Agents need to move from “pushing products” towards “providing holistic solutions.” This will require more training and a focus on creating new offerings that address evolving needs around health, wealth, and wellness. This approach could help counter many consumers’ distrust of the life insurance industry. According to LIMRA, 36% of consumers rate the honesty and ethical standards of the insurance salesperson as low or very low.
Drive efficiencies. To raise productivity, insurers should invest in building digital and advanced analytic capabilities that can provide agents with qualified leads with a high propensity to buy and qualify for coverage. Moreover, by applying these tools to the in-force book, carriers can identify many leads (for example, buy-up options) that are often untapped today. With their deep resources, carriers are in a better position than other distribution partners to invest in these capabilities. For example, carriers in China have made significant per agent productivity gains thanks to their transition to a digitally delivered, analytics-enabled, end-to-end experience.
Automation and artificial intelligence will be critical to driving efficiencies and making the underwriting process simpler, faster, and less invasive, thus reducing overall costs (such as those associated with medical exams). For example, straight-through processing can modernize, streamline, and automate front-, middle-, and back-office processes. Proven tools such as e-application, e-delivery, and case tracking can reduce acquisition and administrative expenses while improving the customer and advisor experience.
All stakeholders stand to benefit from transforming distribution—even the agents themselves.
Address the in-force book of business. Investors and insurance executives must isolate the economics of the in-force book, new business, and distribution to determine where value is being created or destroyed. Too often, they find unwelcome surprises, such as new business being written at a loss in order to sustain the in-force book and distribution structures. This is mostly a problem in mature markets, where carriers often struggle with capital intensive/low-return in-force books.
Going forward, it is critical to evaluate a broad range of strategic options, including whether to maintain the in-force books open to new business, place the business into runoff, divest underperforming books, or acquire books and become an aggregator to drive scale.
THE AGENCY OF THE FUTURE
The pace of change will accelerate. Some insurers are already making bold distribution moves, and that is important because digital players from adjacent industries are looking for disruptive opportunities, perhaps as part of a broader health, wealth, and wellness planning and advisory offering.
Although there is no one-size-fits-all formula for success, the agency of the future will likely be fully automated, will provide agents with qualified leads and other digital and analytic capabilities to boost their productivity, and will address customer needs more holistically, with richer solutions across their lifetimes. (See Exhibit 2.)