October 18, 2016
The Insurtech Revolution: Why Optimism Isn't Enough
A couple weeks ago, I and a few of my colleagues went to InsureTech Connect 2016 in Las Vegas. This inaugural event dedicated to insurance technology attracted about 1,500 people.
From their website: “Rapid technological innovation along with an inescapable shift in consumer behavior is creating nothing short of a revolution.”
The discussions covered every part of the insurance industry. This included distribution, products, claims, underwriting, data, regulation, marketing and even customer experience.
(One of my favorite comments at the conference came from a panelist: “I like how the topic of this panel is Next Gen Customer Experience, and none of us up here have a customer.” It said so much about what’s happening in the space right now.)
Who was there? Mostly, entrepreneurs, investors and insurance executives.
Who was missing? You. Only a small fraction of the attendees were agents. This is a problem.
There are people out there who see tremendous opportunity in our industry. They are looking to replace you with bots and artificial intelligence and take your commissions in the process.
It’s Raining Cash in Insurtech
Investment in insurtech is high right now.
According to CB Insights, there have been 78 investment deals with insurtech startups so far this year. That’s 50 percent more deals than in all 2015.
Last year $2.5 billion of investments went to insurtech companies. 2016 is on track to surpass that.
VC firm Canaan Partners said, “The big opportunity for insure tech is not to make the existing insurance products digitally native, but rather to fundamentally alter the product or its underwriting process to create an order of magnitude improvement to the customer’s experience.”
Investors and startups see the independent agent channel as antiquated and not great at attracting modern consumers. But, they also recognize the hard work involved.
It’s not a matter of if one of these big-eyed dreamer startups will figure out how to provide value at the level you do. It’s a matter of when.
Are You Paying Attention?
Do you think Blockbuster saw Netflix as a threat initially? Do you think Borders worried about Amazon at first?
Take a note from these companies: It would be a mistake to ignore what is happening in the industry.
These insurtech startups are coming. Many of them will fail. (See Google Compare for a case study on why.) But it only takes one.
This is your industry. These are your clients.
You have survived many obstacles that were meant to be your end. Direct writers and the internet to name a couple of the recent ones.
There is a lot of optimism right now, which is great. But, combine that optimism with action.
You can survive this next challenge and grow your business. But to do so, you have to pay attention to what’s happening and not turn your back on it. And, you need to adjust to meet consumer expectations and demands.
Because if you don’t, you’re handing them the opportunity.
“A tree that does not bend with the wind will be broken by the wind.” ~ Chinese proverb
What You Need to Do
There is enough business for everyone. The good news is consumers still want your expertise and advice.
Even for auto insurance, more than 81 percent of shoppers prefer to buy from an agent rather than online. But, to assume that number won’t ever change would be a huge mistake.
So what are you to do?
1. Get motivated. It’s not going to be a straight path to success. The days when a well-placed location and good signage meant a steady flow of leads are almost past. It’s time for the real work to begin.
2. Recognize that these insurtech startups are not going away. And, they will grab some of the market. But, there are several who do want to work with agents.
If you’re not already, start paying attention to what’s happening with insurtech. Look for opportunities to network. Meet these insurtech entrepreneurs and other agents who are succeeding in today’s market. Learn from them. Join in the conversations that are already happening.
3. Assess the technology you use in your agency. Include your insurance agency software, computers and phones. Are you using the right technology? Are you using your comparative rater and agency management system to their fullest potential?
4. Evaluate your processes. Do you make it easy for consumers to buy from you? Are you following up with online leads as soon as they come in?
5. Review your website. Is the design updated? Is the content helpful and high quality? Do you put service forms and claim information on your insurance agency website?
6. Get serious about marketing your agency. I’ve had conversations with people outside the industry who had no idea that independent agents even existed. That’s a problem. If you don’t have time to focus on your agency marketing yourself, get some help.
7. Look at your sales. Are you selling on price or value? Do you have a formal, written down process? Are you holding your producers accountable?
8. Go beyond CE. Learn everything you can on technology, marketing and sales. Study best practices in management. In this case, what you don’t know can hurt you.
There are resources out there available to you that offer this type of information... Webinars, conferences, local groups, blogs, podcasts.
One more piece of good news. You’re not alone. We’re all in it together.
Are you ready?
The Modern Agency monthly blog series discusses various topics related to the success and growth of independent insurance agencies in the modern market.
Photo credit: Oliver WymanMODERN AGENCY INSURTECH COMPARATIVE RATER AGENCY MANAGEMENT SYSTEM INSURANCE WEBSITE SALES AGENCY MARKETING