How To Defend Your Insurance Agency Against Insurtech
Insurtech has become a darling of the venture capitalist crowd; according to a CB Insights report, insurtech companies received $724 million in funding in the first quarter of 2018, more than twice what such companies received in the first quarter of the prior year. That means insurtech’s transformative effects will only become greater as more and more startups roll out new solutions.
The good news is that you don’t have to focus on opposing insurtech. While insurance agents tend to view insurtech as the enemy, in reality, many of these technological advancements are actually a blessing for agents. “If you can’t beat ’em, join ’em” is actually a valid approach for many types of insurtech.
Insurtech is defined as any technology that’s disrupting and transforming the insurance space. The insurtech market has spread to nearly every corner of the insurance industry, as the graphic below illustrates.
This technology may fill any one of a number of different niches, including:
- Distribution — technology that makes insurance easier to buy and use; for example, Bought By Many, PolicyGenius, and Simplesurance.
- Engagement — technology that uses lifestyle apps to make interactions with insurance products a day-to-day affair; for example, Trōv, Yolo, and Vitality.
- Claims management — technology that improves customer experience with the insurance claims process; for example, 360Globalnet, Tractable, and Lemonade.
- Peer to peer — technology that groups insurance customers and rewards claims-free groups; for example, Friendsurance, Teambrella, and Gaggel.
- Data collection — technology that makes collecting and interpreting data easier for rating and underwriting risk; for example, RiskGenius, FitSense, and Quantemplate.
Not all of these niches are growing at the same rate; according to Statista, SaaS and data-collection technology have been dominating the insurtech market in recent years, with usage-based insurance not far behind.
Adopting the more beneficial forms of insurtech can provide some remarkable benefits for your agency. For instance, insurance agents who use Indio tell us that one of their favorite perks is the database of online forms. The platform includes over 3,000 digitized insurance forms that can be searched for using a number of different factors.
Once you’ve found the forms you need, you can pull them together into a single submission packet and send a single link over to the customer, who can then log in and fill out every last form online. This is far faster and easier than the typical paper or PDF insurance-application process, for both customers and agents. It’s a perfect example of how insurtech can have a positive effect on insurance professionals rather than a negative one.
Fortunately, most insurtechs are built to enhance rather than replace traditional insurance agencies. A 2017 study by McKinsey found that
“. . . 61 percent of all insurtechs today focus on providing services to insurers, simplifying and digitizing parts of the insurance value chain. . . . Only a small proportion, 9 percent, are aiming to replace the incumbents while 30 percent are focused on disintermediating the customer.”
If you’re thinking about bringing insurtech into your agency but aren’t sure where to start, ask yourself, “What one thing could I change that would amaze my customers?” Better yet, send a brief survey to your customers to get the answer straight from the horse’s mouth — then, use the results to hone in on just the right bit of technology. For example, if your survey results show that customers are most interested in being able to quickly resolve claims, your first piece of insurtech might be a chatbot that walks customers through an entirely automated claims process. You can then tell your customers that you now have 24/7 claims support.
Embracing disruption as an adviser
Of course, not all insurtech is helpful for insurance agencies — some of it is intended to supplant the human element for certain tasks that are currently a basic part of your job. The most effective way to cope with this kind of disruption is to shift your primary focus to an area that AI can’t touch.
Pivoting into an advisory role is a great way to handle insurtech’s disruption. Let the new technology handle the simple, data-entry insurance tasks while you position yourself as a resource and a subject-matter expert. Just think of the possibilities:
- Business owners need guidance on compliance rules and insurance implementation and administration.
- Consumers need guidance on how to make insurance part of their overall financial picture.
- Businesses and consumers both need guidance and expert advice on insurance fundamentals such as the following:
- What types of policies they should adopt
- Which options and riders to choose
- How to set coverage limits
- How to choose the right carrier
- How to qualify for discounts
Most customers don’t want to master the details of how insurance works and how to best use it; they want you to take care of that for them. When agents become consultants rather than salespeople, they add value that insurtech (and many human competitors for that matter) can’t match.
Facing the future
Insurtech isn’t going away anytime soon. In fact, it’s likely to become increasingly disruptive and dominant, as other fintech has with banks and investment brokers. And like bankers, the insurance agencies that learn to use and work with insurtech will thrive in the new environment while “dinosaur” agencies will be left by the side of the road.