A high percentage of life and annuity company executives report middling satisfaction with agent portals. But insurers plan to continue improving digital distribution channels in 2018, according to a new report.
Internet portals, which let agents log into company systems to track customer policies, provide the key link between the insurer and their retail distribution advisor.
Novarica's annual survey on the state of information technology spending in the coming year revealed many insurers gave themselves failing or barely passing grades on their portal capabilities.
Of large life and annuity insurers, 38 percent said that their current agent portal capabilities were “poor,” and 31 percent said they were “acceptable,” according to the report.
Only 15 percent of large life and annuity companies reported “strong” agent portal capabilities, and 8 percent considered their portal capabilities “very strong,” Novarica found.
Among midsize life and annuity insurers, one in 10 respondents said their agent portal capabilities were “poor,” 30 percent considered them “acceptable,” 20 percent said they were “strong,” and 30 percent termed them “very strong.”
Customer Portals Need Work, Too
But the survey found that insurance company executives believe customer portals, which serve as the key link between a company and a client, also need work.
As many as 8 percent of the large life and annuity insurers said their customer portal was “very poor” and 38 percent classified their customer portal as “poor,” the survey found.
Among the midsize life and annuity companies responding, 20 percent classified their customer portal as “very poor,” 30 percent as “poor” and 20 percent as “acceptable.”
Insurers are aware of these shortcomings, and a majority said they plan to replace or undertake major enhancements to their agent portals in 2018.
Among large life and annuity companies, 23 percent said they plan major enhancements and 31 percent said they plan new replacements, the survey found. Large companies were described as those generating more than $1 billion in annual premium.
In the midsize insurer segment, three out of 10 respondents said they planned major enhancements to their agent portal systems, one in 10 planned a new replacement in 2018, and one in five planned to continue agent portal replacements already in progress.
Midsize insurers are those generating less than $1 billion in annual premium.
Digital marketing and customer engagement are “the most commonly demanded business capabilities.” They are considered even more important than speed-to-market or product changes, said the report’s author, Novarica CEO Matthew Josefowicz.
Low Rates and Profit Margins
Low interest rates mean low portfolio yields. Low yields mean pressure on insurer profit margins.
Digital infrastructures, which lower costs, mean insurers operate more efficiently. Nearly two-thirds of the life and annuity companies surveyed said digital infrastructures were a priority in 2018 and beyond, the survey found.
It’s no secret that young consumers demand digital capabilities. So if insurers care to remain relevant, a robust digital strategy is a must-have, even if interest rates were to rise.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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