1. A Path to Insurance Distribution Leadership:
New Channels and New Data for Innovative Outcomes
September 2015

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Confidentiality Statement
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© 2015 Majesco. All rights reserved.

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Contents
Executive Summary ............................................................................................................... 3
The Changing Landscape of Insurance.................................................................................... 3
Limitless Possibilities: Analytics to Empower Insurance Distribution....................................... 5
Boundless Opportunity.......................................................................................................... 6
Distribution Efficiency and Effectiveness ................................................................................ 7
Investing in Data Analytics: Taking the First Step .................................................................... 7
The Path to Distribution Leadership is Unfolding.................................................................... 9
References .......................................................................................................................... 10

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Executive Summary
If there is one business topic that dominates boardroom discussions in insurance companies today, it is growth. If
there is one technology topic, it is analytics. No longer confined to CEO and CFO tablets, and no longer limited to
simple operational reporting and dashboard reports, analytics has emerged as a strategic tool to transform the
insurance business across its entire life cycle, including distribution management. Unfortunately, as industry
research by KPMG indicates, while insurance company executives acknowledge its importance and business value,
many are yet to define strategies and begin the evolution of organization-wide adoption.i
This whitepaper examines a strategic area of analytics opportunity and impact — distribution management — based
on the perspectives of industry leaders from a Majesco Roundtable on ‘Leveraging Digital Technology to Reinvent
Distribution Models’. The roundtable discussion provided insights into how to leverage analytics to deliver business
value and reshape distribution models to support market growth strategies.
Distribution management is a unique cogwheel of the enterprise, positioned to influence transformational changes
that impact the entire organization. The use of analytics when approached strategically and deployed operationally,
can deliver real business benefits including organization-wide efficiency, profitability, agility, and time-to-market,
while strengthening both customer and distribution experience and relationships.
The Changing Landscape of Insurance
The insurance industry continues to be poised for growth with many countries indicating an optimistic economic
outlook. IMF’s World Economic Outlook - April 2015 forecasts the global economic growth to be 3.5 percent and 3.8
percent in 2015 and 2016, respectively, with recovery potentially visible across Europe, USA and Canada and a steady
growth in the Asia Pacific region.ii
The insurance sector, however, is expected to witness increased competition in both Life & Annuity and Property &
Casualty segments. Many new companies are emerging in the space, both within and outside the industry. Some of
these companies are backed by large investment firms and are becoming active through acquisitions — posing
competition to established players. Additional competition has arisen from subsidiaries or new brands launched by
established insurers, hoping to position their organizations to compete in new markets, existing markets or in new
business segments to enable growth strategies.
However, rising competition coupled with low interest rates in developed markets continue to trim insurance profit
margins. According to Conning’s 2015 report on ‘Global Insurance Distribution & Services Sector Mergers &
Acquisition’, US insurance M&As grew by 48 percent in aggregate announced transaction values and 12 percent in
announced transaction volume in 2014 over 2013, indicating the effects of competition felt by the US insurers.iii
Already in 2015, M&A is rapidly unfolding with Ace purchasing its rival Chubb in a $28.3 billion deal, creating the
second largest P&C insurer in the US. This is one of the many mergers where consolidated data may result in a host
of coveted analytics, with the power to redefine the quality of underwriting and customer interaction. Adding to the
2015 momentum, the US-based health insurer Anthem agreed to purchase its rival Cigna in a $48.3 billion
transaction. The deal is expected to close in 2016. This deal, combined with Aetna’s $37 billion purchase of Humana,
leaves fewer large health insurance companies in the US market.

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Each of these changes is reshaping and intensifying the competitive landscape for insurance. To respond to
competitive pressures, insurance companies need to expand and strengthen their distribution channels. Insurance
distribution is the cogwheel that drives growth. It is a crucial link between insurers and customers and can play a
critical role in helping companies remain relevant, competitive, and stable in the choppy waters of change and
disruption.
Over the last 10 to 15 years, insurance distribution has been undergoing a powerful revolution, often starting in one
geographic region and spreading quickly to others. Empowered by the Internet and digital technology which
together provide greater access to information — retailers are creating new, engaging customer experiences, such
as those provided by Amazon, Apple and Google. As a result, today’s insurance customers are increasingly more
demanding, wanting an Amazon or Apple-like experience. This experience runs dramatically counter to traditional
agency distribution methods.
While the traditional agency distribution model continues to play a dominant role in many markets, increasingly,
consumers (especially Gen X and Gen Y) are demanding new methods to connect with insurers in a direct-to-
consumer model. Across different regions, alternative channels like bancassurance, customer portals for self-service,
aggregator sites, and new channels like Google are emerging as strong alternative channels, intensifying the need
for traditional distribution to ‘modernize and transform’.
A modern distribution channel should be attracting and engaging millenials, who are increasingly affluent with
potential insurance needs.iv
Born from 1981 to 2000, millenials who hold at $100,000 in assets are further classified
as affluent millenials. There are as many as 15.5 million of affluent millenials in the USA who spend $2 trillion
annually. These customers expect quick service, such as digitally powered pre-filled approaches to documentation,
among various other personalized and attentive servicing models.
These developments and others will have far-reaching impact on how insurers engage with their customers and
potential customers, conduct business, and most importantly remain relevant and competitive in this rapidly shifting
marketplace. The strategic use of analytics can play a major role in how insurers respond to these shifts, leveraging
an array of distribution channels to create an omni-channel experience for their customers over the next few years.v

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Limitless Possibilities: Analytics to Empower Insurance Distribution
Distribution channels are critical to insurance companies’ growth (new customers) and retention (existing
customers). From small improvements in channel efficiency and effectiveness, to large improvements through
optimization and innovation, the changes can deliver significant cumulative benefits to the organization. Benefits
range from increased operational efficiency to improved customer reach, customer satisfaction and retention, new
customer acquisition, sales growth and new market segment growth opportunities.
In a recent Ernst & Young report, ‘Improved distribution and product development’ is at the top of the top 10
opportunities for global insurance organizations. “Effective collation and analysis of data,” the report states, “can
enable insurers to perceive and target demand for new products, control the customer experience and manage
costs.”vi
According to Sudhin Roy Chowdhury, Ex- Member (Life), Insurance Regulatory and Development Authority of India,
analytics can play a significant role in making the insurance distribution process more efficient. Mapping the market
footprint and expertise of every insurance agent and improving channel training will lead to higher sales productivity
and profitability for both insurance companies and distribution channels. “If we use analytics in the area of
intermediaries,” Chowdhury says, “it will help the industry a great deal,”vii
“I don’t buy my car insurance policy online; I still have my agent. He is so handy!
Like a Web aggregator, he does all the needed procedures.”
— Sudhin Roy Chowdhury,
Ex- Member (Life), Insurance Regulatory and Development Authority of India
Consumer Engagement Stages
There are multiple stages of consumer interaction with insurance companies. The quality and frequency of
communication with customers varies based on these stages. There are three broad stages that influence this
communication.
Ownership stage:
Consumers have few interactions with insurers (outside of bills) and when they do, it is a relatively neutral to non -
positive emotional experience. Studies say that 65-75% of consumers do not know what an annuity means, but 52% of
industry material contains annuities. There is need for better consumer education through improved communications.
Renewal/Shopping stage:
Consumers find insurance confusing and mysterious and they prefer not to deal with it. This leads to a state of inertia
for many consumers, in which they tolerate annoyances like confusing paperwork and poor service simply because it’s
too much of a hassle to go through the shopping/buying process.
Shopping/Purchase stage:
Consumers expect a seamless omni-channel experience that allows anonymous shopping and comparing offers. When
they get deeper into the purchase process they expect all information they’ve provided to be sent to or available in any
other channel they use.

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Boundless Opportunity
The increasingly competitive environment in the insurance industry has made it imperative for companies to
innovate in the products and services they offer as well as how they are offered via different distribution channels.
Increasingly, analytics are used to design new products based on the unique requirements of a niche customer
segment, including the preferred distribution channel. Linking customer expectations with products and channels is
the foundation of engaging with customers based on their needs and preferences, creating not just great customer
experiences, but unique customer experiences.
Furthermore, analytics can help insurance distribution in multiple ways. Analytics can help optimize distribution by
accurately forecasting commission and incentive payouts that enhance operations and improve working capital
management. As a CIO of one the biggest general insurance companies in Indiaviii puts it: “When we talk about
distribution, everyone is concerned about the cost of distribution and the percentages paid in commissions. In such
situations analytics can be of immense help if you want to analyze a particular channel and assess how potent that
channel is within a particular segment, a particular geography or a particular product.”viii
Furthermore, analytics can map specific agents in an area geographically and by lead and customer base, to track
their performance. As a result, insurers can uncover gaps and needs within various demographic groups and guide
its agents to target sales efforts by matching appropriate customer segments to products that fit. Using this
approach, they can quickly identify ’low hanging fruit’ in a given market (geography, market, line of business or
customer-segment), and educate their distribution partners to leverage and tap those opportunities.
For example, if small business owners in a particular commercial district are discovered to be susceptible to a fire
hazard, distribution partners within that geography can proactively market the right property insurance products to
the most relevant and likely prospects. Similarly, if a particular urban area is prone to a particular disease, such as

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Malaria, agents can be prompted to promote health insurance products with extended coverage for the disease in
that area. If a particular zone within a community is known for significantly higher risk of vehicle accidents, high-risk
products or additional coverage can be marketed extensively and exclusively in that region.
Distribution Efficiency and Effectiveness
According to Murali G, Business Director, Star Union Dai-ichi Life Insurance, analytics can also help detect
distribution inefficiencies and thereby improve productivity by addressing them. Insurance distribution, he says,
can be viewed in relation to three aspects — product, channel and customer. Knowing whether the right channels
are selling the right products to the right customers is the key to ensuring that an insurer achieves optimal
efficiency and effectiveness in its distribution operations. “If a channel is repeatedly mis-selling, why is it mis-
selling? Is it a training issue? Does the agent not know the product? Is the product too complex?”ix
Relating his experience, Vivekanand Tripathi, Head of IT at Aegon Religare Life Insurance says that his company uses
Tableau’sx
business intelligence tool to monitor channel sales performance in four to five product categories. “People
can actually see which channel is selling to which age group. As a result, we are adding more products this year,” he
says.
Providing the enterprise application perspective, Rajendra Walawalkar, Product Manager – Majesco Distribution
Management says, “Data analytics can be of use in the distribution platform; in setting-up the channel, managing
the channel and adapting the channel through configuration. Each channel comes with its own complexities.
Business rules are different. On-boarding processes are different.”xi
A comprehensive distribution management
solution can manage all this and more, including regulatory compliance, enabling insurers to adapt to changing
market conditions, varied competition and shifting customer expectations.
Investing in Data Analytics: Taking the First Step
The strategic and operational use of data analytics begins by mapping out a data strategy with well-defined
objectives, goals, expected results, budgets and timeline. This enables the organization to clearly identify the
resources needed, including funding, people and technology. Like any other business solution implementation,
analytics software requires integration with core insurance solutions, modifying some existing business processes
and reorganizing movement of data throughout the enterprise. Here are a few aspects to consider before employing
analytics in your distribution operations.
78% of executives interviewed, cited big data analytics as the
disruptive force that will have the biggest impact on the insurance
industry.
Source: Capgemini World Insurance Report 2015

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Data Strategy
Strategies and their specific approaches for analytics may differ from organization to organization. However, to build
a foundation and organizational momentum, insurers should identify the greatest opportunity areas that support
the business strategy. For instance, SBI General Insurance uses analytics to assess customer preferences, with the
specific purpose to enhance retention, recognizing that it costs less than acquiring new clients.
Gayatri Prabhu, Channel Head - Digital at SBI General Insurance says, “We do a lot of data mining with our customer
base because it is far more profitable to retain a customer than to acquire a new one.” The company employs various
evaluation and modeling techniques to learn which customers have a high probability of renewing products or
buying new ones. “We use different attributes to understand target segment, location or how a niche segment would
be skewed towards a particular product,” Prabhu explains.xii
Customer retention can save insurers billions of dollars in premium and profit loss. Research conducted by LexisNexis
shows that more than 30 percent of insured households in the US evaluated their auto insurance options at least
once in 2014, with an eye toward switching carriers. Analytics can help stem these losses by identifying and acquiring
customers whose risk appetite matches that of the organization. It can also help understand a customer’s unique
needs and service them in an automated manner, says the report.xiii
Data Governance
As insurers extend their geographic reach, expand distribution channels, introduce new products and grow their
customer base, ensuring data consistency and quality becomes a challenge. Lack of standardization in data
definitions and models, coupled with multiple source systems, and massive amounts of unstructured data (growing
exponentially from documents, pictures, E-mails, spreadsheets, social media, telematics data, and Internet of things)
are complicating data management governance practices. Defining and implementing a comprehensive data
governance framework is critical for an organization to maximize ROI in terms of desired outcomes and business
value.
Data Capture
Leveraging internal and external data is critical for insurers to gain deeper insights. For internal data, capturing it
across the insurance value process, across systems and at every customer touch point is vital to gaining an informed
view of the customer. External data is increasingly crucial as an addition to this internal data, including social media,
telematics and more to uncover and understand patterns or predict trends. Unfortunately, many insurers face
challenges by their current inability to retrieve and analyze data, particularly for customers and channels.
Mayur Vasa, Head - IT Applications at Liberty Videocon General Insurance says that most insurance providers in India
lack adequate customer data. Citing auto insurance as an example, he points out that data is captured about the
vehicle, as it is the basis for rating and underwriting. “In case of motor insurance we capture the data about the
vehicle, but not about the driver! However, since most customer data like date of birth are not required, they are
not captured, leaving gaps in data that could be valuable for future products and engagement.”xiv
Kayzad Hiramanek, COO, Avantha ERGO Life Insurance, explains the necessary elements using the three Vs: Veracity,
Velocity and Variety. “There are three things that are important to consider. The first one is the veracity of data. The
second is the velocity at which data is changing—how often is the customer transacting with me using various
platforms? Lastly—the variety of platforms that a customer uses for transaction. Am I really capturing all that
data?”xv

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The Path to Distribution Leadership is Unfolding
Data analytics is more than just an enabler when it comes to insurance distribution. It is weaving itself into every
aspect of the business from sales to marketing to customer engagement, and transforming them for the better. The
insurance sector is the midst of dramatic change and analytics can help insurers develop a roadmap leveraging
analytics to navigate this change successfully.
The pace of change, the explosion of data, the demand for enhanced customer experiences via the channel of choice,
and ready access to the data are challenging insurers to make the transformational changes that analytics can
deliver. In today’s new world, change is not optional – it is mandatory to compete.
With clear business strategies, C-level commitment, the right foundational distribution management solution that
enables expanding channels, and the strategic use of analytics to align customers with distribution, insurance
companies now have a platform to transform and reinvent their distribution models to compete in today’s omni-
channel world. Beginning a transformation journey for distribution management is a critical step toward bringing
the “Amazon-like” experience to customers.

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References
i
Transforming Insurance: Securing Competitive Advantage, KPMG, 2014
https://www.kpmg.com/BE/en/IssuesAndInsights/ArticlesPublications/Documents/transforming-insurance.pdf
ii “Uneven Growth: Short- and Long-Term Factors”, IMF’s World Economic Outlook, April 2015
iii Warner, Michael, “Global Insurance Distribution & Services Sector Mergers & Acquisition: Vying for Domination in
2014”, Conning Inc., March 10, 2015
iv “Affluent Millennials: Winning the generation that is transforming the financial world”, LinkedIn Corporation
v Omni-channel is a multichannel approach to sales that seeks to provide the customer with a seamless shopping
experience whether shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store.
vi “Insurance Business Pulse 2013–2015”, Ernst & Young
vii Chowdhury, Sudhin Roy, Roundtable Discussion on ‘Leveraging Digital Technology to Reinvent Distribution
Models’ organized by Majesco, June 5, 2015.
viii CIO of general insurance company, Roundtable
ix Murali G, Roundtable
x Tableau is a business intelligence and analytics software
xi Tripathi, Vivekanand, Roundtable
xii Prabhu, Gayatri, Roundtable
xiii “Proactive Customer Retention: A Driver of Long-Term Profitability for Personal Auto Carriers”, LexisNexis, April
22, 2015
xiv Vasa, Mayur, Roundtable
xv Hiramanek, Kayzad, Roundtable

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About the Authors:
Denise Garth is Senior Vice President Strategic Marketing responsible for leading marketing, industry relations and
innovation in support of Majesco’s client centric strategy, working closely with Majesco customers, partners and
the industry.
She is a recognized industry leader with both P&C and L&A insurance experience as a CIO and business executive
with deep international ties in Asia and Europe through her ACORD leadership role. Denise is an acknowledged
strategic thinker, innovation leader, international speaker, and author of thought leadership and articles regarding
the key issues and opportunities facing the industry today to prepare for the future.
Shalaka Wagholikar is Deputy Manager, Marketing and is responsible for driving Majesco’s marketing initiatives in
the APAC region as well as supports the Global Marketing team in execution of marketing plans. She has extensive
experience in areas such as thought leaderships, C-level events, region specific campaigns, marketing
communication, analyst relations and corporate branding.