What if you participate in a car race where everyone has the latest models except you, with a car from the 90s? What do you expect the race result to be? – Regardless of your driving skills, the outcome is almost certain—you’re going to be left behind.
Now, flip the scenario with the insurance industry in 2025.
Insurers who are still using legacy distribution models have to compete against those using AI-powered insurtech software solutions. Here, they are not just lagging, but they are losing customers and, indirectly, their business growth and success.
The global digital insurance platform market was valued at around $102.2 billion in 2020. Projections estimate this market will reach approximately $169.2 billion by 2026, reflecting a CAGR of 9% over the analysis period. (resource).
However, with this growth, insurance companies need to ensure a digital-first strategy for digital insurance distribution because that is what customers find more convenient. Let’s discuss comprehensively how the digital first strategy can be a paramount distribution approach in 2025 –
What is Digital First Distribution?
As the name digital-first distribution suggests, it’s an approach where insurance companies utilize digital platforms as their mainstream to do business. For insurers, this digital-first strategy helps in the following:
- Selling and managing policies via mobile apps, websites, and messaging apps (like WhatsApp).
- Utilizing AI chatbots and digital agents for round-the-clock service.
- Offering seamless onboarding, e-KYC, digital signatures, and real-time claims through unified platforms.
- Analyzing customer behavior in real-time to deliver a personalized experience
Instead of depending on physical or human resources, they utilize insurtech software solutions to their full potential.
Why is the Digital-First Strategy a Must for Distribution in 2025?
Because it’s the demand of time and customers!
By 2025, a large chunk of insurance buyers will be millennials and Gen Z—digital-first generations who expect everything to be self-service, mobile-first, and instant. They don’t want to wait in queues or talk to agents for simple queries. They want to:
- Compare plans online.
- Buy or renew policies instantly.
- Get support through live chat or WhatsApp.
- Access their insurance details on-demand.
The Shift From Agents to Algorithms
In the past, individuals were fully depended on personal connections with agents— but today they are equally comfortable making big decisions on apps. They want convenience, speed, and clarity, reminders, and guides, all in one place. This doesn’t mean agents are irrelevant—it means their roles must evolve into advisory and relationship-building, while automation handles repetitive tasks.
Post-COVID Expectations
Most of the world’s population has shifted to digital behavior in the last few years, especially after 2019. COVID-19. People started seeing insurance as a necessity rather than just a source of reliance. This is where insurtech software solutions can be a savior, assisting in online claims, offering substitutions, in-person sales, and faster solutions.
The Rise in the InsurTech Competition
Traditional insurers have one big advantage—trust and legacy. But unless that trust is combined with digital agility, it will fade. While startups leveraging insurtech software solutions are already dominating the industry. Even those who have adopted digital experience have now become unstoppable, right from the year they combined their expertise with technology.
Policies Are No Longer Just About Selling and Buying Insurance
The digital-first approach changes the way insurers offer products, how conveniently policies can be availed, and how relevant the insurance products are becoming based on customers’ needs. This approach also allows them to
- Wellness partners who send preventive health or risk alerts.
- Financial assistants who guide users through emergencies.
- Digital companions who provide clarity and confidence during uncertain times.
Insurers stop being policy sellers and become trusted digital companions in their customers’ lives.
Glimpses of the Digital-First Insurance Customer Journey
A digital-first strategy means reconsidering your approach to customer outreach from the very beginning. It involves re-imagining your digital insurance company as though it were established online.
Once done, here is how it will work:
- Discovery: When a potential customer browses your website, AI-driven algorithms recommend personalized policies based on browsing behavior or pre-filled data, removing guesswork and saving time.
- Onboarding: In less than ten minutes, they can pay using UPI, sign digitally, and confirm their identity using e-KYC.
- Engagement: To manage their policy, submit claims, and chat immediately with support, they are provided with an easy-to-navigate dashboard.
- Retention: Predictive analytics allows the system to remind users about renewals or add-ons at the precise moment they need them.
The best part is that the entire process remains transparent, which means the customer can see their policy status and can access it easily. This eliminates their hassle of human interaction and questioning the insurance companies for uncooperative insurance services.
The Takeaway: 2025 Is Your Time To Start, Before It’s Too Late
In 2025 and beyond, customers want insurance and insurers to be available for them at their (customers’) convenience—be it the web, social media, or mobile devices. They also expect them to be prepared to provide immediate assistance with their products. But humans can’t always be available, hence let the tech do the responsibilities for the customers, in fact, in a quicker, better, yet affordable way
The goal of a digital-first distribution strategy is to empower human agents, not to replace them. When most insurtech software solutions have already alleviated the industry challenges of most insurers and their consumers, lagging behind can absolutely hamper your business. If “how to integrate digital-first software solutions into insurance systems” bothers you, then Ensurite, a digital distribution of insurance solutions, is at your rescue. Contact us to know more.
Explore more Blogs: https://ensurite.ai/blog/
Frequently Asked Questions
What technologies are driving digital transformation in insurance distribution?
Technologies that are driving digital transformation in insurance distribution are data analytics, CRM tools, cloud platforms, digital KYC & e-signatures, mobile apps, chatbots, AI & Machine learning.
How can insurers begin transitioning to a digital-first distribution strategy?
To initiate with a robust digital-first distribution strategy, insurers must:
- Build a strong website where customers can compare, select, and purchase policies.
- Create a mobile application for customers' convenience.
- Automate the KYC and onboarding process
- Train their sales team to acknowledge and manage digital leads.
- Use marketing tools like email and WhatsApp to reach out to people.
- Offer online customer support through help centers, chat, & FAQs
Can traditional insurers compete with InsurTechs using digital-first strategies? Absolutely!
Traditional insurers already have an established brand value, customer data, and market trust. However, by going smarter, they can work a step ahead of InsurTechs. Here is how:
By going digital, they can-
- Reach more people.
- Have cost savings.
- Offer faster, smoother service similar to InsurTech startups.
Is a digital-first approach suitable for all types of insurance products?
Yes, for insurance like car, health, or travel, a digital insurance distribution platform works perfectly. However, for complex products like business insurance or long-term policies, people might get skeptical and prefer insurance under an expert's guidance. Hence, the best is to opt for a hybrid model that ensures speed, security, and human support.