Integrating an Online Strategy with Other Distribution Channels

The most common excuse I hear for not offering life insurance online is potential for channel conflict. This is justified and there is no silver bullet solution to this problem. But the problem won’t go away and companies that delay for this reason are deferring the inevitable and possibly building on the problem.

Insurance companies are now competing to gain the attention of an ever-shrinking pool of financial advisers whose average age is in their mid 50’s. Some insurance companies have even come to look on their agents as their customer.

The starting point for an insurance company to be successful is to recognize who their customer is and who are the stakeholders. A company’s agents are stakeholders and their interests cannot be ignored, but be clear they are not the customer. If a company feels they are the customer then an online strategy is unlikely to be right for them, instead they should focus on appealing to the shrinking pool of agents. It is hard for me not to think of this strategy with a hint of sarcasm, but for some companies traditional distribution methods may be a valid strategy.

The next step is to consider how the existing distribution channel may benefit, ask yourself some questions such as:

• Could agents offer self-serve online referrals, saving their time to focus on business that really requires advice?
• Could online business generate additional new business for agents?
• Could an online system work in tandem with agents, perhaps at higher sums assured or at older ages where advice would be needed?

An important consideration is that of territories and compensation. Online business will not exist in isolation, if a customer has a question could it be referred to an existing agent? In return that agent would need to be compensated, but this could be an extension of a centralized call center.

Finally there may be unique opportunities for specific companies to help agents build their own web page and have the link to the online solution from their page. Agents selling to high-wealth markets may use this for smaller related business that does not justify their time and effort.

Another option is to offer the online solution through agents, thus making their processes much simpler and increasing their productivity. However the time will come when it will be obvious that this can be offered direct to consumers and the elephant in the room will have to be addressed — what is the role of the agent in this case?

Channel conflict should not be a reason not to look at selling online, but it needs to be handled carefully and with a clear strategy. Agents will see it for what it is; so make it an opportunity for them if you can, but don’t sugar coat the message if it isn’t. Worse still, a phased approach will likely meet obstacles that could not be anticipated. Treat agents as stakeholders — each company is different and each will have to find their own solution consistent with their brand and market strategy. It won’t be easy, but it will be worth it not to be left behind.