Improving Insurance by Fermion’s Peter Miller

Now, more than ever, the entire insurance industry requires leadership from its distributors, as well as that of insurers. The whole nature of how insurance policies are developed and sold is changing, and the policy distributor should have a greater say in how the policy is shaped and what it delivers.

Historically, retail insurance is a product-push sale, where the product development is performed by the insurance company with some input from the distributor and nil to minimal input from the target customer. Insurance companies control the product proposition.

In Southeast Asia today, policies are sold by a web of agents, brokers, banks, non-bank affinities and increasingly direct to the consumer. To illustrate: a bank’s relationship manager may offer insurance products on behalf of the insurance company. When the policy is sold, the bank and by extension the relationship manager make a commission from the insurance company.

The model is changing. In 2021 in Singapore, a third of new business was derived from channels not tied to representatives, with the remainder of new business arising mostly through bank representatives and financial advisers.

With the COVID-19 pandemic, digital transformation in insurance became about how the policy is sold, rather than the policy itself, or the premium.

From product push, the industry is moving to embed products by offering end-to-end distribution solutions and increasingly, ecosystem solutions. However, the promise is yet to become an everyday reality.

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