How do you think InsurTech companies will impact Independent Agents?

[InsuranceNerd]

It's a hot topic in the IA world right now: InsureTech. It's not going anywhere. The more we hear about InsTech startups making their debut, the more we hear and read about the relevance of the independent agent in the future.

While my opinion is one of optimism for the IA, what are the thoughts of the forum? If I overlooked an existing thread on the topic, please provide a link.

Happy Monday,

InsuranceNerd

 

[InsCommentary]

99% of what you read about InsurTechs is written BY them or those providing tech consulting services. Industry publications pick up their HYPErbolic press releases and run them because they are attention-getting and the reporters/writers know pretty much nothing about insurance, so they buy in to the hyperbole. You can read about a lot of the holes in their armor on my web site at www.InsuranceCommentary.com (search for "insurtech" and "big data" and Lemonade, a startup I've written a lot about).

That being said, some of them could be a threat to some agents. If you sell on price and your service as an agent involves primarily running basic information through a comparative rater, then you offer nothing more than some of these phone app/online ventures (other than maybe your E&O policy as a liability backstop).

On the other hand, if you're a good agent who believes that you exist to assist individuals, families and organizations in identifying their exposures to loss and properly and adequately protecting them so as to minimize their serious or catastrophic exposure to loss, then you should be fine. Couple that with being an advocate for your customer at claim time, and your concern should be minimal.

At least for now.

 

[InfinityLeads]

Coming from Silicon Valley, I do believe some of these startups will definitely resonate with the millennial marketplace, however the agent isn't going anywhere.

 

[Matthew King]

I think that AI will definitely be introduced. However, the Insurance Arena has generally always "lagged" behind other industries due to legalities and several other reasons. I think that it will come into play in the future. However, "the agent" will still be around for a while!

I agree with what has been said above, for agents that do nothing but rate and sign up clients. This is a true worry. On the other hand, for the agent that provides real value to their clients. I think they will be okay for years to come.

 

[Aaron_4SIGHT]

Get to know a few companies that have raised many millions of $'s in venture capital to put you out of business:

Oscar Health
$727.5M in funding
hioscar.com
The Oscar team is focused on utilizing technology, design and data to humanize healthcare. They are a group of technology and healthcare dreamers who looked at the current state of the US healthcare system, got frustrated by the horrible consumer experience, and decided to do something big about it.

Hippo Insurance
$39M in funding
myhippo.com
Hippo is a new kind of insurance company that uses modern technology to provide a simpler process, smarter coverage, and a completely new approach to how we care for our homes.

The Zebra
$63M in funding
thezebra.com
The Zebra simplifies car insurance by allowing drivers to anonymously compare dozens of insurance companies in real time.

Metromile
$205.5M in funding
metromile.com
At Metromile, we invent smarter ways to manage risk. In doing so, Metromile is revolutionizing car insurance through technology with its pay-per-mile insurance model.

EverQuote
$37.6M in funding
everquote.com
We just take the hassle out of finding and calling multiple insurance agents in your area or spending time filling out online quote requests with carriers less likely to provide you the best rates. We do the research on the insurance companies, match you with insurance providers who offer what you need, and you get great insurance rate quotes to compare.

Bright Health
$240M in funding
brighthealthplan.com
Bright Health is a venture-backed health insurance company that offers health plans, an integrated technology experience, and provides health systems economic rewards for practicing efficient, high-quality healthcare.

Next Insurance
$38M in funding
next-insurance.com
Today, dealing with insurance companies is an energy-draining experience wherein both insurers and agents are seen as inflexible and impersonal, following their own agendas. The insurance industry, meanwhile, is focused on paying out as few claims as possible - certainly not something that drives outstanding customer service! We are on a mission to use our expertise in innovation and technology to transform insurance for businesses.

Slice Labs
$15.5M in funding
slice.is
Slice Labs is an insurance technology startup that offers an on-demand insurance platform to support the on-demand economy. The platform allows participants to easily purchase insurance policies when they need it without committing to any annual plans.

Cover
$11.1M in funding
cover.com
Cover is an Android and iOS mobile application that allows its users to insure anything by taking a picture of what they need to insure. It partners with many insurance companies and brokers to provide its users with the best available rates. The application allows its users to insure vehicles, mobile phones, pets, jewelry, houses, boats, tours, and more.

Joany
$19.2M in funding
joany.com
They are dedicated to providing a personalized experience with the highest possible service found anywhere . Their missionis to make buying health insurance online simple and transparent.

PolicyGenius
$51.1M in funding
policygenius.com
PolicyGenius, based in New York, NY, was founded in 2014 by two former McKinsey consultants who saw a gap in the insurance industry and dedicated themselves to shifting the industry online and into the hands of the consumer.

Lemonade
$180M in funding
lemonade.com
Lemonade is a licensed insurance carrier that offers homeowners and renters insurance powered by artificial intelligence and behavioral economics. By replacing brokers and bureaucracy with bots and machine learning, Lemonade promises zero paperwork and instant everything.

Root Insurance
$12M in funding
joinroot.com
Root provides car insurance. Root helps in buying insurance, submitting a claim, or updating a policy.

Goji
$104.2M in funding
gofi.com
Headquartered in Boston, Goji (formerly Consumer United) is the country’s leading independent online insurance agency. Goji combines human expertise with smart technology to match customers with the right coverage at the best price.

Insureon
$31M in funding
insureon.com
Insureon is an online agency that provides insurance protection services for small businesses . It both serves retail clients directly and supports banks, brokerages, and insurance companies in delivering their commercial insurance products such as professional liability, errors and omissions, worker’s compensation, and more.

Embroker
$14.4M in funding
embroker.com
We’re the insurance brokerage built for the way you do business. Embroker provides technology that takes the pain out of insurance, offers top-tier service from the best brokers in the game, and partners with the nation’s leading carriers to surface policies tailored to your company.

 

[InsCommentary]

Aaron, the list is largely more hype. For example:

The Zebra simplifies car insurance by allowing drivers to anonymously compare dozens of insurance companies in real time.

There is no real comparison on their web site. You basically get a list of insurers and premiums. If you wanted to buy a car, would you feel comfortable making a decision from a list like this:

$4,258 Toyota
$6,879 Chevrolet
$2,226 Ford
$5,931 Honda

Next Insurance above says, "The insurance industry, meanwhile, is focused on paying out as few claims as possible...." That's a lie and it's illegal. The insurance industry is focused on paying out what the insurance contract calls for. There can be legitimate differences of opinion about what that is or its value, but absent the crooked players that exist in every industry, that's not what the insurance industry is about.

PolicyGenius claims it can compare policies in detail. I seriously doubt how accurate it is, plus it was started by former McKinsey employees. Don't get me started on McKinsey.

I've written a lot about Lemonade. The best thing they have going is PR.

The whole "micro" insurance thing makes no practical business sense. Why buy separate insurance policies on everything you buy when your HO policy can provide broad open perils coverage on a replacement cost basis for thousands of possessions?

 

[VolAgent]

$4,258 Toyota
$6,879 Chevrolet
$2,226 Ford
$5,931 Honda

Here is the problem, most people see it as this.

$4,258 Car
$6,879 Different car
$2,226 Car
$5,931 Yet another car

 

[Aaron_4SIGHT]

Aaron, the list is largely more hype.

I hear you. Hype or not, the $$$ they've raised is real and they have investors expecting a return on it. These startups might not do what they currently say they will, but they certainly will do *something*. And that's going to bring about change in the industry.

 

[InsCommentary]

"Most interesting observation after 3 months as VC is how critical I am of things I know something about and how excited I get when clueless." - Villi Iltchev, venture capitalist

There are billions available in venture capital, much of it from within the industry, like Munich Re. They're using these startups like R&D arms. Most will fold. Many will sell and their technology be absorbed. Probably none are going to revolutionize the industry.

Of course, I could be wrong...which, if that's the case, doesn't bode well for consumers.

 

[InfinityLeads]

I hear you. Hype or not, the $$$ they've raised is real and they have investors expecting a return on it. These startups might not do what they currently say they will, but they certainly will do *something*. And that's going to bring about change in the industry.

agreed. not every agent/agency will make it.

it'd be absurd to assume that technology won't trim the fat.