A few weeks ago, I wrote an article that listed every single insurtech investment that had been made in the last 2 years.
It was a monster article.
I honestly didn’t expect most people to read the whole thing.
But I was hoping readers would be shocked at how long it took them to find the end.
2.9 billion dollars of heavily tech-focused activity has been injected into our industry in 2 years.
40 incredibly progressive, online businesses are playing in our space.
Even if that doesn’t change our lives tomorrow (which, let’s be real, it probably won’t affect us that soon), we need to be aware of it.
Here are 3 reasons why:
1) An End-To-End Solution
Many of the companies I listed are simply online lead-generators for agencies, brokerages and carriers.
They occupy some online real estate, have found a way to attract online traffic to it and know how to effectively convert that traffic into “leads” which they distribute for a fee.
Ok – that doesn’t seem too harmless.
But as I began reading press releases and articles, I realized that their current position in the industry is not the vision.
The vision for many of these companies is to become an end-to-end solution.
Being a lead-generator is just their first step, not their end goal.
What does that mean?
That means they won’t need agencies, brokers and carriers.
That means they are 100% ok with cutting us out.
Trov provides on-demand insurance for your stuff (meaning you only insure it when you need the insurance).
Here’s what a recent article wrote about their vision:
Some startups are getting rid of brokerages entirely. Trov is building a cloud-based, end-to-end mobile insurance platform, scheduled to launch later in 2016.
Cover helps you find coverage after you send them a picture of what you need insured through their app.
Here’s what a recent article wrote about their vision:
“The app currently routes customers to a broker, but Cover will be licensed in the next few months to provide an end-to-end in-app solution. It’s a compelling solution that lets consumers interact with insurance in a very different way.”
The better we get at digital marketing (both individually as agencies and collectively as a channel), the more we challenge startups like Trov and Cover.
We aren’t putting up as much of a fight in the online world right now as we could be – which means we’re making their job wayyyyy too easy.
Let’s make it a little harder for ‘em.
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2) Targeting really niche (and ignored) markets
Ok – this is where these startups are getting sneaky.
Many of them are targeting very niche audiences, not your average auto/home/small, low-risk business crowd.
Figo Pet Insurance is a one-stop-shop for pet care.
Policy Genius is offering long-term disability coverage online.
Ladder Financial is betting on one product: term life insurance.
Bunker is helping freelancers.
Quilt can hook any post-college grad up with a simple renters policy.
Clover Health appeals to the older generation who uses Medicaid (talk getting granular in the health care industry).
Slice Labs fills in the on-demand home-share (AirBnB ) and ride-share (Uber/Lyft) insurance gap.
What does that mean?
It means they are flying under our radar; they’re getting bigger and stronger right under our noses…..
….by appealing to audiences we don’t typically love to serve.
I mean – I haven’t met many agents who like to write pet insurance and auto insurance for Uber drivers.
(If you’ve seen one of these unicorn agents, please message me on LinkedIn asap with a picture.)
There’s less competition for insurtech startups in these market segments, which provides them a smoother initial foray into the industry.
And here’s the vision we should all be aware of: this is just the start.
Once these companies have a solid foot in the door, they’ll just keep opening it wider and wider.
Once a successful and profitable online insurtech business model has been established, it can (and will) be replicated – either by the same 40 players or by new, hungry players who are paying attention.
So, what do we about it?
We dominate our own niches online.
I’ve attended 40+ conferences and had conversations with hundreds of agents. I always ask them what their niche is. More often than not, I hear “Anything, really. We’ll do it all.”
(^^^no that wasn’t my roommate’s dog jumping on my keyboard)
Sometimes I wonder if “Anything, really. We’ll do it all.” is code for ‘I’ve got solid renewal income so I can be picky and write the easier, less-nichey, more-average stuff.
Hey, maybe I’m wrong.
I sure hope I am.
But regardless, being a general lines agency online is a tough, tough road.
Digital marketing isn’t for the generalist.
It’s for the specialist.
Let me repeat that, you cannot be a successful digital marketer if you try to please everyone.
(Unless you’re Geico and you have a $6 billion annual advertising budget.)
If you specialize in a particular insurance product, understand the audience who needs that product inside and out, then you have the perfect platform from which to launch a badass digital marketing strategy and capture some serious online attention.
3) InsurTech companies are not competing on price
The first insurance companies to really make a splash in the online world were direct and captive carriers, like Geico, State Farm, All State and Progressive.
They immediately used this new world to beat us all over the head with cost-saving advertisements.
They began to turn insurance into a commodity.
In response, the independent agency channel dug in its heels and said “No. Insurance isn’t a commodity and competing on price alone doesn’t provide your clients with enough value.”
We perceived their advertisements as cheapening our product.
I know we all know this – but I’m reiterating it to point out that our online competition is now much bigger than these direct and captive carriers.
And not only do we now have more competition, we have very different competition.
Unlike the Geicos and State Farms, insurtech companies do not compete on price.
They compete on customer experience.
Listen to what these insurtech CEOs are saying…
“Today’s brokers are not suited for mobile-sourced customers who expect instantaneous results from interaction: namely quotes and the ability to convert.”
That was Karn Saroya, the CEO of Cover, in this TechCrunch article
‘We heard a lot of, “This is great, exactly how I wanted to do my insurance shopping, love the modern user experience, that you guys use friendly conversational plain English to talk about my insurance needs.” They liked the advice approach rather than a salesy one. We got a lot of, “when are you going to do this for health?”’
That was Jennifer Fitzgerald, the CEO of Policy Genius, in this Insurance Innovation Reporter article.
“Also critically important is the fact that no one’s happy with the industry. Insurance is not a respected sector. Insurance brands have not succeeded in convincing consumers that they’re trustworthy. Most consumers consider insurance to be a necessary evil. As far as entrepreneurs are concerned, that’s a huge opportunity. It’s an industry that’s just begging for a makeover.”
That was Daniel Schreiber, the CEO of Lemonade, in this Life Health Pro article.
Not only does Lemonade want you to be able to buy insurance quickly, easily, whenever you want, however you want, at an affordable price. They want you to feel good about it.
That is a drastically different value proposition than “we’ll give it to ya cheap.”
But don’t just listen to what they’re saying, look at their businesses.
Figo doesn’t just help you with pet insurance; they give you a tool that helps you manage your pet’s health over their entire lifetime.
Embroker isn’t just quoting P&C coverage for small businesses; they have a full-fledged dashboard that allows you to request certificates (and track their service status), pull up insurance information in a jiff on your phone, pay bills online quickly and more.
Policy Genius has created a free “insurance checkup” that focuses 110% on the customer’s needs, instead of the insurance product. (seriously – go do the check up for yourself and see how cool it is)
Unlike Geicos and State Farms, these companies are not cheapening our product.
They’re actually making it better.
So, what can we do about this?
First, we need to stop thinking that good customer service sets any of us apart – either from each other or other businesses in the industry.
It doesn’t set anyone apart – good customer service is a barrier to entry.
Secondly, we need to stop talking about customer service as if it’s the end-all-be-all.
Customer service is a part of the customer experience.
Customer service starts when one of your employees picks up the phone and ends when the call is over; it starts when one of your employees receives an email and ends when they hit send.
Customer experience starts when a consumer (not your client) starts looking for a product you offer and ends….well….never….because hopefully, they’re your client for a long, long time.
I challenge you to sit down and literally write down every single step you think one of your typical clients takes from when they start looking for you (and need to find you) all the way up until they stop doing business with you.
Then ask your employees to look at it and find the gaps.
Then start listening to your clients about their experiences with your agency and match it up to your roadmap.
Now look at your roadmap as a whole and figure out how to make it better for your customers.
Don’t get caught out in the cold.
(pretty sure that counts as a double pun.)