The Future of Insurance Sales and Distribution

By Greg Webber, President, Insurance Systems, SunGard

Recently, one of my children graduated from university, which led to one of those typical (father to son) financial responsibility discussions. In this case, we were talking about the need for him to purchase his own automobile insurance.Of course, I gave him the name and number of "our" insurance agent, to which he gave me "that look" (I'm sure every parent can relate) and said (very emphatically, I might add), "Dad, I'm not calling an insurance agent. I'll just take care of it my way." He then took out his phone (but, of course, not to make a call), to Tweet that he wanted to purchase insurance for his automobile. Within a matter of minutes, he then proudly displayed to me the fact that he had a friend request from a rather progressive insurance company for his Facebook account and upon accepting that "friend" was able to easily link to an online site to purchase insurance.

A few clicks later, he had a policy bound and had printed an insurance card to carry in his vehicle (and of course to display to his Dad while telling me how much easier it was then actually calling an agent). Needless to say, it made me think about the future of insurance distribution channels. Clearly, he bypassed the traditional phone outreach and any contact with a broker, and instead did it all in the manner he was accustomed to.

On the other hand, when I travel through emerging economies, where access to computers, laptops and the Internet is limited, at best, I am amazed by the rapid growth and development of telecommunications infrastructure, particularly in countries like India and China. Clearly, mobile devices will play a big role in insurance distribution in these countries.

So how does the emergence of the Internet and mobile devices as distribution mediums impact insurance companies? What should they be doing differently to meet the distribution needs and reach new demographics through these new mediums?

There are three key areas that insurance companies will need to focus on in order to acquire and retain clients as consumers become more savvy and self sufficient: presentation, product diversity and risk management.

The first phenomenon is that technology is becoming the face to the customer. What do insurance companies want that face to look like? Ease of use, intuitive GUIs, dashboards that provide views across a customers' portfolio of holdings, and the ability to empower consumers will be key.

Secondly, insurance companies will need to do some work behind the scenes. They will need to ensure that different policies are integrated and can be served up as options to the consumer like they can in banking. Traditionally, policies (life, health, auto, etc.) have been managed by different silos in an insurance operation. Today, that can no longer be the case.

Additionally, competition from other financial services companies, like banks and brokerage firms, which are also offering these insurance policies and packaging them with their traditional product offerings, will mean that insurance companies must expand their portfolio of offerings and be able to provide a comprehensive view of those policies selected by each individual consumer.

Further behind the scenes, insurance companies will need to ensure that they can offer policies in emerging economies, where there is great potential for growth. This will require technology that can handle the nuances specific to each country's regulatory landscape and can model risks that are new or greater in these emerging economies.

Insurance companies will also need to implement an enterprise risk management (ERM) framework to better manage their capital assets and liabilities with technology that integrates and provides a unified view of previously siloed businesses and presents them with a comprehensive global view of their enterprise risk.