The next great transformation: When insurance finally meets the customer

For decades, the insurance industry has relied on intermediaries such as agents, brokers and financial advisors to sell its products. In life insurance and annuities especially, this B2B2C model dominated because products were considered too complex for consumers to buy on their own and required a licensed professional.

Today, the insurance industry is waking up to a reality that banking, travel, consumer goods and healthcare confronted years ago: people want to buy products on their terms, not wait for someone to sell to them. The forces driving this transformation, including demographics and changing consumer expectations, are clear. But the transition won’t be easy. As insurance carriers are starting to explore what direct-to-consumer (D2C) could mean for them, they’re coming around to the fact that they know very little about the people who actually use their products. Success in this new model will depend on understanding those people first and designing digital experiences that feel personal, transparent and human.

What’s driving the change

Three forces are pushing insurers toward direct-to-consumer models:

• Demographics. Baby Boomers, who relied heavily on brokers, are aging out of the market. Gen X, Millennials, and Gen Z expect digital experiences across every part of their lives. When you can compare mortgage rates in minutes, book international travel from your phone and manage investments through an app, waiting weeks to buy insurance through a broker feels absurd. These generations also expect digital experiences that reflect empathy and understanding, not just efficiency.
• Consumer expectations. Younger consumers increasingly seek advisors who can address their financial needs comprehensively — including investments, insurance and tax considerations. Maybe they don’t wake up wanting to buy an annuity, but when they encounter retirement products, they expect transparency and clarity in the buying process. They also expect brands to anticipate their needs and deliver guidance that feels tailored to their life stage.
• Economics and changing models. By selling direct, insurers collect first-party customer data, control the experience and reduce dependency on intermediaries. Owning the customer relationship makes it easier to cross-sell, upsell and personalize engagement. Embedded distribution, with insurance being a bundled part of the car buying process for Tesla, for example, is a growing trend. Insurance is showing up where consumers already are rather than forcing them to seek it out. While technology enables this shift, the true differentiator will be how human those experiences feel once consumers get there.

The barriers to going direct

In the old model, insurance companies acted as manufacturers, creating products that brokers marketed and sold. In the new model, carriers must understand their target segments and customers and meet them where they are. That’s a huge change. Many insurers lack basic digital marketing capabilities because they never needed them.

Insurers must also recognize that their products touch people’s most personal concerns, including life, death, health and security. Building a direct relationship means meeting those moments with empathy and care. A human-first mindset is key to developing the loyalty and trust that intermediaries historically provided through personal relationships. This is especially important among Gen X, Millennial and Gen Z consumers who expect brands to see them as people, not just policy numbers.

The technology gap is real. Legacy carriers built systems for policy administration and claims processing, not customer engagement. There's also the workforce problem. Carriers need people who can guide customers through purchases remotely. This means building sales teams that can handle licensing requirements and compliance obligations previously managed by independent brokers. For companies that never employed consumer-facing sales staff, the move requires a major operational adjustment.

Brand awareness is another challenge. Many carriers have strong reputations among brokers but limited awareness with consumers. Without an advisor vouching for the product, carriers must build credibility and trust directly with consumers. Once that trust is established, there’s the hurdle of consumer education. Products like life insurance and annuities are not bought impulsively. They require context, calculators and clear illustrations to help consumers understand their fit.

All these factors make direct models more difficult for insurance; but they’re not insurmountable. As the value shifts toward whoever owns the customer interface, insurers risk obsolescence unless they build their own user-centric consumer brands.

What a direct model requires

Moving from B2B2C to direct-to-consumer sales isn't just a channel adjustment. It's a complete business model overhaul. The carriers making progress share common traits:

• Simplified product design. Direct channels work best with “plain vanilla” offerings — straightforward fixed or income annuities with fewer variables and clear benefits. Complexity can be layered later.
• Transparency of cost. Consumers trust brands that are upfront about costs.
• Digital underwriting. Algorithms, electronic signatures and instant approvals meet modern expectations and reduce friction.
• Advisory-like tools. Online calculators, journey modeling, and “what’s best for me” wizards bring some of the advisor’s role into the digital experience.
• Human-centered design. Moving beyond transaction-focused systems to create experiences that acknowledge the emotional and practical complexities of financial protection decisions. This means designing with empathy for people’s real circumstances and concerns.
• Partnerships. Rather than going fully direct, insurers can embed products into trusted platforms such as retirement apps, wealth management tools, wellness programs or member organizations. This piggybacks on existing trust and expands reach.
• Change management. Internally, carriers must prepare their workforce for new roles and modernize technology stacks.

The wakeup call

Insurance won't abandon intermediaries overnight. Complex products and regulatory requirements mean advisors will remain relevant for specific customer and segment needs. But the shift is underway and the middle market is up for grabs. Carriers that succeed will center the people they’re building for and treat direct-to-consumer as a true business model transformation, not a side project. That means committing resources to customer experience, technology modernization, brand building and organizational change.

Consumers expect to engage on their own terms, and competitors from outside the insurance industry, including fintechs, retirement platforms and even healthcare brands are stepping in to fill the gap. Insurance has the opportunity to rewrite the way it does business. The payoff for those that succeed will be immense.