Insurance Distribution Channels: Planning The Shift To Digital Selling

Published on September 3, 2021

Insurance distribution channels have increasingly become a necessary exploration for insurance companies in a rapidly changing business environment. While the shift to digital has been an automatic process in recent years for most industries around the world, it has not come easy for the insurance industry.

Traditionally, insurance has been sold by agents and brokers with personal relationships with their clients. It is a relationship of trust, especially in matters of life and health insurance. More than 99% of life insurance policies are sold through face-to-face distribution or intermediaries in terms of premium. It is only the remaining 1% that are sold through web aggregators and other channels.

Numbers such as these do not look like a promising premise to explore other insurance distribution channels. Why would you make an effort to change something about your sales cycle that works 99% of the time? The only answer is that the world is changing, and it is the pioneers in the insurance industry who succeed in moving to digital insurance distribution who will win. 

Let’s explore more.

What are the different types of insurance distribution channels?

Factors such as technological advancement and market pressures like new products, expense structures, buyer behavior, new non-traditional products, etc., influence how insurance distribution channels operate. 

Depending on their goals, an insurance agency/company can explore different channels of distribution, both digital and offline, as listed below.


Direct channels

Direct insurance distribution channels or self-directed channels allow insurance companies to sell their products without the interference of an intermediary.

Operating through this channel is an advantage since no commissions need to be paid to insurance agents. Therefore, maximum profit.

Insurance companies operate direct channels through e-commerce, internet, telesales, etc., and own sales force. Using a CRM and communication software such as CallHub to streamline and advance their process also comes under this channel. 

Agencies that can afford to avoid intermediaries and directly sell to consumers often have an established brand in the market and are likely to be seen as trust figures and experts in their field.

Intermediary channels

As their name suggests, they bridge the gap between insurance companies and consumers. When using intermediary insurance distribution channels, there is no link between insurers and end consumers.

Intermediary channels include agents, brokers, banks, retailers, broker networks, aggregators, peer-to-peer channels, and more.

Using an intermediary insurance distribution channel works best for insurance agencies looking to build their brand and earn the trust of the consumers. In instances such as this, word-of-mouth marketing through agents and other intermediaries acts as a testimonial for the client to rely on.

Bank-led channels

Popular in the U.S post the Financial Modernization Act of 1999, bank-led insurance distribution channels result from bank and insurance carriers joining forces. 

Since banks are already involved in a widely distributed financial market, they serve as the perfect channels to push forward insurance products.

Direct response marketing

Unlike other distribution channels, direct response marketing does not require the interference of banks or intermediary channels. Instead, the insurers themselves use mass media to generate leads and sell their insurance policies and products.

They deal directly with applicants and consumers through phone, text, or email.

What differentiates direct response marketing from direct channels is the use of mass media in the former. Direct response marketing aims to solicit a response immediately from the customers by using very specific, time-bound calls-to-action.

Peer to peer channels

Peer-to-peer channels are a type of social insurance that is relatively new in the market. It involves family, friends, and relatives with a similar mindset who pool their premiums together to insure against risks. 

In case of a loss, the members of this group pay to cover it. It reduces the risk involved with traditional insurers who may take premiums but refuse a payout when the time comes. 

With its increasing popularity in the US, insurance providers are seeking ways to make this model available and commercially viable for their customers and themselves.


The latest but slowest growing distribution channel among insurers has been the internet. Often overlooked, it is THE channel that customers are shifting towards. 

Many customers report going online to compare insurance products and make decisions independent of an agent or broker. 

While life and health insurance products might take some time to become popular as online products, motor or house insurance, for example, are already gaining traction online. The difference is in how personally the insurance product will affect the consumers. Instead, they would ask questions and know more about life insurance directly from a broker for increased trust compared to motor insurance.

The internet as an insurance distribution channel would work perfectly for insurance providers with a trusted brand and more tech-savvy staff that could process online traffic. Traditional insurance providers modernizing their process must look into the internet as an essential distribution channel.

Direct mail marketing

This insurance distribution channel reaps the most benefit. It does not involve intermediaries, so the profit is whole for the insurer to keep. They also have the highest response rate as compared to any other digital channel.

Marketing tools such as postcards and letters, and more recently, email marketing, are used within the bounds of this insurance channel. You can reach thousands of potential customers with just a few clicks once this channel is set up.

Direct mail marketing is an additional effort that includes time and logistics, and thus, when seeking out prospective high net worth customers, it is a favored distribution channel. Direct mail marketing can target high net worth individuals once you have sorted through your contact lists and identified and categorized such individuals.

While there is a wide range of insurance distribution channels to choose from, it is also essential to explore how best they can be utilized by overcoming digital buying hesitancy.

We’ve listed down a few ways in which your transition to digital channels can be made more accessible.

Planning your move to digital insurance distribution channels

The benefits of buying insurance online are myriad for the consumers. To begin with, they can:

  • Compare policies online and find out which one suits them best.
  • Gather information and reviews from other consumers online without an agent upselling a more commission-worthy product.
  • It is easier to make a transaction online than go through the paperwork and payment process offline. Also, it can be done in the middle of the night at the customer’s convenience.

Therefore, eventually, digital selling is going to take over the market share of insurance distribution channels. While that change gradually occurs, being prepared and ready to go will help you be the front runner in this change. Here are some ways for your to start moving to digital:

1. Simplify your product for online selling

Frequently insurance products are described and sold using the language of sales and insurance. While it may make a lot of sense to the agent or broker, it may not always communicate to the consumer.

For digital selling, it is easier if the product description is simplified in a manner that the end consumer easily understands. If it seems too complicated, it would be easier to regress to the old method of calling up an agent or broker to explain the policy.

2. Talk to your existing customers

Every business has a customer base willing to move with them no matter what shifts occur. Identify your loyal customer groups and introduce them to the digital insurance distribution channel that you’ve chosen. 

This serves you in two ways:

  1. You get to test if your new distribution channel is working and simple to use.
  2. Once the ball gets rolling, more and more people will get comfortable with online selling.

Engage your existing customers and see how it impacts your move online.

3. Build a remote workforce

Remote workforces benefit insurance companies in many ways. To begin with, a remote sales force can serve a larger group of people than traditional methods, thus resulting in lower commission costs per sale. And nowadays, you can do everything from remote system management to payroll from the comfort of home.

Using tools such as the calling and texting features offered by CallHub, insurance companies can easily coordinate remote working efforts.

For example, through CallHub, managers can automatically update calling scripts or craft text message templates that can be used by all agents that log onto the system. Furthermore, a standardized FAQ list can also be provided to the agents to make calls.

By expanding your team to a remote sales force, you can end up with a sales team that is more efficient at relationship building and closing deals.

4. Foster team spirit within the organization

Since digital distribution channels are new for your team, figure out ways your team can still collaborate and make a difference.

You can start by making your team attend digital selling workshops together, discussing new strategies to optimize sales, share feedback from their new workflow, discuss how new tools are working for the team and allow them to help each other out during this transition.

Fostering team spirit at this crucial juncture of change is going to build your base for the future.

5. Identify gaps in your journey

When planning your move to digital insurance distribution channels, map out your entire journey from the product to the end consumer. Figure out where players such as agents, brokers, banks, and other intermediaries come into the picture.

Designing your workflow keeping each factor in mind will help you better prepare in advance and foresee any difficulties in your shift online.

Find out which tools might help you bridge the gap in your journey if there is any challenge in a particular area.. 44 percent of agents rated either digital agent tools or customer tools as the number one capability insurers can invest in to support them right now. Invest in those tools to accelerate your growth in the initial stages.

6. Explore SaaS products

SaaS products will help you immensely in your move to online insurance distribution channels. From streamlining your workflow to managing your contacts, there is a lot that a good SaaS product can do for you.

Here are some benefits of using a SaaS product:

  • It helps you nurture your relationships with the customer by offering tag features and managing outreach methods.
  • Provides consumers with personalized communication through all channels used by them.
  • Provides you with reports to determine winning strategies, areas for improvement, and other metrics.
  • Analyzes and predicts consumer behavior for better targeting and results.
  • It integrates with third-party applications to improve your lead generation, lead nurturing, and social media outreach efforts.

7.  Gather Data

When starting something new, like your transition to digital insurance distribution channels, the best thing to do is research and gather data.

Look at trends from other insurers who have also begun their shift to digital, ask questions to your consumers, or analyze the results within your team. There are many ways to gather data. It would help to ask yourself these questions:

  • What are some strategies that competitors have implemented? 
  • What can your team do differently?
  • What are the latest trends in the market?
  • Are customers comfortable with the new strategy?
  • What metrics and goals can be achieved on a monthly, quarterly, or yearly basis?
  • Do agents need new or upgraded lead generation tools?
  • Do agents require specialized communication tools?
  • Do I need to spend more time on training my staff?

These questions would give you a rough idea about areas of improvement and might also help you see things from a new perspective. 

8. Find the perfect mix between insurance distribution channels

When starting, it is important to experiment with different insurance distribution channels to figure out which one works best for you. Laying all your eggs in one basket might be risky in the initial stages. 

In any case, different channels of insurance distribution bring in different types of clients belonging to different demographic segments and with different needs. Using a combination of distribution channels increases your chances of success.

When working in tandem with the technological sector, it is always a good idea to stay alert for trends and figure out new advancements in technology in your space.

Often, the first few market entrants to use certain products and offer new features see the maximum success. Stay ahead of your competitors by always learning.

Before you begin

Not all distribution channels work for all companies. Therefore, it is important that you identify the ones that can aid your success. No matter which channel you select, it needs to align with your organization’s mission as well as business goals.

The method you choose must also be customer-centric. Do customers feel at ease when your agents reach out to them? Do they prefer one method of communication over the other? Do they want someone to talk them through the process, or do they want a hassle-free online experience?

When choosing an insurance distribution method, keep your customer at the center of your strategy development process and choose what uniquely suits you.

As on our part, CallHub is offering a free 14-day trial so you can take your first steps into exploring different insurance distribution channels.

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