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Where next on the distribution journey

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of those having joined primarily to access a larger insurer panel. While the role of networks has been called into question following some high profile splits, such as the Keychoice partner Aviva leaving both Broker Network and Willis Networks, there is no doubt that broker networks are here to stay. Therefore, insurers need to make sure they work with a network or strategic partner that is easy to do business with, and which offers the most value to their business, in terms of greater efficiency, cutting costs and driving profits, rather than just providing an aggregation of brokers. While brokers are the dominant distribution channel in the commercial space, they start to lose market share when it comes to SMEs and micro-SMEs, as business owners look to repeat their personal lines purchasing experience. This has led to increased penetration for the direct channel. Although 51% of SMEs 6 are still using brokers for their commercial insurance needs, 35% now prefer direct channels and 22% choose to purchase online. More than a quarter (28%) are likely to change channel at their next renewal date, with over half of micro- enterprises set to use aggregators. Regardless of the channel they choose to use when purchasing insurance, business owners will be looking for a consistent experience. Brokers and insurers need to ensure they have the systems and processes in place to enable this. All of these factors are leading to a more digital landscape, which mirrors the transformation that has taken the personal lines world by storm. This is being driven by different buying behaviours, with the next generation of buyers more aware of the need for cost-effectiveness, coupled with transparency, ease of doing business and faster turnaround. While this increased digitalisation of the commercial market can be perceived as a threat, there are immense opportunities for insurers who can adopt a flexible, agile and simple approach to meet these demands from the new generation of purchasers. However, this does not mean that insurers should just put their existing business processes online. Instead they need to deliver differentiated customer experiences and engagement by developing a well thought out, omni-channel approach for each segment that puts the customer at the heart of everything they do. Brokers are not the only channel: making the most of digitalisation Indeed, a business's insurance requirements will not always be met by the neat pigeonholes of online distribution channels. 5 Datamonitor report: UK Commercial Insurance Distribution 2012 6 Datamonitor report: UK SME Insurance 2012: Purchasing Behavior and Relationships

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