The evolution of the life/annuity agent experience

Only a few years ago, with the onset of the COVID-19 pandemic, many in the life and annuity insurance industry believed that the direct-to-consumer channel would be a salvation — and that agents would be replaced by automated processes. But today, as we look at customer experience preferences through the lens of channel preferences, it’s clear that a changing industry doesn’t have to come at the expense of the agents. Technology won’t replace the personal touch; it will improve and augment it.

In 2024, the industry will focus on a number of technology priorities. As detailed in Celent’s  Technology Trends Previsory Webinar: Life Insurance 2024 Edition, one of the main tech priorities will be the distribution revolution and how it can enhance customer experience. This may include digitally enabling insurance agents to help policyholders who are looking for advice, deploying and refining the self-service capabilities that are available to customers, and identifying new channels and products based on customers’ preferences. Insurers must support the ongoing role and relevance of agents to best meet the needs of policyholders.

The omnichannel experience requires access to agents

An omnichannel experience integrates and coordinates all channels that customers use to interact with an insurer. This approach places a priority on meeting customers’ preferences on how they want to interact with an insurer.

Even with the new distribution models available in today’s omnichannel environment, agents aren’t going away. Customers still need and look for advice about what to buy and how much coverage is necessary. As a result, agents still make about 90% of life insurance sales in the United States, meaning that they’re a crucial distribution channel.

Although digital channels have grown increasingly prominent and customers embrace them, customer behavior shows that many still expect and rely on access to agents. When taking out or modifying life insurance policies, some consumers want purely digital access, where they complete everything online, using an app or a website. But the majority of customers want to interact with a human agent. This group uses multiple channels, completing most steps online, then also relying on some support from the insurer, either remotely (such as by phone or via email communications) or in-person. Some consumers still prefer an entirely in-person experience, seeking guidance from and completing policy transactions with an agent or broker.

Insurers must invest in improving the agent experience

Given the ongoing significance of agents, life and annuity insurers must focus on making it faster and easier for agents to do business with them. While making tech investments — for everything including core transformations, cloud adoption, data migration, analytics, automated processes, and the transformative use cases of generative AI — insurers must also consider and focus on the way in which technologies can support and augment the role of agents. This includes:

• Making it faster and easier for agents to do business.
• Enabling agents to serve their customers better.
• Attracting and retaining more agents to sell.

The ease of doing business with a particular insurer is a crucial factor in how an agent guides clients about where to take their business. Many agents will avoid placing business with insurers that don’t have an easy-to-use portal, for example. Therefore, efforts to strengthen an insurance company’s operating efficiency, improve policy-level underwriting and pricing, and enable more digital insurance products are all ways that can help improve the customer experience and, in turn, support the relationships with agents.

By closing the gap between the technologies available to their agent force (such as for lead generation, customer data and analytics, and interactive visualizations) and the integration of reporting analytics, insurers have an opportunity to differentiate themselves in the marketplace.

Areas of focus for agent digitization

Life and annuity insurers who are looking to differentiate themselves by supporting agents as part of overall digitization initiatives may take action in four focus areas:

1. Increase straight-through processing rates. Life insurers should set high targets for STP (which facilitates the automated processing of transactions, eliminating the need for manual steps) for as many lines of business as possible. Underwriters can produce the results of automated underwriting to help improve STP, particularly for highly complex cases.
2. Enhance the agent value proposition. By enhancing the agents’ roles as advocates and advisors, insurers can help agents become “advisors of the future.” Agents should have the support of insurers not just at the time of sale for a policy, but while servicing the account and at the most delicate, sensitive touchpoint: the claim.
3. Improve digital integration with agents by building out application programming interfaces. APIs, which enable multiple applications to interact with one another, equip agents to create customer-facing digital experiences that work across insurers. APIs support the integration of internal systems and data for reporting, along with third-party data.
4. Expand data and analytics capabilities. Artificial intelligence and machine learning can help identify and work with the best-performing agents to help support their work. Predictive models can also help provide agents with the next best actions to match the right product with the right application.

The personal touch remains relevant in digital distribution

 A holistic view across their delivery activities can help insurers stay competitive, improve operational efficiency and meet the evolving needs of today’s customers. As life and annuity insurers continue their digital distribution and transformation journeys in 2024, the agent will remain an essential part of their overall success.

Fabio Sarrico is an analyst in the insurance practice at Celent, a global research and advisory firm focused on technology and business strategies in the financial services industry. Contact him at [email protected].

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