Before I entered into the insurance industry, I was a software engineer working for a tech startup in the clinical research space. Working in tech, you get used to using some of the best technology the world has to offer. This software made us faster, more effective, and helped us provide a great experience to our customers. When one of my best friends, now co-founder, and I started looking into how we could help improve his insurance agency, I quickly realized how outdated his business was. Clients were acquired mainly by referral, the customer experience wasn’t a thought, digital presence was a pipe dream and the software they were using was slowing them down, not making them faster. Once we started raising capital to fund XILO, we noticed how many investors were sold on the idea of insurance agencies being disrupted over the next 10 years. I’d say 50% of the investors we spoke to would have rather funded a company trying to eliminate agencies as opposed to helping them. $7.1B was raised in 2020 by InsurTechs, with a lot of the deals focused solely on D2C (direct-to-consumer) insurTech businesses. If you haven’t done your research on the industry, it’s understandable as to why VCs would believe this. The world is going digital and a lot of agencies are moving slowly to adapt to it. But there are also a lot who are moving quickly to try and take advantage of the opportunities this presents.
The short story is, insurance agencies are under attack by large venture capital firms and the insurTech startups they’re funding to disrupt them. 75% of the workforce will be millennials by 2025 and these insurTechs are setting the standard for this generation's expectations on how insurance should be bought and serviced. Insurance agencies are struggling to meet buyer expectations because they:
They are in need of help from the organizations and the software they work with. If agencies could figure out how to digitize their businesses to drive a consistent, compelling and simple insurance shopping and servicing experience, they’d bring in more business and retain more customers over the next 10 years than the insurTechs. Insurance agencies (both Captive and Independent) wrote 89% of the P&C market (with similar results on the Life side) back in 2019. The opportunity for agencies to dominate the industry is great, if they could just evolve with the market.
If you’re an insurance carrier and you write a majority of your business with captive or independent insurance agencies, you need to be focused on helping them digitize their businesses. That is the only way your company will be able to see the premium growth and combined ratio numbers you need to beat out the up and coming insurTech providers.
In this article, I’m going to cover 4 ways insurance carriers can help digitize their agency channels. This includes:
Carriers who invest the time and money into digitizing their agency channels using tactics like above will see more premium growth and better combined ratios over the next 10 years.
Imagine a newly married couple who recently purchased a new home and is looking for home insurance late at night after a long day of work. They start googling home insurance, only to see all the agencies near them are closed, so they land on Kin Insurance instead. Kin quotes the policy in minutes automatically and then has automated follow up systems to keep the couple in communication until someone can finalize their policy. Lets also envision a business owner who just started an e-commerce store who’s looking for insurance. He or she can get quoted with Next Insurance in minutes vs the hours it could take a traditional agency. The larger the commercial policy, the more human hours traditional agencies have to put in, only making the experience worse for the customer. Insurance agencies have a lot to compete with and they need guidance on where to start. This is why we believe holding automation workshops would be beneficial to insurance agencies. Insurance carriers have the staff and resources to conduct the research or pull in the people needed to provide the right guidance to agencies. We recommend creating large amounts of content on topics like, sales automation, digital marketing, digital transformation, customer experience, and more. Did you know that “insurance sales automation” and insurance agency marketing” are being googled thousands of times per year? Agencies are looking for content to help them automate their businesses and transform digitally. Carriers who help provide this content will be helping their agencies quote customers faster and start digitally transforming their businesses. Here are a few topics you can create content on:
For more information, read our article on How to automate insurance sales and service requests.
Over the past few years, more and more insurance carriers have started opening venture arms or partnering with venture capitalists to help stimulate innovation in the insurance industry. Even more have started innovation departments, focused on proactively improving their businesses and keeping them safe as the market evolves. If you write a majority of your business through agencies and are not investing in helping your agencies through better technology, you’re missing out on helping them succeed in the market. Here are a few ways you can invest in better technology for insurance agencies:
Custom experience seems to be the buzz word of the decade. Long gone are the days that businesses can get away with poorly designed customer experiences tailored to an older generation of buyers. In 2018, 74% of insurance shoppers started their buying journey online. Even though most had bought offline through an agent, that’s 3/4th of the market that is looking to do business with any provider who gives them a good buying experience. It’s easy for an insurance carrier to enhance their own customer experience but what happens when it's your agency partner they’re going through? You have little control over the experience each agency can provide. Here are a few ways you can help drive a better customer experience through your agency:
Whether it’s continually investing time and money or building assets once like a WordPress website or branding guidelines, we highly recommend helping agencies drive a better customer experience. You have very little control over the experience your agencies are providing and it's essential to drive business now and in the future. XILO offers web forms with experiences comparable to insurTechs like Lemonade or Hippo. If you’re interested in this for your agencies, reach out to firstname.lastname@example.org.
Open Insurance as well as Embedded Insurance are “hot” terms in the insurance industry. Simply put, both involve insurance carriers investing in API technology that can digitally enable their partners and customers. Did you know that 41% of Insureds responded that they wanted to switch their insurance providers during COVID due to a lack of digital capabilities? That’s a lot of unhappy customers telling you where the market needs to go. But what can you do as an insurance carrier when the business representing your services is an independent organization? And what can insurance agencies do if you’re not enabling them to connect to your systems so they can provide those digital services? Let's look at some API services you could provide to agencies and how that could impact their businesses:
Although insurance agencies have a hard time working with API technology, companies like XILO make it easy for them to consume those APIs. At XILO, we can set it up right now so agencies can Quote, Bind, Submit Applications, handle Renewals and Service requests easily. Our team takes all the burden of connecting to your APIs and making sure it works well for the agency. If you’re interested in giving access to your agencies, shoot me an email at email@example.com
Insurance agencies are under attack, and with billions being invested in their disruption, it’s time for everyone they are partnered with to start rolling your sleeves up and helping. If we can help agencies provide a consistent, compelling, and simple experience to their customers while automating their businesses, they will continue to dominate the industry for years to come. If we can’t, well …. Let’s just focus on option #1.
CBInsights - InurTech investments 2020
Deloitte - Millennial workforce by 2025
Big I - Insurance agency premium written 2019
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