How can you use distribution channels to manage insurance risks?

2 Indirect channels

Indirect channels are the opposite of direct channels. They involve intermediaries, such as agents, brokers, banks, and affinity groups, who sell insurance products on behalf of insurers. Indirect channels offer some benefits, such as wider reach, higher customer retention, and more tailored solutions. However, they also have some drawbacks, such as higher costs, lower margins, and less control over quality and compliance. To manage these risks, you need to select the right partners, align your incentives, monitor their performance, and provide them with training and support.

3 Hybrid channels

Hybrid channels are the combination of direct and indirect channels. They aim to offer the best of both worlds, by allowing customers to choose how they want to interact with insurers. For example, customers can research and compare products online, but buy them from an agent. Or they can buy products online, but receive after-sales service from a broker. Hybrid channels can enhance customer satisfaction, loyalty, and retention, as well as increase cross-selling and upselling opportunities. However, they also require more coordination, integration, and communication among different channels. To manage these risks, you need to create a seamless and consistent customer journey, leverage data and analytics, and foster collaboration and feedback among channel partners.

4 Alternative channels

Alternative channels are the emerging and innovative ways of selling insurance products to customers. They include platforms, such as social media, e-commerce, and peer-to-peer, that leverage new technologies, business models, and customer behaviors. Alternative channels can offer new sources of revenue, customer acquisition, and differentiation, as well as lower barriers to entry and scalability. However, they also present some challenges, such as regulatory uncertainty, data security, and customer education. To manage these risks, you need to experiment and learn, adapt and comply, and partner and co-create with other players in the ecosystem.

5 Strategic channels

Strategic channels are the long-term and holistic ways of designing and managing your distribution network. They involve aligning your distribution channels with your business goals, customer segments, product portfolio, and value proposition. Strategic channels can help you optimize your distribution mix, allocate your resources, and measure your results. However, they also demand constant evaluation, innovation, and improvement. To manage these risks, you need to conduct market research, analyze your strengths and weaknesses, and monitor your performance and feedback.