A Winning Approach to Alternative Distribution for Insurers

Mar 29, 2023 Carriers

A Winning Approach to Alternative Distribution for Insurers

Insurer reviews alternative distribution methods with colleagues.

Between the market effects of the pandemic and innovative market entrants, the insurance industry is undergoing a major transformation. For one, the push to adopt alternative distribution has accelerated significantly. Insurers face increasing pressure to innovate and adapt.

But where there is a challenge, there is opportunity.

Today’s customers have fundamentally different attitudes toward insurance than their parents and grandparents. Not only have their needs, knowledge, and expectations changed, but they are digital natives accustomed to the ease and convenience of digital distribution in most aspects of their lives. With comparison sites, ratings, and testimonials a click away, any friction encountered during the sign-up process often leads to abandonment.

Digital transformation is a matter-of-fact force that’s driving the industry forward. We are rapidly shifting from product-led to service-led offerings that provide customers with a convenient, holistic experience. Deloitte estimates that 33% of premium insurance volume will come from new propositions by 2024.

Alternative Distribution Channels

Insurance carriers need to take another look at their distribution strategy. Adjustments are needed to upskill sales forces to utilize digital capabilities, create new digital-first products, and enable a seamless experience across multiple channels.

Embedded Financial Services

Embedded financial services, including eCommerce payments and insurance, are increasingly widespread.

  • Nearly 56% of consumers have used a Buy-Now-Pay-Later service while shopping online (an increase of almost 50% in less than a year).
  • 60% of consumers would prefer to purchase insurance at the point of sale of the associated product or service, rather than using a retailer-referred source.
  • Once they buy insurance in this manner, 83% are more likely to buy insurance again for future online purchases in the same manner.

Embedded insurance distribution represents a triple win for consumers, distribution partners, and insurers alike. This form of alternative distribution creates a better customer journey, simplifying the buying experience and saving time. Insurers capture additional revenue streams, more efficient distribution, and a continuous feedback loop to improve their products.

Various insurtechs have sprung up to provide embedding services that any business can use to integrate insurance into its offerings. Industry analysts expect huge growth in embedded financial services over the next few years, to more than $700 billion in gross written premiums (GWP) by 2030. Penetration will vary significantly by product line, with the highest expected in auto sales, travel bookings, and property sales and rentals.

Self-Service Digital Assistants

Customer experience is becoming a key competitive differentiator. Providing customers with enhanced self-service capabilities and omnichannel experiences is rapidly becoming the key to future success.

GenX and GenY lead the way in customers demanding self-service capabilities for nearly all the products and services they purchase and use, including insurance. Some expect to do their own research before proceeding independently through the buying process. Others prefer to contact an agent or call center for additional details. Carriers can meet these customers where they are by integrating chatbots, voice bots, and natural language processing (NLP) into new and existing solutions.

Digital Sales Force Enablement

Moving to digital services only partially removes the need for agents, brokers, and other intermediaries and partners. Along with developing new digital channels, carriers must digitize their sales force as part of their alternative distribution strategy. This includes providing digital tools that allow the sales force to work effectively and remotely.

Omnichannel Experiences

Customers want to interact with carriers across multiple channels, including web, mobile, phone, social media, digital assistants, and in-person. They also want to move seamlessly from one channel to another without repeating themselves.

A customer who initiates an estimate online may want more details from the call center. If they initiate a coverage conversation through the call center, they may want to discuss the product in more depth with an agent.

Personalized Experiences

Customers expect (and even demand) that carriers anticipate and understand their needs. This requires that carriers consolidate data and use it to extract customer insights that will allow them to offer more personalized experiences. 

Data silos must be broken up in favor of a “Customer 360” view, including electronic ‘Know Your Customer’ (eKYC) processes. With a good understanding of a customer’s needs, the carrier can offer personalized product recommendations and pursue personalized selling efforts, automated underwriting, and digital onboarding.

Partner Ecosystem

To achieve a successful focus on digital transformation, carriers need to build and leverage a partner API ecosystem through which they can connect to both technology enablers and distribution partners effectively. This may include insure-techs, alternative distribution partners, marketing organizations, and affinity channels.


Customers know that their insurer is using digital interactions to collect data about their location, buying behaviors, and other information they have submitted. In return, they expect their data to be used to provide a personalized experience.

The sales cycle for insurance products will likely stay the same — lead generation, product research, needs analysis, quotation, application, underwriting, and issuance — but with each step transformed through innovation.

The goal is to capture data from digital interactions, enabling carriers to have extra insights into customer behaviors, leading to personalized experiences that result in more digital interactions in the future.

Want to learn more about alternative distribution channels for insurers? Contact Relay or schedule a demo of our insurtech platform today. 

Carrier Guide CTA

Related Blog Posts

A Letter to Our Valued Relay Community - One Year Anniversary

I’ve now just celebrated my one year anniversary in my role as CEO at Relay Platform and am excited...

News Release - Relay Unveils Latest AI Setting New Benchmarks in Cyber Insurance Workflow Optimization

News Release - Relay Platform Named to Guidewire Insurtech Vanguards Program