Effect of COVID -19 on the insurance industry distribution model


By this time every player in the insurance industry is asking how the covid 19 has affected customer buying behavior!

This article is aimed at looking at the changes in customer behavior and whether that is causing a fundamental shift in the insurance distribution model in the Ghanaian Insurance space which hinges on the customer-buying behavior.

Every Insurance player in the insurance space, be it an insurance company, a broker or an agent is talking about the digitalization strategy as an exit strategy to reach out to their clients.

But the big question is – is  it the only way to go? And is it different from digitization and digital transformation?

What is digitalization?

IGI -Global posits that digitalization can be defined by either of the following;

  • Integration of digital technologies into everyday life by the digitization of everything that can be digitized.
  • The adoption of digital technologies to modify a business model. The aim is to create a value from the use of new, advanced technologies by exploiting digital network dynamics and the giant digital flow of information
  • The use of digital technologies to upgrade processes.
  • It is the process by which companies reorganize their work methods and strategies to obtain greater benefits thanks to the implementation of new technologies.


What is digitization?

Digitization is the process of converting information into a digital format, in which the information is organized into bits. The result is the representation of an object, image, sound, document or signal by generating a series of numbers that describe a discrete set of points or amples. (source Wikipedia) 

Pedro Robledo, BPM process management expert says Digital Business Transformation is about doing things differently – creating new business designs by using digital technologies. It is not just about automating or inserting technology into an existing process (digitalization) to optimize the current value chain, but to go further, modifying the business model, changing the value chain and surely creating a new supply of products and services ( caused by the application or incorporation of digital technologies in the products or services prior to the transformation), which lead to a new and better way to provide customer value. And they will require the modernization, rationalization and simplification of the current business processes, as well as the creation of the new key processes necessary for the new business rethinking.

Clearly all the above shows that technological strategies are enablers to the actual deal of getting to the customer therefore we have to ask our selves that Is it that consumers of insurance are causing a shift in the insurance distribution model by embracing digital channels and has their experience lead to the leading tech companies to raise their expectation when buying online or off line?

According to Simon Kaesher et al 2020 A seamless, consistent ‘’multi-access” experience across all touch points is now the standard that all companies must strive to meet.

As an insurance industry ready for such a shift because the bar is also being raised by insuretechs.

According to MCKInsey , investments in insuretechs worldwide grew from $0.3billion in 2003 to 5.8Billion in 2019 and the unique selling proposition of many emerging players is based on a digitally enhanced customer experience.

Global trends intimates that tied agents are declining and many insurers still rely on an exclusive network of intermediaries to handle frontline interactions. Can this be said about Ghana?

In the wake of all this legacy IT systems hinder the implementation of digital technology required for a seamless customer experience because they operate currently as silos and requires an integration.

To achieve this new distribution model that is the multi access approach one may ask what is MULTI ACCESS  this means companies across the industry should have many more ways to engage with customers -from traditional ,in person and offline contact to phone ,online ,mobile and social media. This creates omnichannel customer experience with seamless transitions between channels.

The concept of “multi-access’’ represents a more granular look at the customer journey. This lens recognizes that customers engage with their insurer at multiple access points within different channels before, during and after purchasing a product. By focusing on supporting these individual interactions across channels insurers can be better positioned to provide an excellent experience and strengthen their ties to their customers.

Customers now need and expect an upgrade.

Way Forward

In Ghana, the recommendation is that every insurer addressing its customers will need to adopt a multi access approach.

How can this transformation be achieved and which aspects to focus on will depend on the state of the insurance company current distribution model.

Therefore, any insurance company in Ghana to determine the best path forward  must ensure that  they have a clear understanding of their organization

  1. Multi access capabilities
  2. Target Market and
  3. The competitive land scape


Currently the Ghanaian Insurance market traditionally has agents and brokers designated as the primary interaction channel with their customers.

This has though not disappeared 100% . To move into the mode of multiple access points for engaging with the insurer the customer journey will completely change.

There are going to be a mix of touch points which will make consumer engagement much more complex.

A research must be conducted to find out how many Ghanaians now use digital steps along the customer journey.

How many are responsive to buying online and how many will switch channels within the customer journey.

If digitalization becomes a serious part of our distribution model then there may also be the need for further investigation weather customers consider the service quality of trusted advice of intermediaries as an important part of their decision to buy due to price sensitivty or the option of online transparency which has also the benefit of lowering switching cost to unpresented levels which without prejudice the later will be every insurer option but the negative impact will be loyalty for intermediaries will decrease especially for customers mainly purchasing on line .

In conclusion, will we as an industry opt for the multi-access distribution model or continue with the traditional system?

The Author is a seasoned Insurance Practitioner and currently Senior Manager, Client Service of Enterprise Insurance Company.

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