This year is certainly one for the history books – and that includes the insurance industry. While industry analysts will likely spend years reviewing 2020 and how it transformed the insurance business, it’s time for insurance brokers, advisors and professionals to look forward and start planning for 2021.
We’ve made a lot of progress this year, especially in the life insurance field. Seemingly overnight, the industry went virtual and began implementing digital tools like video conferencing, e-signatures, and accelerated underwriting. As a result, nearly half of life insurance companies reported growth in policy sales, and, according to LIMRA, total policy count was up 1% year-to-date in the second quarter.
While it sounds like good news for our industry, there’s a catch – and it’s a major one if you are an insurance broker or independent advisor.
This growth has been overwhelmingly propelled by direct-to-consumer sales from major carriers and insurtech companies. However, while these channels are growing, LIMRA reports other distribution channels are experiencing declines.
As major carriers look to further refine their direct-to-consumer sales processes in 2021, insurance brokers face new challenges that threaten their survival. But with the right solutions, it’s possible to overcome these challenges and build a successful, sustainable business for years to come.
Challenge #1: Shifting Business Models
Change in the insurance industry may have been sparked by the pandemic, but don’t expect it to flicker out. In many ways, the pandemic sped up a digital transformation that was already underway. The days of advisors only meeting with clients in person, working through mountains of paperwork, and maneuvering through manual processes are over.
Digital technology will be a mainstay in the insurance industry from now on. That’s not to say everything will be virtual. Post-pandemic, experts predict a shift to a hybrid model in which the sales process and client-advisor communication happens fluidly via both online channels and in-person interactions. The extent that communication happens, either online or offline, will depend on what the client wants.
The major insurance carriers are already drastically altering their business models and taking more of the market share as a consequence. It’s important for advisors to modify their business model to succeed in this new era of digital transformation.
Challenge #2: Meeting Clients’ Changing Demands
45% of insurance professionals believe living up to evolving client needs and expectations will be a major challenge over the next few years, and with good reason. Consumer demands are now higher than ever. Amazon and other tech leaders have set high consumer expectations when it comes to ease of use, accessibility, and speed that extend not only to other retailers but also to nearly all industries.
Insurance customers today are looking for the best of both worlds: more convenient, streamlined processes and a greater relationship with their advisor. Some of the defining features of today’s insurance customers are:
- They rate quality and ease of use as the most important factors.
- They report higher satisfaction and brand loyalty when they have increased connectivity with their provider.
- They value a strong relationship with their advisor and more consistent communication.
While it may seem impossible to meet all these needs, insurance brokers and advisors have a leg up on the major carriers when it comes to building relationships. The challenge will be trying to match the “Amazon-like” experience that carriers are developing.
#3: Navigating Increased Insurance Regulations
Moving to a more digital model is vital for insurance practices, but it also comes with new privacy regulations and data security laws.
Regulations like the NAIC’s Insurance Data Security Model Law are being widely implemented, and we will likely continue seeing similar regulations passed in the next decade. These laws are important in protecting clients’ privacy online, but they present roadblocks in the customer journey. You’ve probably seen this play out with encrypted emails, which often confuse or frustrate clients.
In 2021, the ultimate challenge for insurance professionals will be to provide a high-quality digital experience that allows for open communication while staying compliant with regulations.
Overcoming Challenges with Insurtech Technology
It should come as no surprise that the answer to these challenges involves technology. If 2020 was the year when insurance professionals scrambled to go virtual, then 2021 is the time to take a high-level, strategic approach to your digital strategy.
The piecemeal approach many advisors used in 2020, adopting disparate tools as they needed them, won’t stand up to the major carriers’ advanced platforms in the long term. Advisors will need to adopt more comprehensive and sophisticated insurtech solutions to compete.
The good news is that advisor-centric insurtech platforms are already available. With a platform like Link by LegacyShield, for example, insurance advisors can communicate with their clients, digitally share policy documents, and build their book of business – all within a secure digital workspace designed to meet insurance regulations. Advisors using Link receive analytics on client activity that can help them better understand their clients’ needs, plus clients can connect their loved ones and secondary professionals to their account, creating a new source of organic leads.
With each new challenge, there is opportunity. Adopting an advanced insurtech platform can unlock new opportunities to increase customer retention and build your multigenerational book of business. The future for advisors is not working in spite of technology but using technology that enables you to do your best work.
To learn more about how insurance technology can create a new path to success for advisors, read our blog, “Closing the Last Mile for Life Insurance Advisors.”