We recently talked about the last mile challenge for advisors. We covered ways for advisors to adapt to close this post-sale gap between advisors and their clients and create a better relationship between parties. Part two will discuss why closing the last mile is critical for advisors.
“The last mile” is a term that is paramount in the e-commerce and logistics industry. It refers to the movement of goods from a warehouse or distribution center to the final destination, which is usually a personal residence. For example, Fed Ex will fly packages from Boston to Los Angeles with little difficulty or error. The complications arise when transferring those packages to the correct destinations once they have landed. Packages need to be delivered in an efficient manner that aligns with increasing consumer demands.
Without a satisfactory experience for the consumer, the business falls behind. Consumers still base their purchases on the same criteria online as in a brick-and-mortar store, including customer service, personalization, style, and real-time transparency.
In the insurance industry, a similar issue arises when trying to close the last mile between carriers and the end-consumer. Though finding a product or policy that best fits the client’s needs is not always easy, insurance technology has made it much easier to search between carriers, navigate underwriting manuals, and find good options. However, these advancements are not sufficient as understanding the intricacies of insurance policies and choosing the right one can be complex. This is why most individuals still benefit from an advisor to help them navigate the insurance process.
Aside from an advisor helping a client navigate through products and solutions, good advisors help their clients post-sale. Going back to the FedEx example, if a consumer does not receive their package, they are able to use tracking numbers or contact the delivery company to resolve the issue. In the insurance industry, if a client passes away with an untapped policy, the beneficiaries often do not know that there is a “package” waiting for them. Financial advisors are an integral part of the insurance process as they serve as the informant and execute the policy on the client’s behalf once they have passed.
This oversight has resulted in a gap in translating a policy and its benefits to the client and their beneficiaries. E-commerce models provide a chat bot or other solution to connect users to a professional should they need extra assistance and allow for follow-up after a package has been delivered; a similar approach should be taken in the insurance industry to ensure those who require guidance have access to it rather than excluding insurance advisors altogether.
The Last Mile Challenge for Insurance
For decades, insurance advisors built their practice on referrals and in-person meetings. As the digital era takes over, agents have attempted to digitize their practice using drop tickets, e-apps and e-policy deliveries. These services are a step in the right direction and undoubtedly useful, but it is not enough to close the last mile and give advisors the insights that would allow them to better their business. Not only that, but it is not enough to keep consumers engaged and ensure their plans are carried out.
Most consumers are looking for ways to access insurance policies through an omnichannel approach that can give them the answers they are looking for immediately. This is fueled through e-commerce processes that have allowed for one-click purchases, mobile accessibility, and next- or same-day deliveries. These new expectations apply to the insurance industry as:
- more than half of all consumers are interested in increasing or buying life insurance, but 90% do not want to do business face to face;
- quality and ease of use are the most important factors for insurance customers;
- 80% of customers said that agents should prioritize the right policy for a client rather than the lowest price; and
- millennials with increased connectivity with their insurance providers were more loyal, bought more products, and gave higher ratings.
Many insurance companies are making changes to their business model without the end-consumer in mind. Studies indicate that the vast majority of investment is going into direct-to-consumer insurtechs. Based on research from the Wall Street Journal, many of these insurtech companies are looking to become the carriers themselves, thereby displacing advisors. Technology may play an essential role in closing the last mile for consumers by fostering more fluent access and communication, but advisors are still critical for the consumer experience. Some consumers will need to consult an advisor to get the quality, personalization, and connectivity they want. Technology cannot replace the personal relationship, experience, and expertise an advisor provides.
Advisors play an imperative role in closing the last mile by transferring policies to their clients’ beneficiaries. Clients may be able to access different policies on their own but don’t have the expertise to create a plan that complements that policy and make sure it is executed as it should be. Consumers may not want in-person meetings, but they still rely on an advisor to counsel them, explain the details, and assist them in ensuring everything is secure and accessible.
How to Succeed Moving Forward
LegacyShield believes that the industry can adapt to benefit both the advisor and the end-consumer, their customers and beneficiaries, by creating a relationship-focused business model powered by insurance technology. Different organizations may already have tools in place that work well and engage consumers at specific points in the buyer’s journey but there lacks a fully encompassing suite of services connected to the client at all times. That’s why we are pioneering this change in the industry through our newest platform, Link.
Link is an advisor-rich software that serves as a communication platform between advisors and their clients. Advisors who manage their practice through Link can receive and deliver client information such as insurance policies securely. Their clients can work within the platform, inputting important information and sharing it directly with their advisor or any other trusted individuals, including family.
This collaboration provides insights that make it easier for advisors to identify gaps in coverage, recommend solutions, and build a connection with the client’s entire network. By storing everything digitally, the family is more exposed to the advisor and knows where to turn to access all critical information when the time comes. Advisors who form more personal relationships with their clients are more likely to retain clients, increase sales among clients, and get more recommendations. Link allows advisors to grow their book of business organically while providing consumers with the quality and ease of use they desire.
The amount of money invested in insurtech in the first half of 2020 is almost $2.2 billion and continues to increase. Carriers and agencies are looking to insurtech to develop a competitive edge and provide efficient transactions and personalization to customers while many insurtechs are looking to displace carriers, agencies, and their agents. These digital solutions adopted by the major players in the insurance industry only cater to the core values of their organization and not the entire picture.
Adopting a CRM, quoting software, or revenue generation lifestyle tool is beneficial for the carrier, but no business is working to connect all players involved and truly close the last mile in the insurance industry. We acknowledge that carriers have been able to close the last mile with the consumer, but only from a one-on-one relationship. This interaction between carrier and consumer does not provide insights to the advisor, and any knowledge gained cannot overlap between carriers. This gap needs to be addressed.
LegacyShield has organizational leadership from all different stages of the value chain; we have purchased insurance, worked as insurance agents, and been involved with distributors and carriers. Through this holistic lens our leaders saw a problem that specialized insurance products cannot fix – an insurtech platform to piece all of these stages together and fully close the last mile for insurance carriers, agents, consumers, and their beneficiaries.
Closing the last mile goes beyond one-on-one interactions and policies. Carriers and agents will be able to analyze more data and have better insights into the customer experience when they collaborate. Agents who are better connected to their customers end up with clients for life. When the agent is there to serve the client’s beneficiaries when the time comes, they have the potential to create multigenerational relationships, which maintains wealth and results in more policies sold, which benefits the carriers. Closing the last mile will create an interdependent strategy among all parties that is mutually valuable.