The insurtech controversy. Will it hurt agents? Can they survive?
Or – best case scenario – will the tsunami of new technology help agents thrive like never before?
Clearly, most insurtech is hostile to the agent-broker channel.
But, some see a silver lining. (Myself included.)
That silver lining looks like this:
Agents and brokers who act quickly and fight back with agent-friendly insurtech will dominate their marketplace. Easier and faster than ever before.
In other words, if new technologies threaten the agent landscape, ‘fight fire with fire.’ If the enemy wields the weapons of innovation and technology, fight back with your own weapons of innovation and technology.
Let’s start by taking a close look at insurtech itself. This growing ‘sub-industry’ attracts money. It attracts talent.
And it has developed a body of business leaders, investors and thought leaders who clearly believe that ‘insurtech is the future of insurance.’
Let’s see what some of those leaders say about insurtech.
I was recently selected to co-author the upcoming Insurtech Book, published by the international publisher, Wiley. That has exposed me to the most current thinking about and execution of insurtech ideas. And to the people who have and act on those ideas.
I’ve identified a handful of insurtech leaders, along with their most poignant comments and declarations about the future. Let’s examine a few of those.
And, let’s see precisely what they might mean to the future of the agent-broker system.
And, finally, I’ll outline 5 Action Steps serious agents & brokers should take to thrive in this turbulent business environment.
Insurance is ripe for disruption…and insurtech wants the job
“The insurance industry has remained much the same for more than 100 years, but over the past decade it has seen a number of exciting new innovations and new business models…InsurTech, is emerging as a game-changing opportunity…”
Mike Quindazzi – Business Development Leader and Management Consultant at PwC
“We are seeing that start-ups gradually eat the insurance old guard. With traditional marketing dead or dying, traditional insurance companies must change now or find themselves losing revenues and market share.”
Tim Hughes – Co Founder at Digital Leadership Associates
In 2008, Jim Keyes, the CEO of Blockbuster, said, ‘“Neither Redbox nor Netflix are even on the radar screen in terms of competition.” Shortly after, Blockbuster declared bankruptcy. And Netflix transformed the video industry.
Business leaders risk not seeing ‘big wave’ trends. They sneak up on you. After all, they start quietly. Usually, outside of or on the periphery of the industry. (Sometimes in garages.)
We’re beyond that now. Insurtech is full of start-ups. But, as a ‘sub-industry,’ it’s no longer a start-up. It has money. It has products. It has conferences. It has magazines.
It’s here to stay.
But, as business leaders, it’s easy for us to be so focused on what we do or so focused on the obvious competitors, we miss the ones we’re not trained to see.
If you’re an agency principal, your Friday probably looked pretty much like your Thursday. And Thursday looked pretty much like Wednesday. And so forth.
Then, one day, things don’t look so much the same.
And you’re time to act is gone. Over.
As every good insurance agent knows, the time to prepare for a hurricane is before the hurricane.
The time to prepare for insurtech is today.
Insurtech is just beginning…but it’s coming fast
“I’m not saying there won’t be a bumpy ride along the way or that many start-ups won’t disappear, but if that scares you, you should not be part of it. Those who stick it out, with some luck, they will be able to change the insurance industry forever and along the way provide customers with personal services that most people don’t even dare think are possible. That’s why I strongly believe that the InsurTech industry will have many great years ahead of it. We are just beginning. That’s all I need to know to give it my all.”
Spiros Margaris – Founder of Margaris Advisory
“This future is coming and it’s coming fast!”
George Kesselman – Co-Founder / CEO at InsurTechAsia
Don’t judge insurtech by its failures. Failures are standard operating procedure for start-ups and disrupters.
I’ve heard many an agent and industry pundit point to Google’s rapid entrance and exit in insurance as an example of ‘how it can’t work.’ “Look,” they say, “if Google can’t make, with all their billions…”
Google tests. They do it fast. They do it big. And they measure. Google’s entry into insurance was a blip in their screen. And their exit was simple and strategic. They determined they’d get more revenue from the huge insurance advertising revenue than from selling insurance.
Meanwhile, start-ups around the globe have attracted money of their own. In 2016 alone, $1.7 ‘billion-with-a-‘b.’
Innovators have captured the imagination of very serious investors. Some will fail.
Others may very well take your customers.
Insurtech isn’t just fast. It’s big. Very big.
“The potential of the InsurTech and FinTech industries is so huge that whatever impact most of us imagine they will have in our lives will only scrape the surface.”
Spiros Margaris – Founder of Margaris Advisory
Newspapers were paper. Music was vinyl or plastic. Pictures were printed. Phones had wires. Books were ‘things.’ Documents were made on typewriters. Travel agents booked your flight. Cameras were…cameras.
Funny…insurance really does look like it did so many years ago.
Just don’t take that for granted.
If you’ve been in the insurance industry as many years as I have, it’s easy to develop a common disease: the one that makes you think ‘this is the way it is.’
Then, someone comes around with a vivid imagination. They think it can be different. And they have an idea on how they can make that happen.
Beware the outsider. And fear the outsider with money.
Insurance has had natural barriers to disruption. It’s complicated. It’s highly regulated. And it’s pretty good at what it does.
But those barriers aren’t impenetrable.
Once the dam is breached, there’ll be water everywhere. Look at those other industries. They’ve been ‘Kodak’ed.’
Venture capital is not too keen on making a little change. They want change all right. Big change.
Here’s how it’s going to happen: carriers will partner with insurtechs
“The most progress will likely be made by partnerships between innovative nimble start-ups and incumbents who are skilled at navigating a highly regulated and complicated ecosystem.”
Nick Martin – Fund Manager – Insurance at Polar Capital
“Insurance players will still be relevant in the future but will have to be insurtechs.”
Matteo Carbone – Principal at Bain & Company
When was the last time Fortune Magazine featured a major insurance executive as cutting edge innovator? Uhhh…never? But, Wired Magazine was happy to host the CEO of insurtech Lemonade as a speaker at their recent annual conference. Not to talk about insurance, of course.
Established entities are great at doing what they do. Or, in the case of insurance, pretty much doing what they have been doing.
Those well-established systems, with an army of employees and well-documented systems, procedures and workflows would likely keep on keepin’ on.
If they weren’t threatened.
But, when the writing’s on the wall, good executives read it. And do something about it.
That’s why more and more insurance carriers are partnering with insurtechs. Or funding their own venture capital fund. According to CBInsights, “10 of the top 25 largest US P&C insurers have invested in a tech startup since the start of 2015.”
If you can’t beat ’em, join ’em. Or join up with ’em.
And that’s exactly what smart carriers are doing today. Innovation may not be in their blood.
But they can buy it.
It’s (partly) about connecting with (your) customers
“Connected customers expect engaging, seamless and personalized experiences.” Connected customers expect engaging, seamless and personalized experiences…”
Sebastien Meunier – Senior Manager at Chappuis Halder & Co.
“InsurTech has put the customer at the core of the value chain, solving for legacy industry pain points, which lends itself to lots of opportunity to engage with their customers.”
Danielle Guzmán – Global Solutions Marketing Leader, Investments at Mercer
The customer. At the core, they drive the change.
And, if you haven’t noticed, they’re not big fans of insurance.
It’s no wonder. In its Global Customer Insurance Survey, EY reported that, “44% of current customers report no interactions during the previous 18 months.” And only 14% reported being highly satisfied with the communications from their insurance provider. (And they said this was a relationship business?!)
In a later report, they urged their carrier clients, “be ruthless with brokers who are damaging the long-term economics of your business.”
Your customers are your most valuable asset. And your loyal customers are your most valuable customers.
What does all this mean for agents & brokers?
Like so many industries before it, insurance is ripe for disruption. Or, at least, change big enough that some tables will be turned upside down.
Insurtech wants that job. It may stumble. But, it’s leadership is committed to making it happen. And they want it to happen fast.
To accelerate change, established carriers are partnering up with insurtechs.
And – agents beware – if ever there was a time to protect your customers, that time is now. If you don’t earn their loyalty, competitors will do their best to earn it.
And those competitors may not look anything like ‘the guy down the street.’
Get the job done right. Pick up the tools.
A couple of weeks ago, a panel moderator asked, “Michael, what would you say to an agent who’s not comfortable with technology.”
The question gave me pause. I’m front of several hundred agents. Do I soft-pedal – and give hope to those who struggle with technology?
Or do I tell the truth – and risk offending agents and brokers in the audience?
The answer was clear: tell the truth and offend the audience.
The agent who is uncomfortable with technology is like the contractor who shows up empty handed, saying, “I don’t really like working with tools.”
Agents who are serious about customers – getting them, keeping them and delivering value to them – use tools. Tools get work done. Faster and easier. Tools make things that were impossible, possible.
Agents who are uncomfortable with tools should:
- Change their attitude. Approach technology as their friend. Recognize modern technology as a business tool. A way to better serve your customer.
- Be willing to get uncomfortable. That’s okay. Make a few mistakes. Get training. Hire staff that loves technology.
- Make sure that when they purchase technology, get tools that are designed to be easy-to-use. That makes a world of difference. (Everyone should. It saves time and frustration. Great technology is designed for the user. Not the programmer.)
- Once and for all, act with urgency. Agents must recognize it’s not the 1990’s anymore. Or the 2000’s – when the internet resembled some wild west experiment. Recognize that trend lines aren’t straight. They hit inflection points – and the consumer’s use of online communication tools hit that inflection point years ago. Consumers have more choices than ever. Clearly, some of those choices want your customers. In a fast-changing environment, procrastination divides the winners from the losers. From time to time, life presents us with the decision to do something ‘once and for all.’ If you haven’t made the decision to connect with your customers where your customers are, do it.
- Don’t do ‘check-box’ marketing. In other words, when you make the decision to ‘do digital marketing,’ do it right. For your sake and your customers (and prospects). Nothing influences the way your marketplace feels about you like the way they see you. The way you present yourself. If you’re thinking, “Got a website, check. Got a Facebook page, check. Got some email marketing, check.,’ that’s irresponsible. The buck stops at the top. If your normal standard is excellence, don’t lower your standards in your online communications. Ultimately, nobody else is responsible for what your customers see and feel when they visit your website. When they consume your social postings. When they receive your emails or texts.
- It’s not just about the media. It’s about the message. A useful way to think about your digital insurance marketing is the ‘3 buckets’ model. Your website. Your social. Your marketing automation. Give thought to what your customers and prospects want to receive from you. Give some thought to the ‘who‘ they most want to receive it from. What kind of person will they be attracted to? Remember this marketer’s axiom:Novice marketers think the best marketing is about ‘how much can I get?’ Advanced marketers know the best marketing is about ‘how much can I give?’
- Work with your carriers on your digital marketing. You’d be hard-pressed to find a modern carrier today who is not exhorting their agents & brokers to ‘go digital.’ Here’s the dark side of that. Carriers are frightened. As McKinsey & Company declared in their recent report, Time For Insurance Companies to Face Digital Reality, “Digital is opening the gates to new attackers that will erode their advantages.” No carrier CEO will face his board or shareholders without somehow addressing that threat.Further, as the international research and consulting firm, EY, stated, “Be ruthless with brokers who are damaging the long-term economics of your business.”In other words, if you won’t do it, they’ll do it themselves. Or find someone else.Ask them to put their money where their mouth is. Many will. Co-op dollars don’t have to go to old-school advertising anymore.
Meanwhile, you can and should do just what carriers are doing to gain an edge as fast as possible: partner with the right insurtech. (In full disclosure, I’m an investor in insurtech that supports the agent-broker community and a co-founder of Agency Revolution.)
- Be strategic. Don’t copy. The best funded and most prevalent insurance providers who are active and proficient in digital marketing are espousing a message: save money. I’ve seen countless agents fail in their growth strategy simply because their copying that as a strategy.
It’s the right strategy for them. The wrong one for you.
If you’re selling on price, you’re attracting high churn price shoppers.
Those are not the people best served by our channel. Nor are they the people who most reward the agents and brokers of this channel. Our best match are those who care most about protection and peace of mind. Earn their loyalty – and they will reward you richly.
By referring their friends and colleagues.
By staying with you longer.
And by buying more insurance.
If it’s high margins and fast growth you seek (what else?), be authentic and deliver ongoing value. Deliver on the promise of ‘relationship.’ Those who seek it will reward you for years to come.
Insurtech is real. It’s a little unpredictable. But the money is real. The commitment is real.
And – at least, some of it – wants your customers.
Fight back. With insurtech of your own.
Michael Jans is the co-founder of Agency Revolution, an ‘insurtech‘ software provider committed to the independent agent and broker.
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