The insurance industry is facing a digital revolution, with a growing number of companies turning to digital channels to distribute their products and services. According to a report by Accenture, “Digital insurance distribution will account for as much as 50% of all insurance sales globally by 2020.” While digital distribution brings about many benefits, such as increased reach and improved customer experience, it also poses significant challenges for insurers. In this article, we’ll explore the key challenges of implementing digital insurance distribution and how to overcome them.
One of the biggest challenges of digital distribution is the need for insurers to have the right technology in place. This includes a user-friendly website and mobile app, as well as a range of digital tools and services that can help insurers sell and administer insurance policies. The process of integrating these technologies can be complex and time-consuming, and requires significant investment. Insurers also need to ensure that their systems are secure and compliant with regulations.
Another major challenge is cultural resistance. Digital distribution requires insurers to change the way they work – from the way they sell products to the way they interact with customers. This can be difficult for companies that have been doing things the same way for decades. Insurers need to be able to change the mindset of their employees, and create a culture that is open to new ways of working.
Digital distribution also poses regulatory challenges for insurers. Different countries and regions have different regulations regarding the sale of insurance products online, and insurers need to ensure that they are compliant with these regulations. This can be complex and time-consuming, and requires significant investment in legal and compliance teams.
Another major challenge is building trust with customers. In the digital age, customers have more information and choices than ever before, and they are increasingly skeptical of digital insurance products. Insurers need to be able to build trust with customers through transparent communication, easy-to-use digital tools, and by providing relevant and timely information.
Despite these challenges, insurers can overcome them by taking a strategic and holistic approach. This includes:
In conclusion, digital insurance distribution has the potential to bring many benefits to insurers, such as increased reach and improved customer experience. However, it also poses significant challenges, such as technological barriers, cultural resistance, regulatory hurdles, and customer trust. By taking a strategic and holistic approach, insurers can overcome these challenges and succeed in the digital age.