The rise of InsurTech does not mean the fall of insurance agents
It's important for an element of the human touch to be part of the insurance formula.
The insurance industry is at the beginning of a technological renaissance led in large part by millennials and younger buyers. These consumers value digital and streamlined purchase processes and are particularly open to industry newcomers.
And there are newcomers aplenty — more than 1,500 new tech-driven insurance companies entered the market in the last five years. InsurTech has become a force to be reckoned with, heralding a massive shift away from legacy insurance institutions.
This begs the question: What does this mean for the traditional insurance agency model? Will insurance agents become obsolete in the next five to 10 years? If you look at the facts, fear not. Although insurance agents need to be ready for change brought on by InsurTech innovation, they are not going away for good.
Making a case for the agent
Digitalization has accelerated significantly over the last year, adding fuel to an already digitally shifting insurance industry. Some InsurTechs have gone the direct-to-consumer route in their digital approach to appeal to younger consumers, while others are applying advanced data analytics and machine learning capabilities to create new efficiencies in the sector.
At the same time, insurance as a service has been around a long time. Its history in the U.S. goes back to founding father Benjamin Franklin and globally, the insurance industry predates medieval times. The industry has succeeded in part due to the numerous benefits of using agents to reach consumers:
- Agents have the ability to comprehend the entirety of a customer’s insurance needs, including life, auto, umbrella, liability, etc., all while taking into account the individual’s life situation.
- Agents act as a long-term representative for the consumer throughout the life of the policy in regards to any changes or when dealing with claims.
- Claims are especially tricky — agents are an essential touchpoint and advocate for the customer.
- Agents provide a white glove experience through the entire process, massively decreasing the time spent managing one or more insurance policies.
Regardless of where technology leads, it’s important to remember that consumers don’t want humans to be entirely replaced by digital bells and whistles. Insurance is a people-oriented service. Thus, the rise of tech-powered insurance companies does not have to mean the fall of the insurance agent.
The future is hybrid
For the future of the insurance industry, the power lies in combining the best aspects of both legacy institutions and tech-powered companies. Agents must rethink their relationship to technology and leverage it to do their job better while staying focused on the more human elements of insurance — relaying industry know-how and network connections to get customers the best value and service.
Now is the time for InsurTechs to start thinking about how to best leverage insurance agents for increased success, considering the existing independent agency base and the fact that technological advancements are helping agencies service more customers and write more premiums. Agency owners are implementing software to digitize new insured on-boarding, the quoting and binding process, policy administration, marketing and claims management, and more. Even through consolidation, the channel is growing and too large to ignore.
On the flip side, insurance carriers must learn to adapt to inevitable industry changes. Leaders, if you don’t currently have a plan for implementing artificial intelligence, machine learning, or predictive analysis into your business solutions strategies, you’re already behind. Insurance is an incredibly data-rich industry, but we’re still figuring out how to use those data points to serve customers better and improve policy outcomes. The companies that get ahead will be those that use data effectively to develop products that make the insurance process more personalized and quickly adapt to changes.
There exists a middle ground between legacy insurance institutions and savvy InsurTechs keen to disrupt. The life circumstances that necessitate insurance policies are not light or easy. It’s important for an element of human touch to be part of the formula. Technology certainly can help make the customer journey a smoother one, but insurance agents are here to stay.
Ken Gregg (kgregg@orion180.com) is CEO and founder of Orion180, an InsurTech that uses the insurance agency model to reach consumers. These opinions are his own.
See also: