Using Insurtech for Transformation, Not Disruption

Posted by: UBI Telematics Category: Uncategorized

You’ve seen it happening. New players come into our industry and some go.

There are entire conferences dedicated to displacing the insurance agency as we know it. You have read the many articles about the role technology is playing within the industry.

We and those watching our industry refer to this movement as insurtech. The internet scared the industry 20 years ago. Today, insurtech is the boogey man haunting our industry.

Should you worry? Yes. But, there is a key difference between the introduction of the internet and the increase in companies within the insurtech space.

The internet enabled new ways to market to insureds. The insurtech segment is now chasing those same insureds. Consumers are demanding ready access to information to research, buy, and use their insurance.

Who is at risk?

Insurance agencies are the first target of insurtech players. The majority of agencies cannot match venture capital-backed entities in marketing resources.

This year startups and venture capital firms came together at conferences and discussed the idea of Agent 2.0. Only licensed agents can sell insurance. So, Agent 2.0 is a nice way to describe replacing traditional agencies with technology and call centers.

But it’s not just insurance agencies in the sights of these new players. Insurance carriers are also getting tested. Newer firms like Lemonade and MetroMile are changing the way insurance is offered.

Uber did it to taxis. Netflix did it to video rental. Amazon did it to every retailer in the nation.

The insurtech startups are looking to disrupt the current model. They want to replace it with a highly scalable, improved version.

How is the disruption happening?

The best way to take an existing industry and make it scalable and more efficient is with technology.

Startups use technology in unique (yet not all that innovative) ways to provide a more interactive, streamlined buying experience.

Some are focusing on better understanding how insureds actually drive through usage-based monitoring. Others are focusing on paying for just the miles you drive. Many more are using data prefill services to provide an accurate quote with minimal information like a picture of your driver’s license or vehicle’s license plate.

These startups make the research and quoting experience quick, easy, and engaging. Just as Expedia, Priceline and Kayak did to the travel industry.

Unlike the travel industry, insurance is a difficult-to-understand financial instrument. Do it wrong, and you can put you and your family into a deep financial burden.

This brings us to the reality that most consumers would rather buy directly from an agent. However, in none of the studies does it say that the agent has to be sitting at a desk right down the street.

Startups build a highly scalable, efficient, around-the-clock call center operations fully staffed with licensed agents. This bolsters their technology’s strengths while supporting any gaps the technology cannot solve. If they can’t close a lead with their chosen carrier mix, they are also willing to sell that lead to someone else.

This is the real power of these up and coming startups, flexibility. They are flexible in how their business operates.

They are willing to try new things and abandon those that are not working well. They are open to looking at the way “it has always been done” and finding a different, better way. They are looking at markets beyond just auto. They are looking at home, health, life, and even commercial.

Transformation, not disruption

Up and coming startups still have to conform to the same state and federal regulatory concerns as you.

They still have to be a licensed agent. They still have to follow the laws. They still have to sell policies at rates as filed with each state. At no point do they have a competitive advantage for the actual insurance transaction.

Therefore, these startups are not disrupting the insurance industry. They are merely transforming it to meet the consumer’s modern expectations.

They are just willing to be flexible and innovative in three critical areas. The way they deliver information. The way consumers purchase of a policy. The way they service their insureds.

Can agents and carriers compete?

Absolutely. The first step is being willing to change.

Take a good look at how you currently operate. What is working? What is not? For example, are you able to provide a complete auto quote against multiple carriers in less than five minutes? If not, how can you expect to compete with others that can? Can you provide a quote 24/7? They can.

Once you have realized the gaps in your offering, the second question is how are you able to solve them? This is where technology comes in.

The same insurance technology all these startups are using is readily available to you. Technology is not always cheap. However, used properly it will make you more efficient. It will also allow you to close, support and retain more policies.

Third, you must be willing to step out of your comfort zone and compete. Right now there is no place to hide in the industry.

Due to competitive pressures, many agencies have fled personal lines. Instead they are focusing exclusively on commercial lines. This is a lesson in futility because insurtech is targeting commercial lines too.

Finally, you must be willing to be flexible with your business operations. Flexibility comes in all forms.

Do your customers desire extended weekday or even weekend hours? Maybe you should. Do your clients want the ability to purchase a policy directly online? You should be talking to your carriers. Are you unable to sell a certain line of business efficiently? You should sell the lead to someone that can.

Are you ready?

If you notice above, technology is only a small part of the current insurtech revolution. The most critical part is the willingness to make a change to an industry that has been around since the 1600s.

Technology has transformed how you live your life. You have accepted that change.

Are you ready to embrace that same change in how you offer insurance?


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