Ever since the commercialization of the Internet, it has been clear that the right technology alliances can quickly and fundamentally change the digital distribution landscape in ways insurers alone could never have accomplished so quickly.
And today alliances continue to create significant opportunities for insurers to improve their distribution and outreach through partner technologies and methodologies. Indeed, alliances with tech-savvy partners spur digital value that, otherwise, might have taken years to develop; instead, they are becoming rapidly available today.
Finding the right technology partner is vital to advancing the process and adopting the right technologies. For example, one global insurer recently formed a strategic alliance with Facebook to develop its footprints in digital, social and traditional media globally. Such forward-thinking solutions to digital engagement could very well revolutionize the way insurers interact with clients.
Focus on the customer
From a customer service perspective, technology is quickly becoming the preferred route of engagement. Tech-savvy customers enjoy greater efficiencies and feel more connected to their insurers and more confident about their product options. And they can easily
access the information they seek, creating seamless opportunities and additional touch points for insurers beyond the
annual renewal.
Some of the more successful alliances in this area combine keen insight into customer preferences with the ability to create the right operating models to take advantage of such interactions.
And, in doing so, are further enhancing two-way data sharing between brokers and their tech-enabled customers which, in turn, is creating a strong catalyst to cultivate new business.
Creating nontraditional distribution channels
New distribution channels are not limited to the Internet. Indeed, many insurers are now looking to develop affinity deals and partnerships to drive new business. In Russia, for example, new clients are tapped via mobile chains that now sell accident insurance, and supermarket chains offer bill protection, travel, pet, accidental death and life insurance.
Global retailer John Lewis taps multiple insurance providers to market products to its customers. This includes Ageas for travel insurance; Sterling Insurance Co. Ltd. for specialist home insurance; RSA for pet, wedding, event and home insurance; and Friends Provident for life coverage. And South America has seen significant growth in the sales of microinsurance through third parties, such as retailers, drug stores
and supermarkets.
Other innovative initiatives are taking a more cross-industry approach. Bolt Google Connect, from BOLT Solutions Inc. is essentially a new distribution program that helps insurers join Google’s insurance aggregation site—Google Compare—and determine how it fits into their product and distribution strategies.
Digital distribution partnerships are helping insurers to:
- Integrate services into a single package
- Develop portals to enable better agent-broker interaction
- Focus on mobile technologies and
secure infrastructures - Employ geo-based technology to allocate leads, which are automatically assigned to sales people
- Create interactive sales tools and
mobile apps - Digitize the documentation process
- Adopt software to improve production and underwriting insurance reports
- Simplify trust setups for protection policyholders
- Expedite customer claims via mobile-chat applications
- Assist with personal mobile-based safety
- Adopt signature-free (e-sigs)
applications - Analyze data from smartphone apps to help price motor risks individually and reward safe driving
- Select prospects and policyholder audiences to market life insurance via e-mail, display advertising, social media, mobile and direct mail
5 key takeaways
Think about the customer: The success of a distribution channel largely depends on consumer preferences and demands, trends that insurers must understand before investing.
Be open to nontraditional ideas: Selling insurance in supermarkets, over mobile phones and in vending machines may be somewhat unorthodox but could unlock a new market entirely.
Consider the additional value: The use of digital distribution channels opens the door to additional revenue or value generation opportunities for insurers and their customers.
Explore affinity deals: Affinity deals and partnerships can also provide insurers with an established client base to market to.
Don’t forget the basics: Whether for a distribution channel or a new technology, creating the right structure, operating
models and success factors is critical.
Africa partnering for growth: Insurers leverage Africa’s telecoms networks
Technology organizations call it “leapfrogging”—when a country or region skips an entire generation of technology to become a world leader. And, so, it has been with Africa and telecommunications. Landlines are rare—just 2 percent of African homes have one, yet mobile penetration is among the highest in the world in many markets. In Egypt and South Africa, mobile-phone penetration tops 100 percent; Nigeria and Algeria are above 90 percent.
Interestingly, the rapid adoption of mobile has allowed the continent to achieve another leapfrog maneuver, this time in banking.
The launch of Safaricom’s Mpesa
mobile money-transfer service in 2007 has utterly transformed the way people buy and sell items in Kenya; around half of the country’s GDP now funnels through the Safaricom network each year. The initiative’s success has catalyzed dozens of similar systems around the world.
With mobile penetration and usage rates rising everywhere, a small but growing number of insurers are now looking to leverage Africa’s mobile leadership to achieve their own leapfrog maneuver by partnering with leading mobile organizations and local innovators to create
entirely new products and services. Much of the activity has been in three key areas:
- Microinsurance:
How does it work? Similar to bancassurance, mobile-network operators leverage their existing network and customer database to promote products, manage claims and handle customer inquiries through voice and SMS, while insurers manufacture products, receive premiums and settle claims through mobile wallets.
Who is doing it? One of the first and most successful programs (Mi-Life) was launched in 2010 through a partnership between Hollard Insurance (one of South Africa’s insurers), MTN Ghana (a mobile operator), MicroEnsure (a rapidly growing mobile-insurance distributor) and MFS Africa (a mobile-wallet operator).
- Weather-index microinsurance:
How does it work? This variation of the microinsurance model is intended to protect farmers from drought risk and excess rain. Farmers buy coverage when purchasing agricultural inputs, registering the product electronically via a smartphone scanner.
Stockists collect premiums and transmit them via Mpesa, which also disburses claims to farmers.
Who is doing it? Kenyan insurance company UAP Insurance Ltd. partnered with mobile operator Safaricom and Switzerland-based Syngenta Foundation for Sustainable Agriculture (SFSA) to launch Kilimo Salama crop insurance.
- Mobile-network insurance partnerships:
How does it work? Mobile-network operators bear insurance costs on behalf of customers, who are covered provided their monthly airtime consumption exceeds a specified threshold. The included insurance coverage then increases commensurate to airtime consumption.
Who is doing it? A number of programs exist across the continent including in Ghana where Vanguard Life and Bima, both local insurance providers have partnered with MicroEnsure (the mobile-insurance distributor) and Tigo Ghana (a mobile-network operator).
What makes these partnerships work?
Besides the ability to share resources, R&D budgets and risks, these innovative partnerships also leverage the core value proposition of each party to create a new idea or concept.
For insurers, partnering with a trusted brand is also critical, particularly in markets where the public remains skeptical about the benefits of insurance.
Ultimately, by creating partnerships with nontraditional players, insurers operating in Africa have been able to expand their market reach, improve their reputation, drive growth and inspire world-leading innovation.
The article was taken from KPMG’s special publication entitled The power of alliances.
2016 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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