Blog | Insurance

Your Journey to Direct-to-Consumer - What Stands in the Way

What are the barriers that typically stand in the way of an insurer opening an effective digital direct-to-consumer (D2C) channel? Learn more today!

APRIL 29, 2021

The Covid-19 pandemic and resulting economic impact have dramatically changed customer needs, behaviors, and expectations while driving the virtualization of insurer operations. Eager to quicken their recovery, insurers are also eager to innovate. Most are actively identifying obstacles to growth and profitability while making investments to overcome them.

The pandemic has sped up the pace of digital transformation in all industries, including insurance. Strategic plans already in place for a more gradual transition to digital business--often intended to take five-or-more years to realize--were greatly accelerated over the past year. Pre-pandemic, many insurers were already making Direct-to-Consumer (D2C) work for them. The rise of insurtech startups, with estimated ongoing funding of $7.1B annually, had put pressure on all insurers to consider investments in D2C channels. These existing trends toward digitization were strengthened by consumer reluctance to meet face-to-face with agents and brokers during the pandemic.

The result? More insurers than ever are opening-up new D2C channels. And even more are increasing their investment in the direct online sales channel already part of their business. Often, these efforts complement recent investments in remote claims handling and greater underwriting automation.

So, what are the barriers that typically stand in the way of an insurer opening an effective digital direct-to-consumer (D2C) channel?

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Navigate the 6 Challenges in the Way of Direct-to-Consumer Success


1. Putting a digital face on disparate operations & siloed systems is harder than it looks.

Most insurers have grown through acquisitions, so they’re using a wide variety of siloed legacy systems. When developing a direct-to-consumer model, it’s typically more effective to use those legacy systems rather than undergoing a costly and time-consuming rip & replace effort. But the lack of integration between those systems is a HUGE challenge when trying to put a digital face on operations. Since some of those systems are proprietary, scaling them up to meet the demands of digital is far from easy.


2. A new way of distribution requires a new way of thinking.

Change can be hard. Those in an organization accustomed to doing things one way for so long are often invested in keeping things that way. Direct-to-consumer disintermediation is an altogether different business model than distributing policies through brokers or captive agents. Delivering value over the web, through an app, or via a contact center doesn’t just require new processes. It demands a whole new way of thinking.


3. You can’t deliver consistent experiences without consistent data.

Customers and prospects often experience wide discrepancies in the nature and quality of service from one insurer channel to the next. Siloed data is typically the culprit. The data available for operating effectively in one channel is frequently unable to inform the experience delivered in another. To make D2C work well, a customer needs to be able to do the same things—and achieve the same outcomes—in every channel. That means that the same data must be available everywhere—and in real time.

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4. Old processes won’t support new channels.

New channels typically require new workflows. The old ones simply won’t do. Changing operating processes in one channel will demand changes to processes and procedures in another. Without them, there can be no experience consistency for the consumer. And business operations will actively undermine the brand—not strengthen it.


5. New skills don’t always require new talent. But they do require the right talent.

Delivering humanized digital experiences to customers requires a different set of workforce competencies than more traditional insurance distribution models. So, having the right team with the right skills in place is critical. Staffing to meet this need is a challenge in the best of circumstances. But the insurance industries’ ongoing struggle to attract & retain talent into the business compounds the challenge.

Uneven Efforts

6. While digital transformation must be end-to-end to be most effective. It can begin anywhere. So, start where you are.

Whatever is happening at an insurer from a digital transformation perspective, it’s usually happening alone, by itself, in a vacuum. Something is happening in claims. Something else altogether is changing underwriting. Very little digital transformation happens at insurers in a coordinated fashion across the enterprise. While digital transformation doesn’t have to be happening everywhere for it to start being effective, it helps to have a roadmap. Transformation begins where you are. And you build from there, particularly if it’s your aim to achieve straight-through processing. 


At Sutherland, we welcome the opportunity to have a conversation with you about these barriers…and how you can overcome each and everyone. We take pride in meeting our clients where they are – at whatever point in their digital journey.

Just reach out. And look for more from us on this topic in the months ahead.

Reduce Risk. Gain Advantage. Improve Retention.

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