Nearly six years ago we authored a white paper titled, “Distribution Modernization.” Over subsequent years that paper has proven to be somewhat timeless and is still downloaded regularly by insurance professionals. In the paper we speak about the need for insurance organizations to look at distribution in a new light, make distribution management the first link in the insurance value-chain, and the importance of understanding how carriers must engage with their most important business partner: the agent.
As we near the end of 2018 and unwrap 2019, you will see dozens of articles that will rank in importance what technologies or process improvements carriers are looking to invest in. Typically, these lists are somewhat predictable with the latest and most hyped technologies at or near the top. I’m sure this year it will be Artificial Intelligence, Blockchain, Predictive Analytics, InsureTech, and Customer Experience. Typically, the top 3 or 4 will include “improve agent carrier relations and communications.”
Addressing agent carrier relations and communication is precisely what Distribution Modernization is about, and it is as important now as it was six years ago. One reason that modernizing distribution is difficult is that it has unique complexities. Distribution generally encompasses agent recruiting, onboarding, compliance (agent lifecycle), compensation, CRM, portals, and analytics. These areas usually have infrastructure issues, multiple systems, multiple managers and multiple reasons not to do anything.
Because VUE Software offers the only Distribution Management Platform that fully manages all aspects of distribution we have a perspective that is somewhat unique. Our experience shows that carriers in all insurance segments—life/annuities, property and casualty, and health—are addressing distribution as a significant part of their overall business strategy and are willing to invest in improving their distribution strategies. For example, old technologies and processes do not support paperless recruiting and onboarding, agent compliance, gamification, multiple types of compensation and bonus programs, advanced portal technology for agents, mobility or any device anytime, and CRM.
The benefits that come from investing in modernizing distribution are significant. Agents prefer to do business with carriers that offer technology that makes it easy for the agent and carrier to work together. These streamlined business interactions are the net result of modernizing distribution. Modernizing distribution is much more than ease of doing business; it also enables technology that can create competitive advantage for the carrier and the agent. We are regularly seeing RFI’s that want to know about various ways to pay commissions—daily, weekly, semi-monthly—and bonus compensation that is based on premium or unit growth, claims performance, and custom bonus plans.
A carrier that is stuck with old systems and technology is going to have a difficult time competing with carriers that are growth oriented, focused on being a true partner with the agent, and can deliver products and services with new technology.