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Global Insurance Tomorrow: Taking Your Firm from Traditional to Direct with Data and Analytics

15 May 2019 Robin Wagner, Senior Vice President: International Insurance at TransUnion

In the second of our five-part blog series, TransUnion’s Senior Vice President for International Insurance Robin Wagner discusses the second-biggest trend in insurance — going from traditional distribution channels to direct platforms — and how data and analytics can help. 

Going from traditional to direct 

While going digital is one of the biggest trends in the insurance space, going direct is gaining equal traction. Going direct is becoming increasingly attractive to traditional insurers that are looking to improve the customer experience while managing expense ratios. Direct platforms use data and analytics in new ways that dramatically enhance customer interactions and business performance. As insurers race to deliver innovative, top-quality solutions, maximize distribution channels, and keep a competitive edge, new direct offerings are taking off.

The benefits of direct platforms are clear and compelling. One of the biggest expenses insurers incur is high broker commissions. Some of the biggest thorns in the consumer’s side stem from manually driven back-office processes that take too much of the consumer’s time. Direct insurance helps address these challenges. You are not only bypassing the expensive broker network; you are offering customers a direct, modern, and tech-savvy way to meet that matches modern consumer preferences and quickly and easily addresses their insurance needs. Insurers need to strategically assess if they want to go from traditional to direct, or if they want to incorporate direct insurance in their overall distribution network, but adoption overall is rising in markets across the globe. Major insurers in Canada and Brazil have now established digital direct platforms and in the South African market there are already several direct insurers, some of which operate as alternative distribution channels for larger, traditional insurers.

Breaking through the broker network

Direct platforms also effectively address the threat traditional insurers face of becoming irrelevant by relying on a broker-only distribution network. Look at how the Retail Distribution Review (RDR) has put the main distribution channel of most insurers under pressure. In countries like the UK, RDR has eliminated a significant portion of the broker base that simply could not operate in line with the regulation. Australia has also advanced along their RDR journey and South Africa is most probably going to be the next big market to undergo the RDR transformation. While traditional insurers can’t necessarily cut their broker base completely, offering an alternative direct insurance platform could help them remain competitive and keep more customers. This is another strong factor accelerating the move to direct insurance, and InsureTechs are perfectly positioned to take advantage of this migration from broker to direct.

Enhancing the customer experience

Going direct means finding effective ways of connecting with customers and better managing your digital back-office processes in line with your growth and risk strategies. When it comes to the customer experience and creating seamless processes, automation helps improve your interactions dramatically.

Insurance is sometimes referred to as a grudge purchase. The point of direct insurance is to overcome this by meeting the consumer where it suits them, either by going mobile or going online, and making it as easy as possible to deal with you. This approach can touch on every aspect of the customer lifecycle: from easier onboarding and claims processing to targeting campaigns that help retain and grow the insurers’ share of wallet. A direct, digital platform that runs on layers of richer, alternative and intelligent data can mean the difference between being seen as cumbersome or quick in the eye of the consumer. Consumers expect their insurance services to be seamless, smart and at all times relevant.

Going direct enables an array of consumer advantages, such as seamless, faster quoting. TransUnion’s Prefill® solution, for instance, automatically populates application forms with up-to-date information from multiple, reliable data sources. This simplifies and speeds the capture of consumer information, while adding a consumer-friendly, personal touch. In short, your digital platform allows you to deliver the right offer to the right person with an efficient and automated risk management solution that draws on multiple data sets to help you optimise processes while reducing risk. 

Problem solved: Data-driven automation and technology can help traditional insurers create direct insurance platforms that save money and increase efficiency while improving customer experiences. 

Our next challenge: pricing and segmentation.

We’ve looked at how data can help insurers go digital and go direct, but these capabilities mean nothing without the right pricing and segmentation tools. Our next blog will discuss how insurers can leverage data to enhance their pricing models and segment customers to maximize business while minimizing risk.

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