Why life insurance agencies are missing out on digital engagement benefits and three ways they can fix it
Dominick Williams, a life insurance distribution specialist, former CEO and 25 year industry veteran articulates just how important it is for life insurers to take digital engagement more seriously.
In a recent Asia Life Executive Study, there was widespread acknowledgement (>62%) that current digital capabilities of life insurers were far from ideal. No executive rated their capabilities as an ‘ideal’ state.
Whilst digitalisation is pushing transactions online, life insurers need to develop and deploy a complete practical and pragmatic digitally-enabled agency solution.
Existing digital and hybrid solutions tend not to engage agents or enable them to connect with and serve the consumer. We know an inherent weakness of the industry is that customer interactions occur less than a handful of times per year.
A complete digitally-enabled solution not only boosts productivity and meets today’s consumer expectations of an omnichannel experience, it also fully engages the entire sales force whilst ensuring their core skills and activities are to the professional standard required. In other words, the solution must empower – and not replace – agents.
As geopolitical and macroeconomic headwinds continue, we can no longer talk about an agency of the future because the future is today!
Tackling this multifaceted issue is one of the biggest and most urgent distribution challenges facing life insurance CEOs right now.
A different approach to engagement is needed to to meet changing consumer expectations
Agency remains the dominant life insurance distribution channel across APAC and this is not expected to change any time soon. What is changing, however, are consumer behaviours and expectations. Greater convenience, choice and transparency is being demanded and one of the many data points to substantiate this is Swiss Re’s annual survey tracking consumer sentiment about health and protection post-pandemic.
Around half (46%) of APAC consumers expressed openness to purchase coverage from insurers’ apps and websites. Consumers in emerging Asia markets are among the world’s most willing to share personal data with insurers, with 58% in Vietnam and 48% in India open to doing so without explicit incentives. There is more reluctance in wealthier markets but benefits are shown to decisively tip the balance. While just 16% of consumers in Singapore and Japan are willing to share their data unconditionally, this rises to 81% and 67% respectively if sharing will result in rewards, discounts or streamlined applications.
This level of openness is unsurprising when we remind ourselves that 24% of Asia’s population are millennials. That’s 1.1 billion people. By 2025, Gen Zers will constitute the same share of Asia’s population as millennials will and, by 2030, millennials and Gen Z are projected to make up 75% of ASEAN consumers. These generations contribute significantly to spending now and will dominate it in the not-too-distant future. Oh, and both cohorts are tech-savvy with Gen Zers considered digital natives.
The opportunities for forward-thinking life insurers
The digital enablement of Agency therefore represents a huge opportunity for life insurers, from leveraging advanced analytics and AI to reimagining customer journeys to a personalised customer experience and building modular products. This has been coined ‘Bionic Distribution’ by Boston Consulting Group and, for early adopters, has been a game-changer. It has boosted productivity by 15-20%, cut the time to market by at least half, improved customer loyalty scores by 20 to 40 percentage points, and lifted revenue by 5-10%.
None of this is new news within the life insurance industry and, whilst there is no shortage of technologies pushing insurance transactions online, the focus is rarely on the agents themselves nor how they can be empowered to better serve their customers. This is despite the fact that infrequency of customer interactions is a recognised weakness in the industry. We also know that – despite being comfortable transacting online - today’s consumer wants, indeed needs, human engagement for parts of the sales or advice journey.
So, there is an urgent need for agents who can add value at key moments in this journey and be supported by an easy-to-use digital experience when their expertise and assistance is not required. This means digital distribution must engage and empower their agents rather than replacing them.
Empowering agents, not replacing them
But there are two other critical factors that can’t be ignored.
In the same way as consumers’ behaviour and expectation has evolved, so has that of agents. New agents are typically millennial or Gen Z, meaning they share the same mindset and attitude to tech as the consumers referenced above.
We have seen that millennials and Gen Z consumers are not easily engaged by agents from previous generations, which – given the demographic trend in Asia - galvanises the need for life insurers to be innovative when it comes to the recruitment and retention of agents. This topic will be covered in another blog but, for now, suffice to say more must follow in the steps of a leading life insurer in Indonesia. With more than 40,000 agents, this company has purposely made sure that 60% of them are millennials and Gen Z. This is because millennials attract their own and can relate.
It’s also important to remember that traditional agency performance management issues haven’t gone away. These include difficulty attracting and recruiting new agents, low agent engagement and activity levels, and an apparent lack of agency leadership succession planning. It’s all very well creating a digitally-enabled agency but there is still a huge need for the basics to be done right.
Boosting agency productivity
With this in mind, there are three key performance areas where digitally-enabled agency engagement solutions can quickly and effectively boost productivity as part of an agency evolution and professionalisation program:
Forward-thinking agencies should therefore consider:
Redefining the way agents and consumers are engaged
- Use GenAI to create digestible, engaging content in formats that capture the attention of today’s agent and consumer.
- Turn the traditional agency communication dynamic on its head so the content delivery is controlled by the life insurer to maximise agent reach. This is a proven game-changer.
- Extend this delivery mechanism so agents can share content with consumers.
- This will generate more engagement and interaction, and ultimately provide timely, personalised approaches and offerings.
Recruiting and activating more productive agents in less time
- Segment recruits using simple yet tailored profiling tools.
- Ensure a broader and intentional recruitment approach coupled with a strong, innovative retention strategy targeting millennials and Gen X.
- Train, coach and develop agents (product, regulation, tried-and-tested skills training) using modern formats that appeal to them via the same engagement mechanisms as above.
- Offer agents instant access to all modular content 24:7 as part of a wider hybrid curriculum and serve training suggestions at the right time.
- Build a larger MDRT cohort by identifying agents to participate in a ‘good-to-great’ development programme.
- Deliver the program through the same digital tool using multiple content formats.
Better equipping managers and leaders
This is the really cool bit!
- Track all the above engagement and sales activity automatically in real-time on a single management dashboard.
- Leaders now have the crucial data needed to have meaningful performance conversations with their agents. Combined with digitally-led sales management skills training, this is an extremely powerful tool.
- Take away the heavy-lifting from leaders by directing them straight to the relevant development module(s) based on agents’ performance.
- Target investment at the right people. Sales managers and leaders are the backbone of any sales force so not having fresh talent coming through is a huge risk that the psychometric profiling of candidates can mitigate.
Operational priorities and the existing biggest gaps are likely to determine the order in which these areas are tackled. Being distinct yet interdependent, they don’t have to be deployed in a particular way.
Wondering where to start? If you’re considering the next stage in your agency’s digital evolution then we’re happy to share guidance and illustrate the art of the possible - talk to us
The quick wins
Developing a ‘good to great’ engagement and development initiative to build a larger MDRT cohort can be considered ‘low hanging fruit’, as leaders and the life insurer are both highly-motivated to have more top-performing agents. This initiative also avoids tackling the challenges associated with recruiting new agents, thus increasing revenue and growth in the shortest amount of time.
You may well be thinking these are three very obvious performance areas to address – and you’d be right. The secret sauce, however, is in how the solutions are designed and developed. Positive differentiation is essential (again, obvious) and, at least to begin with, solutions should not require intrusive systems integration. They must also be quickly deployable.
Distribution typically accounts for two-thirds of insurance costs. With an augmented bionic and engagement-driven distribution approach, life insurers can cut costs by digitalising low-value activities whilst using technology to increase agent engagement, competency and activity.
A successfully deployed agency of the future will be a smaller, more productive sales force that connects and engages with a larger number of consumers and customers, via channels and formats that they enjoy.
More engagement means more, and better, sales.
Interested in how we are helping life insurers engage better with agents and customers? Drop us a question or request a discovery call to learn more - get in touch