Insurance distribution has been trending towards Direct-to-Consumer solutions. Whether a startup direct writing Insurtech or well-established insurer, Direct-to-Consumer has been the model of choice. Insurers are responding to customer demand for lower prices by eliminating independent insurance brokers for commoditized insurance products.
Commoditized insurance products include home, personal auto and smaller commercial. The impact of D2C is quite apparent as these products aggregate to easily over 50% of the total P&C market.
Consumers Are Responding to Direct Insurers
J.D. Power’s 2019 P&C Insurance Industry Insight says the direct-to-consumer model gained traction in 2018. According to the report, “Increasingly, those insurers who get that consumer model right are the ones who will dominate the market.”
In 2018, Geico and Progressive captured $7.8 billion in direct written premiums, or 54 percent of the auto insurance industry’s gains. According to J.D. Power’s 2020 U.S Insurance Shopping Study, Geico and Progressive captured almost 92 percent of the past year’s premium growth.
D2C has two advantages over insurance agents and brokers for consumers. The first advantage is lower pricing and the second is better consumer sales experiences. Both of these advantages are a direct result of efficiency from single insurer solutions. Developments in technology did not create D2C, it was just called “Direct” but technology allows Direct Insurers to gain even more advantages in both pricing and service.
Distribution through intermediaries, brokers and agents, hasn’t been able to respond adequately to counter those direct advantages for consumers. Over reliance on incremental improvement to current systems is not creating new opportunities. Incremental improvement completely ignores fundamental breakdowns in carrier/broker distribution causing massive manual work arounds.
Yet, intermediary distribution has advantages of its own. Direct distribution won’t offer independent advice, choice or advocacy (particularly in the event of a claim). Unfortunately, these all run a distant second to price during the buying process, which is ranked #1 by consumers as the key factor in their purchase decision.
Enter Direct-to-Consumer 2.0
Direct-to-Consumer 2.0 or D2C2.0 is the next level of distribution that creates new efficiencies through cloud platform, AI and RPA technologies. While these technologies are used ubiquitously throughout the insurance industry, D2C2.0 uses the technology for a distinctly better customer solution. A D2C2.0 solution automates the entire insurance distribution vertical from underwriting through sales; not just for one insurer, but for multiple insurers simultaneously.
This is the very first multi-carrier Real-Time customer insurance experience. Awywi’s Insurance Fulfillment Platform technology enables a 100% Real-Time customer experience of quote, issue, change and renewal from all insurers. The result is elimination of manual processes and friction within the entire vertical resulting in lower costs and a better experience for customers.
Insurance has failed to lower costs to the point that stakeholders adopting the IFP platform will dominate the industry with a significantly better customer experience and lower cost structure. The platform can benefit insurers as well as brokers willing to make the investment.
Throughout the self-serve process a licensed representative can step in, as needed, for advice, guidance or support. Now in addition to all the benefits of D2C and now choice, the customer can depend upon on-demand independent advice and advocacy.
“The platform can benefit insurers as well as brokers…”
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