A Real Possibility for InsurTech Disruption
How did Insurance Agencies evolve into the current Silo Dynamic? Can InsurTech actually encourage real Disruption of this strange evolution?
In what other Industry does a customer face the possibility of having a possible 5 different Service Window scenario to get things done? To understand that interesting dynamic, one must go back in time, almost 200 years or more. (Not as far back as the beginning of the First Man in Game of Thrones, but almost!)
Insurance Agency Customer Service was created to allow an Insurance Salesperson or Producer to get out from under the burden of providing direct Customer Service to a client. Think about that for a moment. The person that sells you the policy is trying to free themselves of the responsibility of helping a customer when they have a question or require a transaction. Not that every producer or Sales Person stylistically endorses that concept. It's ingrained in the psyche that Insurance Sales folk actually want to get calls from their customers. We entered this industry because we're wired to want to help people with their problems (not improve our golf acumen as so many Industry Pundits and new entrant 'disrupters' claim). But, in order to focus on increasing sales, effort categorized as customer service needs to diminish to accommodate cold-calls, lead generation, business development and referral follow-up.
And, in the modern Alphabet House (which really are the Public or Private Equity Owned Brokerages) structure, Producers are Producers and Customer Service providers are Customer Service providers. Producers have a team that supports them and manages their book and renewal processes and even act as guardians preventing carrier representatives from gaining access to their precious calendars and time commitments (that topic requires another article).
At most multi-line agencies, business and customer service is divided into multiple units: Business or P&C. Personal Lines. High Net Worth. Employee Benefits. Surety. Life. And then there's the possibility that you'll have specialists in D&O, EPLI, Professional or E&O, Pension or 401K, Association, Programs, etc.
The basis of this evolution lies in the history of Insurance Innovation and Carrier Creation. The Genesis of Lloyds of London creating the first policy to protect Shipping Companies is closely followed by the beginnings of Mutual Life Insurance Companies.
Insurance Brokers were specialists. They entered the industry under either the auspices of a Life Insurer or a Fire Insurer. Life Insurers developed the still breathing Carrier Owned Agency Structure (such as NYLife or NorthWestern Mutual) which forced their contract agents to solely focus on the sales of Life Insurance. Fire Insurance Carriers, sponsored a similar structure of Contract Agents who solely sold Fire policies. Over time, the industry evolved and Independently For Profit Insurers offered Multi-Line programs. Mutual Fire Insurers answered back and added Life to their mix as well.
In America, The Travelers wrote the first Railroad Employee Benefits Policy in the 1900's. As Unions and Corporate America thrived, more and more insurers developed Employee Benefits as an offering. Primarily, Employee Benefits was, until the early 80's a backwater for specialists who thrived creating programs for Employers. It also was a savior for Life Agents who branched out to service their customers who owned businesses. Most P&C Agents focused on P&C but dipped their toe in the water by bringing or partnering with an Employee Benefits Professional. Until probably the mid-1980's many P&C Agencies were loathed to risk their customer relationship to a health care carrier's claims screw up.
With 1000's of Insurers today, you can pick your flavor or Multi-Line carriers and Specialty Carriers....and mult-line agency or specialty agency.
If you're a Series A or Angel Funded Startup, obtaining Insurance has become a mind-bending time-suck. A startup is required or should be required to buy Key Person Life (to protect investors), Benefits to lure applicants to leave Benefit Rich employers, P&C/Liability to protect landlords and assets, 401k as a recipient of roll-over assets, D&O to protect the board, Cyber Liability (for obvious reasons), Professional Liability in most cases, Workers Comp, Payroll, HR Systems, including onboarding and resume bins, EPLI (Employment Practices Liability --horror stories abound), and that's just for starters! Google any of these topics. Enjoy the headache and tangled web of interlocking lead generation bots and startups that have no business being in business (but hey, their funded, so they must be legitimate!).
But the point is, that under the subject of INSURANCE, researching, evaluating, sitting through presentations/sales pitches, making a choice, finding out it was the wrong choice, going through the process again....and finally settling on a first round of vendors isn't a satisfying experience. Buying Insurance, for even the veteran startup guru -- with pre-existing relationships (which help as a template...but times do change...and that template is antiquated the moment you face your first renewal), has to devote multiple appointments, way too many hours and the result is usually either ONE or MULTIPLE Vendor(s) with a minimum of 5 account reps/5 Sale Rep/Marketing Contacts (and new golfing buddies!) and service numbers!
What would happen if an Insurtech was created that provided a customer with ONE point of contact and ONE Baton (I think Baton would be a great name!) Wielding Orchestral Leader? How differentiated would that be? Would customers appreciate that type of organization? Could it gain traction and viral adoption? It's an idea that requires a true believer and investors that truly want to invest in a truly disruptive idea. A company that promises centralized service and the type of people required to create, establish and operate this kind of innovative service organization presupposes the existence of insurance professionals that have cross-industry experience and education.
Naysayers will say that this type of agency is doomed because of the old saw that the type of personnel would be a Jack of All Trades, but a master of none! They'd reject the idea that someone or that many people would devote their time and educate themselves well on many different topics and expertise or that you could still have the ONE CONTACT who orchestrated multiple specialists or deep domain experts. What can remain constant though, is the idea that one Sales Producer could focus on the relationship, while many account managers provided the day to day resolution and transactional service demands. There are many possibilities of structure. But how refreshing to a Business Owner or Special Group (I have an idea of exactly the type of group that would LOVE this model and it's never been done before) to have ONE PERSON to deal with the topic of INSURANCE!!!