Direct-To-Consumer Is Future Of Health Agent Business

By Cyril Tuohy

InsuranceNewsNet

With state-based health insurance exchanges slated to go into effect next year, the big story for the health insurance distribution network is going to be the evolution of the retail, direct-to-consumer model as adapted to insurance plans, according to experts.

Agents, brokers and financial advisors – the key intermediaries in the chain – aren’t about to fade away, of course, but they will be forced to integrate a multitude of channels into their distribution strategy for life, retirement and health care products and services.

“Health care reform and what that’s doing to a lot of health plans who have historically focused on group health, are becoming retailers as employers get out of benefits, and private and public exchanges get set up,” said Richard K. Berry, director of financial services with the Insurance Industry Group of Deloitte Consulting.

Tectonic changes in healthcare aren’t the only reason for more pressure on intermediaries to adopt a retail model – or elements thereof.

Anemic investment yields – at least for now – and a wobbly economic recovery are forcing the industry to look to new ways to sell coverage, and use more efficient channels to deliver once the sale is made. The inexorable march of technology into every aspect of consumers’ lives has also ratcheted up buyer expectations in terms of speed, price and the service, even if other industries like consumer retail and banking have led the way.

Big segments of the life and health market remain underinsured or uninsured altogether, even when potential buyers understand the importance of life coverage, which means that agents are walking away from opportunities, Berry said.

Agents’ roles are also changing. With the days of selling one or two life or retirement products long gone in favor of a model that stresses the broader, advisory function enshrined in the “financial advisor” moniker, brokers are widening their product offerings and skill set.

“One thing clearly emerging, due to demographics, is that the median age of a full-time life agent is in the late 50s,” Berry said, in an interview with InsuranceNewsNet. “There are fewer companies recruiting new people in the life agency business than was the case 15 years ago.”

With a decline in the number of practicing life agents,  the role of brokering investment and retirement advice will grow. Life and annuity products are simply becoming one of many arrows in a financial advisor’s quiver.

And the number of channels through which carriers reach consumers keeps growing. From traditional media, to social media, to mobile platforms, to flesh-and-blood agents and brokers, to wholesalers, to call centers and websites; nearly all of them present ideal channels to efficiently deliver smaller-volume policies.

Since consumers are not “one-dimensional in how they access financial services,” Berry said, carriers also have to be deliberate in which channel they decide to use to deliver their products and services. And in case market forces don’t provide quite enough pressure on agents and advisors to change, regulators are looking over the industry’s shoulder.

“Insurance and securities regulators continue to pay attention to make sure consumers [are] well served and so oversight of what's being done by carriers and agents is an important aspect to being successful in the business,” Berry added. “There’s an opportunity for advisors and for carriers to support advisors in ways that meet everybody's needs.”

Rebecca C. Amoroso, vice chairman and U.S. insurance leader with Deloitte, in an annual life and annuity industry review issued earlier this year, noted that despite all the changes and the rising importance of technology, insurance is still a “people business.”

Adapting to new direct-to-consumer models won’t be easy, but the longer carriers and agents wait to implement changes, the harder it will be for them to catch up and the more vulnerable they will be to losing customers to the competition forever.

Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at Cyril.Tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.