Insurtechs stimulate a lot of debate among agents about the extent to which they pose a threat and what should be done to address it. Some dismiss the threat by analyzing flaws in a particular venture or mocking past studies that predict the demise of the independent agent. Such criticism may provide some solace but misses the point of what’s driving the creation of insurtechs, and more importantly, what steps agents can take in response.
First, there is some confusion over the definition of an insurtech. The broadest definition involves the use of technology innovations designed to create cost savings and efficiency. Some, however, define it more narrowly to mean startups, such as Slice, Lemonade and Hippo, that target different customer segments, especially millennials, with push-button coverages.
The former is more accurate, but for the purposes of this column, let’s use the latter definition, then discuss what agents can do by using the broader description.
These startups all share one mission: To simplify all or part of the insurance process from marketing to underwriting to claims using technology and big data. Many of these startups may fail as so many skeptics point out. What’s also true, however, is the underlying conditions and opportunity to exploit them will remain, so eventually some of these insurtechs will succeed big. In response, carriers are addressing the need to streamline the insurance process, but agents must also do their part.
“I don’t think ‘good’ agents are overly concerned about the startups, but agents who are little more than price quoters are or should be,” says Bill Wilson, founder of Insurance Commentary.com and formerly the associate vice president of education and research for the Independent Insurance Agents & Brokers of America.
“Someone can always develop a policy or adopt claims practices that cover little and sell it cheap. But I also don’t think we should underestimate insurtech’s efforts to simplify the insurance process.”
Wilson does think the industry can and should question a startup’s approach.
“Underwriting accuracy and regulatory fairness are the issues,” he said. “There are serious questions about the accuracy, reliability and relevance of some of the data being used.”
Using the broader definition of insurtechs helps identify steps agents need to take to counter these startups.
“Insurance innovations fall into two categories: front-end innovations focus on improving the customer experience and satisfaction, while back-end innovations include technologies that are mainly designed to increase companies’ operational performance,” said Peter Teresi, chief executive officer of the ACORD Solutions Group, a subsidiary of ACORD that supports the implementation of standards.
“Agents must provide customers with friction-less communication — in other words, communication with no limits, like chatbot and automated replies, so customers may receive help whenever they need it, even if the agent is not available,” Teresi said. Most policyholders require many different types of insurance throughout their lives. “As a consequence, agents should utilize the multiple opportunities and develop customer life-time value that can be boosted by insurtechs — market prediction, customer acquisition, and insurance online distribution, among others,” he said.
Insurance technology can help agents with productivity post sales as well. “In some aspects, insurtech presents independent agents with one of their biggest opportunities if utilized in the right way by improving post-sale productivity and conversion rates,” Teresi added. “Agents will always have their own advantages, such as their industry expertise and being local, carrier-agnostic and dedicated to hands-on service.” Agents should also utilize the uprising insurance technologies to efficiently target customers and provide more transparent communication, he advised. “With the combined use of traditional skill sets and innovative technologies, agents can do much more.” Share this article with a colleague.