How is InsurTech simplifying insurance distribution?

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Reading Time: 4 minutes

Key Takeaways

  • Insurance distribution refers to the channels through which different kinds of insurance policies are made available to customers who need it.
  • It has been challenging for insurance companies to maintain sales volume during the pandemic.
  • Insurance agents and brokers are reimagining and thinking of newer ways to build potential relationships with clients with the help of InsurTech, more so since the COVID-19 pandemic began.

The insurance industry is complex and is undergoing changes at a rapid rate. With the advent of InsurTech and now the pandemic, we are seeing a shift from a product-centric approach to a customer-centric approach. This will change the way insurance is distributed, bought etc. In this blog, we’ll be focusing on how InsurTech is going to simplify insurance distribution.


What is insurance distribution?

To put it simply, insurance distribution is the way the insurance policy reaches you.
Insurance distributionrefers to the channels through which different kinds of insurance policies are made available to customers who need it.


Today, there are different distribution channels that your insurance company can use to reach you. Learn more about them here.

It includes activities of advising potential customers and users, carrying out preparatory work to ensure the conclusion of contracts, assisting in carrying outperformance of such contracts, giving consumers the right technology to access insurance etc.


How are global trends in InsurTech shaping the future?

At the moment, several advancements within InsurTech are shaping the future of insurance some common ways for this are :

  1. Artificial Intelligence and Machine Learning (risk prevention and smarter claims assessment),
  2. Data analytics (customisation, better sales),
  3. Open API (partnerships, newer propositions),
  4. Cloud (efficient cost model, less time to market),
  5. Internet of Things (consumer behaviour insights, ecosystems integration), and
  6. Blockchain technology (increased data sharing and collaboration).

How does traditional insurance distribution work?

Traditionally, agents and brokers have sold insurance face to face. In terms of the number of premiums, nearly 99 per cent of the life insurance policies are sold face-to-face. In the non-life insurance sector as well, it is agents and brokers who help seal the deal.

These agents and brokers would represent a single insurance company or represent several insurers. However, the ability to reach and manage people was limited to a certain number and geography.


In the 1980s, insurance companies began selling annuities and life insurance through banks and financial advisors, other professional groups and the workplace. Some are even sold by stockbrokers. According to a study, independent insurance agents have held the life insurance distribution market captive at 48 per cent in 2010 and 53 per cent in 2019. In 2019, financial institutions and other channels held only 5 per cent of the market share in terms of distribution.


The new era of insurance distribution

Insurance agents and brokers have been the major force behind insurance distribution and still are. While these channels have shifted during the last few decades, technology savvy players have begun entering the insurance sector, bringing with them their innovative, disruptive and opportunity-filled power.


InsurTech comes under the umbrella of financial technology (FinTech) and is predicted to alter the insurance distribution terrain and bring in changes similar to those seen in banking.


Shift to digital tools – Today people can easily access anything from their devices via the internet. They often use the internet to collect information about a particular policy and compare it to other existing ones.


Customers who may be encountering severe health and economic challenges are now getting to interact with agents online to have uninterrupted services. Insurance agents and brokers are reimagining and thinking of newer ways to build potential relationships with clients, more so since the COVID-19 pandemic began.


According to a McKinsey study in the US in 2020, 90 per cent of sales conversations were conducted in person in January. By May, this number had dropped to less than 5 per cent. The pandemic has increased the desire for comfort around digital and remote interaction models and tools for all –  customers, agents and insurers.


Shift to self-service – Customers and clients are now demanding more and more self-service through digital means, highlighting the importance of technology in this space.


According to a consumer survey in Spain, access to insurance through the Internet has increased by almost 30 per cent since the pandemic started. The same survey also recorded customers were highly dissatisfied with digital delivery in insurance. This is something insurers will need to invest in – expansion and improvement of self-service tools for better agent satisfaction and customer support experience.


Investing in self-service portals will also attract millennials to purchase insurance. For this, insurers will have to identify products that are likely to be sold online and analyse consumer behaviour. This will help increase customer satisfaction and reduce operational workload.


It has been challenging for insurance companies to maintain sales volume during the pandemic. The aim is to return the business to scale soon.


Digitisation of existing offline processes – In India, not many insurers have a digital strategy. Even those that believe digitisation will become a trend even after the pandemic will have to start thinking of implementing one.


Today, intermediary channels like OneAssure and PolicyBazaar sell insurance online. There are many processes that require offline execution – such as physical signatures and medical underwriting. To be able to fulfil the demands of consumers, agents and brokers will have to begin digitisation from existing distribution channels.


Due to the pandemic of 2020, many customers do not want to engage in the physical medical underwriting process fearing a chance of contagion. For this, insurers have to rapidly find ways to digitally underwrite the business.


Digitisation of existing offline processes can be done by training insurance agents to use digital tools to interact with customers, providing agents with digitised tools to follow up with day to day processes, collaborating with direct channels and agents equally etc.


This will help improve customer convenience and help maintain the human component of offline, physical interactions.



The insurance sector is a very complex market and new challenges emerge each day. To tackle all this, insurers must look at digitising distribution channels to optimize costs, maintain sales volume, and improve overall accuracy. This is where InsurTech comes into the picture and simplifies these processes.

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