For insurtechs & legacy insurers, teamwork makes the dream work
Disruption can usher in positive change that can be mutually beneficial if applied correctly.
If you’re in the insurance industry, you’re probably sick of hearing about “disruption.”
It’s a topical theme in insurance, and it’s not without merit. A report from Willis Towers Watson found global insurtech funding hit $7.4 billion in just the first half of 2021.
That 50%-filled figure has already eclipsed insurtech funding numbers from any previous, entire year.
So yes, the insurance industry is undergoing mass disruption. Truth be told, it was long overdue as it became a sector that was lagging behind other financial services that were brought up to the 21st century years ago, like payment processing and banking.
Sometimes though, “disruption” carries a negative connotation, especially for the side that’s getting disrupted rather than doing the disruption. There are worries of being replaced and concerns of unemployment.
Those sentiments are totally understandable, but they don’t have to ring true.
Instead, disruption can be welcomed and usher in positive change that can be mutually beneficial if applied correctly.
This can be the direction that insurance disruption takes if insurtechs and the legacy insurance industry work together instead of competing against one another.
There are a few ways this can be done, and I’m going to use what we’re doing at Breeze, the insurtech I work for, as an example.
Creating a larger D2C market than ever before
First, the rise of insurtechs can create the largest direct-to-consumer market that legacy insurance carriers have ever seen.
Why? Insurtechs have created technological capabilities and online platforms that can reach any consumer in any part of the country so long as they have an internet connection.
Because with most insurtechs, all a consumer needs is an internet connection to go to the insurtech’s website to get a quote, apply and possibly even get instantly approved in minutes and entirely online.
At Breeze, we’re doing this with income protection products like disability insurance and critical illness insurance. We have created the online platform and predictive analytics to offer these products direct-to-consumer in a simplified, easy-to-use manner.
And the legacy insurance carriers we work with then underwrite the policies we bring to them from our platform.
Before Breeze, carriers didn’t have the technological and data science capabilities to offer disability insurance in this digital, quick manner, and they didn’t have the online, D2C platform to reach every corner of the market.
Now they do and both the insurtech and legacy carriers benefit from more business as a result of the relationship.
Applying technology on microscale
If insurtechs and legacy insurance carriers working together is more of a macro-level relationship, then insurtechs working with the independent insurance agents and brokers is the micro-level relationship that also needs to happen.
That’s because these agents and brokers really are the heartbeat of the insurance ecosystem.
They are the ones that have the personal relationships with clients and consumers, and they are the boots on the ground that have historically brought in the most business for carriers.
The growth of insurtechs doesn’t mean at all that these brokers and agents have to now be replaced by technology and data developments that can automate the underwriting process.
Instead, insurtechs can offer their online platforms and cutting-edge technologies to these everyday insurance professionals in another mutually-beneficial relationship.
Imagine how much more insurance coverage these professionals can provide if they just had to direct clients to a website to punch in some numbers and receive a quote in minutes?
Agents and brokers that work with us get a custom landing page that allows them to use our online platform and technologies to offer insurance to their clients in a digital fashion.
Investing in the future
Finally and perhaps the most simple to explain, the legacy insurance business can be a part of insurtech disruption through investment.
Instead of worrying about being replaced, spend that time researching the next great insurtech and how you can be on the ground floor of innovation.
A lot of the traditional insurance business has the deep pockets required to invest, and a lot of early-stage insurtechs are looking for cash.
It’s a match made in heaven really. Moreover, the legacy side of the industry brings invaluable experience to insurtechs who normally may skew towards the younger side.
Mike Brown is the director of communications at Breeze, an insurtech focused on disability insurance and critical illness insurance.
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