figure 2). For example,agencies can improve their sales conversionrates by using CRM system lead and opportu-nity functionalities for customer on-boarding.Carriers can easily share and track new leads theyreceive from various sources such as call centersand marketing campaigns, thus increasing thebusiness potential of their agency partners.Carriers can maximize their marketing effective-ness by executing collaborative campaigns andcoordinating actions to enhance lead conversion.The extension of CRM systems to agencies canexpand their ability to offer personalized serviceto customers. For instance, agencies can utilizethese systems to track important events such asdue dates, customer anniversaries and birthdays,etc. and use these markers to retain customers,up-sell and cross-sell.Carriers can extend their existing IT infrastructureto top performing agencies and help them buildagency-specific, credentialed microsites that aresafe and compliant with industry best practicesand regulations. In turn, agencies can leveragesuch microsites to host profiles, channelize leads,and manage customer servicing needs. Also,carriers can empower agencies with social toolsto better understand each customer’s profile andpreferences, which can help them to offer per-sonalized service and propose best products. Theincorporation of emerging social tools can act asa major differentiator among agencies; conven-tional wisdom suggests that customers, particu-larly millennials, are more apt to do business withthose agencies that use such technology in theirbusiness operations.Improved Cross-Channel CollaborationCarriers are increasingly deploying the Internetto enable consumers to purchase insurancepolicies. During the policy purchase process,however, customers often abandon their prospec-tive purchase. To make sure this set of customersis more consistently acquired, carriers shouldcapture information about them (i.e., applica-tion and quotation information) throughout theprocess and provide leads to their agency partnersalong with the information that they have alreadysubmitted. Such initiatives would increase boththe agency’s and customer’s satisfaction and helpprevent the loss of a potential buyer.The carrier’s Web site can also act as a source fornew customer leads for advisors, thus improvingthe collaboration between the channels. TheRecruitand RetainRight PartnersEnhanceAgencyEaseofBusinessEstablish Cross-ChannelAnalytics FrameworkImproveChannelCollaboration•Deploy a robust on-boarding process torecruit partners who are the right fit forthe organization.•Leverage social media in recruitingpartners who can leverage technologies intheir daily sales and customermanagement operations.•Create agency communities and conductagency development activities to aligncompany and agency objectives.•Assign orphan customers and directchannel customers to existingagencies.•Distribute online abandoned sales toagencies along with informationshared by the customers.•Assign leads collected at directchannels like Web sites and callcenters to agencies.•Deploy a rich analytics framework togather integrated view ofdistribution landscape.•Track partner operations.•Track cross-channel collaboration.•Create segmentation and identifyoptimal product and channel fit.•Provide productivity enhancementtools to shorten the sales cycle.•Set up partner portals to enableagency self-service.•Enable social platforms for the agencyto communicate with end customers.•Extend CRM platform to agencies toenable agencies to manage theircustomers effectively.CollaborativeDistributionModelFigure 1The Agency-Centered Collaborative Multichannel Distribution Model
  4. 4. 4cognizant 20-20 insightscustomer can record product interest in theinsurance company’s Web site, and this data canthen be transferred to the agency’s B2C CRMplatform as a lead. Product interest inputs canbe periodically uploaded from the carrier’s Website to the agency CRM systems to drive lead- andopportunity-chasing activities.Customers acquired through online channels arein our view typically associated with less complex,low-cost term plans. Customers clearly need expertopinion during the purchase of more mature plansand for overall financial planning. Such customersprefer to purchase policies from the agencychannel. The carrier’s objective of upgrading thesecustomers to more mature (and more profitable)products can be achieved if these customers areallocated to the agency sales force on the basisof geography. Customers can also be given theoption of choosing their agencies directly.Establish a Cross-ChannelAnalytics FrameworkAs we have stated above, the distribution structureis becoming increasingly complex. To evaluate theperformance of each link in the value chain, andthe overall performance of any given channel,carriers need a strong analytics framework. Thechannel platform should highlight the productiv-ity of each channel and the level of collaborationamong different channels. Carriers should be ableto know operational details, such as on-boardingprogress, development activity, agency salesactivity details, lead and opportunity conversiondetails, cross-sell and up-sell information andrevenue information to initiate strategic decisions.Reports generated from these analytical tools canhighlight the level of channel collaboration byproviding information on conversion of abandonedleads, up-selling/cross-selling to online customers,lead sharing reports, etc.A strong reporting platform can provide valuableinformation on distribution channel structure,productivity, strengths and weaknesses — all ofwhich can be used to strengthen the network.To build these analytical capabilities, carriers needto get the buy-in from executive sponsors. Thiscan be achieved by having a common understand-ing of the key business drivers (e.g., linking KPIsof senior management with sales people) and astrong change management team advocating theneed for an analytics framework.Looking ForwardThe changing economic microenvironment andcustomer preferences are driving insuranceFigure 2Transforming Distribution Management via CRM-Based Agency ManagementClaimsBillingPoliciesQuotesOpportunitiesAccountsReportingProducts &SolutionsService RequestsActivities
  5. 5. About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered inTeaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industryand business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50delivery centers worldwide and approximately 156,700 employees as of December 31, 2012, Cognizant is a member ofthe NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performingand fastest growing companies in the world. Visit us online at or follow us on Twitter: Cognizant.World Headquarters500 Frank W. Burr Blvd.Teaneck, NJ 07666 USAPhone: +1 201 801 0233Fax: +1 201 801 0243Toll Free: +1 888 937 3277Email: inquiry@cognizant.comEuropean Headquarters1 Kingdom StreetPaddington CentralLondon W2 6BDPhone: +44 (0) 20 7297 7600Fax: +44 (0) 20 7121 0102Email: infouk@cognizant.comIndia Operations Headquarters#5/535, Old Mahabalipuram RoadOkkiyam Pettai, ThoraipakkamChennai, 600 096 IndiaPhone: +91 (0) 44 4209 6000Fax: +91 (0) 44 4209 6060Email:­­© Copyright 2013, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.About the AuthorsBrotin Kumar Chakraborty is a Director of CRM within Cognizant’s Customer Solutions Practice, wherehe heads delivery for all CRM insurance accounts across the globe. He holds a B.E. in electronics andtelecommunications from Jadavpur University. He can be reached at Jhunjhunwala is a Senior Consultant within Cognizant Business Consulting’s Insurance Practice.He holds a B.E. in computer technology from Nagpur University and an M.B.A (finance) from NMIMS,Mumbai. He can be reached at Biswas is a Senior Business Analyst within Cognizant’s Customer Solutions practice, focusing onSiebel projects. He holds a bachelor’s degree in information science from Delhi University and a postgrad-uate diploma in management from IIM, Lucknow. He can be reached at Celent 2012 U.S. Insurance CIO Survey: Pressures, Priorities and Practices.2 2011 Insurance Barometer study by the Life and Health Insurance Foundation for Education (LIFE) andLIMRA.3 Insurance Information Institute article, “Buying Insurance: Evolving Distribution Channels.”companies to rethink their online distributionchannels. However, the agency channel remainsthe industry’s dominant one and is the preferredchannel for customers who want to purchase highvalue complex insurance policies.The growing strength of the online direct channeloften results in dissatisfaction and discourage-ment among agency personnel — and the carrierscannot ignore this. Carriers, thus, need to initiatesteps for improving collaboration among thesechannels. Implementing CRM-based agencymanagement strategies can help insurancecompanies achieve the objective of greater cross-channel collaboration.These systems can help the carriers in recruitingand retaining the right agency partners, effi-ciently manage the agency sales force, alignagencies with insurance companies’ businessobjectives and provide differentiated service tothe agencies for maximizing customer retention.These systems can be extended to partneragencies for improving their sales effectivenessand customer service capability, undertakingsales and marketing initiatives and integratingwith carriers’ online systems.Insurers should consider engaging a strategicpartner on the following activities to ensure theirlong-term competitive advantage:• Create a multichannel distribution strategywith specific roadmap definitions.• Build a product evaluation and technologydeployment roadmap.• Conduct a distribution/agency effectivenessassessment exercise.• Embrace business process reengineering andindustry best practices.