The internet and mobile devices are "empowering customers", says the latest (02/2014) sigma study from Swiss Re. Although intermediaries still have a key role to play, they will "need to adapt to their customers; changing needs and preferences", the study claims.
Because technological advances and "Big Data" are changing the traditional insurance distribution model, insurers with strong brands matched to technological skills will thrive.
Swiss Re chief economist Kurt Karl said that "the statistics on e-commerce insurance mask the profound impact new technologies are having on the distribution process".
Ginger Turner, Swiss Re senior economist and co-author of the study, noted that relatively simple insurance products were being sold online more readily, with new technology making it possible for consumers to interact with their insurance provider anytime and anywhere.
The sigma study found that even in Asia, where most purchasing still takes place via intermediaries, insurers had developed "advanced capabilities for online platforms".
It was observed that in the UK market the online channel had come to dominate after only a few years, thus illustrating "how quickly consumer buying habits can change".
However, sigma also observes that intermediaries will not become irrelevant. Indeed, technology has created new types of intermediary such as the price comparison website. In other cases, many customers still valued the personal interaction and the expert advice of brokers and agents, particularly in complex insurance and life assurance fields. And the world domination of online distribution is still some way off. As the study observed, according to one recent study traditional distribution methods still accounted for 60% of policies sold. Only in non-life in North America is the distribution ratio approaching 50:50. Even UK motor, seen as a vanguard for online sales, only reached 23% of the market via the internet channel in 2012. A further 21% came via an online intermediary, while 32% used a traditional broker.