Distribution can be broadly split into two distinct categories: the indirect and direct channel. Despite this categorisation, in reality most insurers use a combination of the two channels to reach out to customers. The channel of choice for marketing and distributing products is of utmost importance for an insurer’s success. Those operating within this space are responsible for driving awareness and sales among customers.

Listed below are the top enablers of the direct channel, as identified by GlobalData.

Inbound call centres

Call centre agents focus their activities on achieving specific sales targets. The introductory message of call centres is automated, guiding the caller through different options before speaking to an agent. In addition, it is common for call centres to use software to prompt agents with the questions they need to ask customers.

Centres can be located in a different location from the main company’s office. Where feasible some insurers opt for them to be located in a different country where labour costs are lower.

These centres offer an additional method to collate data that can be used to improve operational efficiencies. Reducing call centre queues is essential as it helps optimise the profitability of policies. Call centre services can broadly be categorised into inbound and outbound (telemarketing) services depending on who initiates contact.

Outbound telemarketing

A method of direct marketing by which sales agents solicit potential leads into the purchase of insurance products. Telemarketing is an outbound process initiated by a phone conversation, although it may be followed by subsequent face-to-face conversations.

Insurance agents

Insurance agents are appointed by an insurance company to act on their behalf. While insurance agents include staff in call centres, the term is also used to refer to sales representatives visiting customers. The popularity of insurance agents has fallen over the years, in particular as growth of the media and the internet allows customers to be better informed about insurance products.

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Appointed representatives

Appointed representatives are independent agents that are appointed to work for an insurer at a given time. These representatives provide advice on insurance policies as well as selling products. The scope of work of such representatives cannot extend beyond that of the regulated activity of the insurer they represent.


The rise of the internet and advancements in technology have resulted in the rapid growth of smart devices, which help drive sales online. Customers are turning to computers and mobile devices to compare products and make purchases, a trend that is also present in insurance. Live chats, social media, and connected devices offer newer ways of engaging with customers.

The key factors contributing to the growth of the direct channel are highlighted below:

More readily available information

The widespread use of the internet allows customers to be more informed about different products, reducing the need for advisors and enabling customers to access products more readily. Insurers are embracing D2C models in response to changes in buyer behaviour.


Online mediums are enabling insurance firms to reach out to a larger number of prospective customers faster than before, as well as to broaden their target audience. At the same time, customers are demanding quick turnarounds and customised solutions across all industries. Digitisation can help deliver this.

Expanded market reach

Insurers going direct are not restricted by the geography or product specialisation of brokers or other third parties involved with the value chain. Online sales present an opportunity to reach out to a broader customer base, including in fast-moving markets or rapidly growing product lines.

Greater interest in increasing customer touchpoints

Direct contact allows insurers to better understand customers’ wants and needs, as well as to gather information and more data points to increase product personalisation. It also generates greater opportunities to cross-sell and/or upsell insurance products.

Opportunities to improve customer retention

Unlike sales via other channels, the direct channel enables insurers to own the customer relationship, giving them the chance to engage with customers directly as well as more regularly to ensure their cover continues to meet their needs. To improve retention, insurers may offer customers lower premiums or offer them different products if needed.

Opportunity to improve the customer experience

Increasingly, customers are expecting greater transparency and more intuitive experiences. Insurers putting effort into the direct channel can differentiate from competitors by offering improved customer services and reducing friction within the customer journey.

Improved margins

The direct channel offers lower distribution costs as no intermediaries are involved, thus profit margins can increase. Widespread use of the internet and online technologies are also contributing to reduced costs.

Increased competition

Many startups have largely focused on the direct channel, turning the interest of incumbent insurers towards this channel too.

This is an edited extract from the Direct to Customer in Insurance – Thematic Research report produced by GlobalData Thematic Research.