The evolution of agency networks toward digital agency

Insurance distribution has been facing increased competition in recent years from competitors such as Direct Companies, Brokers, Banks and Post Offices. In addition, difficulty in correctly interpreting customer needs, poor ability to exploit up/cross selling potential, and staff skills that are not fully developed are leading to a gradual loss of profitability for Agencies. Intermediaries not only face competition from traditional industry players, but also from new entrants; online policy comparators are increasing their market share. In addition, the big digital players are preparing to attack this sector thanks to the vast amount of data in their possession, and last but not least, it is necessary to consider the disruptive reach of insurtech , which, through innovative service models, will drive the evolution of the industry.

To cope with market changes, companies and distribution networks are collaborating in developing innovative service models such that agencies are aligned with the ongoing digital transformation processes in the industry. One example is the increasing digitization of the insurance intermediary network, as seen by the heavy investment in the deployment of mobile tools such as tablets or digital channels to support sales processes such as websites or apps. In some cases, these tools are integrated with those of the principal company, such as the possibility of accessing the agency's website through the company portal, so that the insured can easily consult the policy's master data and related services offered. Digitization processes are not only affecting service delivery methods, but also the back office activities of intermediaries; for example, ways of filing policies in digital format are becoming widespread in some agencies. In addition, there is an increased implementation of CRM software, capable of tracking the insured's customer journey, or the advanced analytics systems, which make it possible to provide the customer with an offer more in line with his or her needs.

However, the increasing use of technological devices to carry out front- and back-office processes is pushing intermediaries to deploy initiatives aimed at increasing the level of cyber security. Mitigation of cyber risk will, therefore, be a key topic in intermediaries' business development plans. More attention is also being paid to this issue by the regulator and supervisory authorities.

Despite the critical issues that companies and intermediaries face in implementing the new models, it is necessary to continue with the digital transformation plans that have been initiated. In fact, a study conducted by CeTIF in 2016 on a sample of Italian agencies showed that those that manage to generate higher profitability are those that have achieved greater organizational and operational efficiencies also thanks to the implementation of new digital technologies. Edited by CeTIF - Università Cattolica of Milan