The world of insurance distribution has changed dramatically inrecent years. Major trends have altered thedistribution landscape dramatically and permanently, and insurersface significant challenges in adapting to these newrealities.

Consumers have been avid users of the Internet, and they havelearned to research and compare options before buying. Knowledgeable individuals rarely buy through any distributionchannel without investigating similar products, especially on “bigticket” items such as insurance. More and more consumers do theirown research on line, and then seek recommendations from friends,using social media sites or referral sources such as Angie’s list,Yelp, and TripAdvisor.

In reaching these consumers, insurers have primarily beendependent upon an agent/broker distribution model that isincreasingly challenged to connect with, let alone meet, changingconsumer expectations. The “experience” model for insurancesales is under increasing stress, and insurers have come to therealization that more efficient methods for recruiting anddeveloping agents and brokers are essential --not only to increasesales but to lower operating costs. The limits ofcurrent distribution models-- and their inability to keep up withrapid demographic, social and technological change – have becomeall too evident.

Today, five new disruptive technologies make it possible forinsurers to transform distribution and significantly growsales:

1) Mobile technologies andplatforms -- mobile phone applications, text messaging, and newermobile tablet devices such as the iPad --provide customers andagents with instant access to insurers, agents and oneanother. This two-way street allows insurers and agents toimprove the frequency of interaction with customers, and providealerts and services to address key “moments of truths” in managingsales and service interactions around key events. Proper use ofmobile solutions can help insurers increase the amount of timeagents spend with customers, and dramatically reduce the overallcycle time needed from lead qualification through policyissue. Mobility can also reduce overall reliance on supportstaff, as well as the time needed to prepare for client meetingsand preparations.

2) Good analytical capabilitiesare at the foundation of any high performing business. InAccenture’s research, top-performing companies were five times morelikely than lower-performing companies to have identifiedanalytical capabilities as a key element of their strategy.Insurance companies, through their actuarial departments, pioneeredthe use of what has come to be known today as predictive analytics,using sophisticated models in areas such as reserving forrisk. Insurers have not been as aggressive as consumerproduct companies in aggregating customer information and using itto develop the right tailored products at the right price, and todeliver them to suitable customers through appropriatechannels. The opportunities, however, are abundant.

3) Insurance grew up as anetworking industry, but ironically, insurers have lagged inadopting social media. Social media is a farreaching and transformative phenomenon, changing the way peoplecommunicate with and connect with one another. Social media givesagents a tremendous opportunity to innovate and re-create theirpersonal brands within the social community. Mostagents and brokers are in the “crawl” stage, where they are in theprocess of creating their Facebook, or Linked In profiles. Asthey transition to the “walk” stage, they begin to ask theirclients for recommendations, and build their digital brands asexperts for many of their services. As high performers, inthe “run” stage, they convert those recommendations into a majorsource of referrals and maximize the power of their social graph. Social media represent a powerful business developmenttool, and will dramatically change the way agents build effectiveand rapid networks to scale their businesses.

₄₎ New collaborative technologies such as high-definition video,virtual “white boards” and meeting software, and new smart phonetechnologies such as Apple’s FaceTime are significantly changingthe impact of live communications and making geographic barriersirrelevant. While agents formerly were limited to their own citiesand regions, effective collaboration with customers is nowrelatively easy, and the cost of such technologies is droppingquickly. Unified communications and collaboration solutions candeliver the impact of in-person meetings, making it possible tobring together not just the client or prospect, but appropriateexperts whose physical presence might not be economically justifiedin a typical face to face sales situation.As is the case with othernew technologies, collaboration not only improves the context forcross-selling and the introduction of related products, it offersimportant opportunities to accelerate the training and developmentof agents and brokers and their support teams while doing so forlower cost.

5) Closely related to socialmedia—and always enormously popular elements of online and mobilecommunications—digital marketing and gaming are relatively newchannels for insurance distribution. Gaming has passedemail as the second most popular activity online, behind socialnetworking. Gaming can be a powerful educational tool for carriers.Compared with traditional classroom learning, simulations helpparticipants master content and new behaviors 40 to 70 percentfaster. This is an important consideration inselling a complex and often difficult-to-understand product such asinsurance (and in teaching customers and agents about insuranceproducts). For agents, especially, gaming is a greatopportunity to get them up the proficiency curve more quickly.Insurers are “getting into the game.” Farmers Insurance has linkeditself to the popular social game, Farmville, which allows users tosimulate real-world farming by growing crops and raisinglivestock. Farmville game players can “buy” insurance againstbad weather and crop failure through Farmers as part of the gamescenario, and allows Farmers to brand itself as a company moreknown for “protection”.

Each of these new disruptive technologies can individually helpinsurers increase demand, accelerate sales and service cycle time,and most importantly grow sales. It is when these innovativetechnologies work in concert, however, that carriers can trulyinnovate and transform distribution and sales. The cumulativeimpact of these new technologies as an integrated and coordinatedsystem – a concept we have termed “Holism” – is far greater thanthe impact realized by the sum of the individualtechnologies.

By managing the investments and alignment of these fivedisruptive technologies into an integrated Holism architecture,carriers can realize five key benefits:

Holism accelerates sales cycle time and speed toissue.

• By better leveraging the expertise available within theorganization, lowering geographical barriers and reducing thenumber of meetings, and equipping agents (and customers) with morecontext and deeper background before any advisory interaction,Holism can reduce the number of days from initial awareness to policy issue.

Holism improves the context in whichagents and brokers sell, and their understanding of their owncustomers.

• An environment powered by Holism will enable high performingagents to receive more than half of their leads via high qualityreferrals from their online and offline community of clients whorecommend them. They will also spend less time chasing afterunqualified prospects and on the labor-intensive and unappealingprocess of cold calling.

Holism helps insurers attract and retain betterproducers.

• Insurance was one of the original “social networking”businesses. By returning an element of fun to the business –and turning customers from “people we sell to” into “people who buyfrom us”— Holism makes the industry more attractive to current andprospective producers. And, by increasing the success rate ofagents and brokers, Holism helps increase the number of highperforming agents while allowing those agents to help more clientsand feel better about their jobs.

Holism reduces the overall technology cost of ownershipfor insurers.

• Carriers that initiated investments in the five enablingtechnologies that drive Holism have in many cases built “pilot”solutions, developed proof of concepts for the point technology, orat best released a point capability into production. Theseinvestments are typically controlled today by separate budgets,with separate technology and business sponsors, and, most likely,new and fragmented support organizations. Carriers have yetto build a holistic approach to align these new capabilities withthe key distribution business processes that engage or educate acustomer, with those processes that convert a lead to an issuedpolicy, and finally with those processes that help serve or developcustomers. By integrating the five enabling capabilities ofHolism into an enterprise architecture, carriers can bring realinnovation to their distribution strategies, while dramaticallyreducing field development and ongoing operating costs.

Holism builds emotional connections with customers andcreates a “Wow” factor among producers.

• Through Holism, carriers can innovate and transform the waythey communicate their brand messages through all strategicdistribution channels. Introducing and encouraging meaningfuldialogue within the fabric of existing social communities can makeit easier to educate and engage the addressable market ofcustomers.

We believe the opportunities presented by Holism are every bitas important as those presented by advances in policyadministration, underwriting, enterprise risk, claims and otherareas in terms of their potential impact upon top-line growth andprofitability. Insurers who recognize and convert theseopportunities will be able to build and sustain competitiveadvantage by widening the demand “funnel” and building strongerconnections with their clients and prospects.