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The Building Blocks of Bionic

Distribution in Insurance
Giambattista ("GB") Taglioni, Pia Tischhauser, Tjun Tang, Christopher
Freese and Jean-Christophe Gard • The Boston Consulting Group © 2020

Management / Digital Transformation

Industries / Insurance Industry

Take-Aways
• In times of uncertainty, customers crave quality, transparency, and now, omnichannel engagement.
• Companies that implement bionic distribution improve productivity by up to 20%, and revenue by up to
10%.
• Bionic distribution and strategic partnerships can lower costs significantly while bringing in more
customers.

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Recommendation
The pandemic has been rough on insurance companies, particularly those in developed markets with limited
opportunity for growth. Still, somehow, 14% of insurance companies have managed to grow during the last
4 downturns. How? Smart decision-making during critical, high-stakes moments. In this special report, The
Boston Consulting Group makes suggestions for insurance companies that want to create a thriving digital
ecosystem, apply AI at scale, and create a truly bionic system for distribution.

Summary

In times of uncertainty, customers crave quality, transparency, and now,

omnichannel engagement.

The world has changed, and your customer has changed with it. The pandemic highlighted the uncertain
nature of the current world business climate, and many customers are more aware of the effects of sudden
changes in employment. They’re now looking for more flexible product offerings. They want to be able to
choose and change features when their situations change.

“Customers are looking for simple, transparent products that are presented in an
intuitive and straightforward way.”

Social distancing has given customers a taste for digital engagement, but they also want smooth transitions
from digital to human interactions. Human brokers and agents will still be part of the equation, but
companies need to strive to offer a seamless omnichannel experience. Finally, customers are craving the
certainty of trustworthy companies and quality products. Some of these may take the form of new digital
brands (like China’s Alibaba and Tencent), but customers are also turning to long-established insurance
brands. Any company that wants to thrive should be aiming for bionic distribution.

Companies that implement bionic distribution improve productivity by up to 20%,

and revenue by up to 10%.

Bionic distribution can halve time to market and lead to a 20-40 percentage point boost in net promoter
scores. The transformation starts with a digitally enabled sales force. Advanced algorithms can deliver a
personalized customer journey, promoting “the right product at the right time with the right message and
in the right channel.” Rather than simply plying customers with a one-size-fits-all solution, companies can
also offer modular products, which customers can mix and match as their needs shift. AI can also analyze a
customer’s actual behavior, allowing companies to adjust coverage based on a personalized customer risk
estimate. In sum, the customer journey can be wholly re-imagined, with AI improving quote accuracy and
automating repeated actions.

“Traditional omnichannel and multichannel methods do not have the agent as the
“superhero” or navigator of at their core.”

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When customers embark on the digital journey provided by a bionic distribution model, ideally, they’ll only
need to interact with agents during complicated, unique, and high-margin activities. Low-value activities
and simple products will be handled digitally, and human agents will only become involved when their
expertise is truly needed.

Bionic distribution and strategic partnerships can lower costs significantly while
bringing in more customers.

Traditionally, insurers have only interacted with customers a couple of times a year, which puts them at
a disadvantage in terms of visibility and relevance. Insurance companies can combat this difficulty by
partnering with other companies. The main benefit of such partnerships is access to proprietary data that
can drive personalized experiences.

“Insurers can double or triple their penetration across all market segments by pursuing
ecosystem partnerships.”

In mature markets, rates tend to be “lower for longer,” making it more important than ever to lower costs.
A full two-thirds of insurance costs emerge from distribution, and agents, brokers, and advisors have
consistently opposed cuts. A digitally enabled sales force means a smaller sales team that’s ultimately more
productive because low-value tasks are handled digitally. Despite a smaller sales force, the number of
customers will still go up because they can access product information via digital platforms.

About the Authors

Giambattista (“GB”) Taglioni, Pia Tischhauser, Tjun Tang, Christopher Freese, and Jean-
Christophe Gard are senior partners with The Boston Consulting Group.

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