Thought Leadership | November 7, 2024
By: Ray Adamson, Chief Customer Officer at Lavvi
When my dad entered the life insurance industry in the 1950s, the captive agent model was the norm. It was a face-to-face business, with agents building personal relationships, sitting down with clients, and working through policy details at kitchen tables.
How times have changed.
The industry has seen massive shifts since that era. The rise of digital tools, changing consumer behavior, and most significantly, the impact of the pandemic have accelerated digitalization in the industry.
What we’re seeing now is an unprecedented evolution in life insurance distribution channels, at a rate faster than any in the history of the industry.
For life insurance carriers, the future isn’t just about the move toward omni-channel strategies – it’s also about streamlining operations at the carrier level, sales enablement, and meeting changing customer expectations.
The Evolution of Distribution
The career agent model dominated the life insurance industry for most of its history, and agents were the face of the business. They built trust through personal connections, meeting clients at kitchen tables to walk through policy options. However, the model came with its limitations, with high costs and low retention rates.
As the industry evolved, so did life insurance distribution channels, shifting away from the career agent model toward independent advisors and distributors. This offered more flexibility, allowing advisors to work with multiple carriers instead of being tied to one. The distributor model provided a way for advisors to access a wider range of products and cater to diverse client needs.
By the time I got licensed as an advisor in the early 1990s, this model was the norm. Technology was also beginning to make its mark. Advisors started using early CRM systems and digital tools like illustration software, which made client interactions more efficient and streamlined. From 2000 to 2007, I coached hundreds of advisors across North America, focusing on how they could leverage these tools to be more efficient, save time, and still maintain that essential personal connection with clients.
But despite these technological advancements, the industry’s pace of change remained slow. By the 2010s, many carriers had started to look at eApps and digital platforms, but adoption was slow (I don’t think I used an eApp until the late 2010s). Advisors were cautious, and carriers were still figuring out how to integrate these new tools effectively.
The Catalyst for Change: COVID-19
Then, the COVID-19 pandemic hit, acting as a massive catalyst for change. Almost overnight, life insurance carriers had to adapt to a digital-first environment. Face-to-face meetings and physical paperwork became impractical, and the industry had no choice but to accelerate its digital transformation plans.
Carriers who had been hesitant were now investing heavily in technology—digital distribution platforms, e-signatures, automated underwriting, and more sophisticated CRM systems—to ensure they could sell more policies, meet customer needs, and keep advisors enabled and confident.
This shift was necessary, but it wasn’t without its challenges. The urgency to adapt led carriers to implement systems quickly, sometimes with less-than-ideal outcomes: custom systems that are resource-intensive to maintain; disparate systems that don’t integrate well; separate eApps for different product lines.
But now that the dust has settled, carriers have the opportunity to re-evaluate and look at distribution more thoughtfully.
Navigating the Future of Life Insurance Distribution
When I’m out there talking to carriers, advisors, and industry folks, one thing comes up again and again—companies that will win going forward are the ones that take the lessons from the pandemic and use them strategically. The days of being reactive are behind us; now, it’s about being proactive.
For carriers, the path towards finding greater success in their life insurance distribution channel strategy involves balancing three critical areas:
1. Operational Efficiencies that Give You an Edge
To stay competitive, carriers need to move quickly and adapt with ease. Whether it’s launching a new product or updating rates, the ability to make these changes without being slowed down by IT bottlenecks is a real game-changer. Carriers who use technology as an enabler to streamline their operations and reduce inefficiencies are setting themselves up to win.
At Lavvi, we enable digital distribution in as little as 90 days. With our industry-leading admin configurability, we put the keys back in your hands. You can control your speed to market, launching new products, updating existing ones, and making adjustments—all without the need for IT support.
2. Meeting Customers Where They Are—Across Channels
Or in industry jargon, omni-channel distribution.
Life insurance isn’t a one-size-fits-all business anymore. People want options—they might start their research online, talk to an advisor, and then complete their application digitally. In fact, LIMRA found that nearly half of Gen Z and Millennials expect to blend online research with working alongside a professional. And while direct-to-consumer sales are growing, they’re still a small part of the market. According to CHLIA, 83% of life insurance is still purchased through advisors.
It’s all about finding that balance—offering digital life insurance distribution channels for those who want convenience but also ensuring customers have access to the reassurance and expertise of an advisor when they need it.
With Lavvi, carriers can support a true omnichannel experience, meeting customers where they are, whether sales are advisor-led, consumer-driven, or a hybrid of both. Our platform seamlessly integrates these approaches, helping you deliver a consistent and valuable customer experience.
3. Adapting to Changing Customer Expectations
Today’s customers expect a seamless, personalized experience. They want the ability to engage across channels in a way that feels consistent and intuitive. Whether it’s via an app, a call with an advisor, or face-to-face, it’s about meeting them where they are and offering proactive, tailored engagement that makes them feel valued and understood.
By focusing on these three areas, carriers can not only keep up with the rapid changes in the industry but also set themselves up for long-term success.
What the Future Holds
Life insurance carriers must not only adapt to the changes accelerated by the pandemic but also take a proactive and strategic approach to future-proof their operations. By balancing operational efficiency, evolving their life insurance distribution channel strategy, and adapting to customer expectations, carriers can thrive.
Lavvi is at the forefront of this transformation, providing a digital distribution platform that supports quick implementation, configurability for self-sustaining management, and tools that build confidence for both advisors and consumers.
To learn more about Lavvi and see our platform in action, book a demo or get in touch with us here.