There is a debate raging throughout the insurance industry with traditional insurance vs insurtech startups each wanting to believe their argument is correct.
In this episode of The Show, we’re put this debate to bed:
Traditional Insurance vs InsurTech
Today my friends, we’re going drone flying. Boom!
A couple months ago I had a guy comment to me on Facebook and his opinion was that because I support independent insurance agents in the Independent Insurance Agency Channel that somehow that bias towards the human being, towards independent agents made me the obstacle to progress in our industry.
He actually used the word “obstacle.”
“You’re the obstacle, Ryan.”
I think that’s an incredibly interesting viewpoint taken with some of the most recent news that we’ve seen out of the insurtech space.
In particular, retention levels, shift in business model and essentially with all the hype and talk about insurtech which I am for 100%.
And with InsureTech Connect coming up, I thought it was important that we take today and just really examine what’s going on in the insurtech space and how the winners and losers are actually going to be chosen.
So I’m here at Schuyler Flatts, it’s a park down in Menands, New York, you see.
It’s a pretty cool little spot and definitely a spot that I have been dying to get into and fly this drone for a while. I just haven’t had a chance to get in here. So we’re going to check this place out today and do a little flying.
Everybody’s talking about acquisition and 56% of all insurtech startups are focused on acquisition.
I completely get that.
I get why.
It is easily the low-hanging fruit in our industry. But as these businesses start to mature and we’re seeing Lemonade hit their second year in business, it becomes more and more evident that the winners and losers are going to be coming from those who can retain the business, not just acquire the business.
People are always enticed by cheaper, faster, easier and a little bit of technology.
You throw in the word AI and a bot and you give it a cool name, give it a cool avatar and there’s no doubt that people are going to be attracted to that and at least give the service a try.
Where the rubber meets the road on these things is going to be the insurance businesses that aren’t just lead gen platforms that can build that backend relationship, that can hit that speed to value and deliver over and over and over again and retain that business.
That’s where the money in the insurance industry is made. It’s made on retention.
Now, I’m not so arrogant as to believe that insurtech startups don’t understand that retention is an important part about our business.
I just think retention, building loyalty, creating that connection that keeps people coming back again and again, instead of just trying the next cheaper, faster, easier option. It’s just tough to do.
Now, we talked about speed to value in an earlier episode.
And speed to value is definitely part of it, there’s absolutely no doubt.
I think a lot of insurtechs get the importance of speed to value.
Speed to value in and of itself has to build a relationship, right?
That’s the point of the value.
But I think all of them – and this includes traditional model as well – are struggling with how do we continue to build that relationship deeper and deeper, continue to add value over time.
Not just in that first interaction, not in that second interaction, but how do we build that lifetime relationship with our customers that keeps them coming back despite the new piece of slick tech or the fact that they can get the policy for $5 cheaper on renewal.
Because that’s what we’re really trying to offer them, right?
At the end of the day we’re all, whether you’re insurtech, you’re traditional, it doesn’t matter if you’re app-based, mobile-based, none of it matters unless you have a relationship with that customer, unless somehow the customer experience you’ve provided has built a deep relationship.
And that’s the part that everybody’s struggling with is how do we maintain that relationship over time.
I think this is where independent agents actually hold an advantage over insurtech startups.
Traditional Insurance Competitive Advantage
Not a lot of people are talking about that, but for all independent agents deficiency in frontend acquisition – and trust me, as a broad sweeping stroke, we’re just not great at client acquisition today.
We’re just not, not in the digital space for sure.
But that doesn’t mean that we don’t hold some competitive advantages over insurtech startups.
Those competitive advantages are easily our ability to build deep-seated relationships with our customers, real human-to-human connections.
And every insurtech startup is struggling with that today.
None of the insurtech startups are winning at the long relationship game. None of them, not today. That doesn’t mean they won’t, but not today.
So, my friends, what am I trying to say here?
What I’m trying to say is, I’m getting sick of this insurtech vs traditional insurance conversation. I actually don’t think that it holds much value to us over the long term.
Sure, there are going to be winners and there are going to be losers. But that doesn’t mean that any of those companies actually exist in their current form today in the way in which they’ll win.
Does that make sense to you guys?
I don’t think that actually there is a winner or a loser today in its current form.
It’s not going to be Lemonade’s “We’re going to disrupt the market with an app format.”
It’s not going to the traditional local agent in the way that we’ve always done business.
Neither one of them have the capacity to win in their current form, and I’ll tell you why.
Because neither is living in the brackish water.
The local, traditional agent struggling to do digital.
The insurtech, that is all digital but struggling to understand the importance of the analog side of this business.
Today’s model and for as far as I can see out in the future there is always going to be an analog version of this business. You have to be able to win at both.
You have to be able to win the digital game and the analog game.
You have to be able to live in that brackish water.
That’s the place that the true winners are going to come out of. They’re not going to just sit in digital and it’s all digital. That’s what customer want – cheaper, faster, easier. That’s not the answer. It’s not winning.
Show me a case today that’s winning that game for the long term.
The Brackish Water
Also don’t tell me the traditionals are winning because they’re not winning either.
The local independent agent has to work two, three, four, five times, ten times, a hundred times harder today than they had to work even 10 or 15 years ago to acquire a new business and retain the customers that they had.
And anyone who’s absolutely analog or absolutely digital, one way or the other, failing to dip their toes into the other side and realize that the true strength in our business, the winners that people are going to come out and be here for the next 10, 20, 30 years who are going to dominate this space and attract market share and retain that market share for years to come are going to be those who live in both spaces.
They’re going to thrive in the brackish water.
They’re going to be able to play the digital game and pass that off to the analog game seamlessly – seamlessly passing between in-person touches, phone call touches, the digital touches, understanding how customers want to communicate on every single level.
Guys, this is where the true winners and losers are going to come from and why I think the insurtech vs traditional insurance beef that exists today is just straight silly.
I mean, it’s not even a worthwhile conversation to have anymore because it just doesn’t make any sense.
It just simply does not make any sense to fight a battle that isn’t worth fighting.
Insurtech startups, you do not have the answers.
Traditional local agents who are failing to move into the digital space, you guys don’t have all the answers either.
If we come together – and this is what’s got me so excited about InsureTech Connect which is a week away from when I’m filming this in Las Vegas.
There are 3500 insurance professionals coming from the full spectrum by insurance players.
And what this conference is going to provide us as an industry is a chance to mix and develop and find out who those real winners are in the brackish water, who are the people that can handle both sides of the equation and thrive, because those are your long-term players.
You have to live in both.
And if you can live in both spaces, my friends, that’s the grail right there.
That is the prime space because no one can beat you.
You are cheap, fast, and easy, but you also develop a deep worthwhile valuable relationship that’s going to indoctrinate people to what it really means to have insurance and what insurance means to their lives and to their business.
And they’re not going to leave for the next cheap, fast, and easy option.
That, my friends, is how we win.
You have to thrive in the brackish water.
So let’s stop this debate of: is it insurtech? Is it traditional? Who’s the obstacle? Who’s keeping us from progressing?
The only people who are keeping us from taking this business to the next level are those who sit on the far sides of this conversation.
I’d like everyone to come to the middle.
Tell me your story about coming to the middle.
Because, guys, this is what takes us to the next level.
I hope to see you at InsureTech Connect. Leave your thoughts in the comments.
Who’s doing it right? How are you adding to this conversation? How are you helping our industry move forward for the long game?
That’s what I want to know. I want to connect with you.
I want to connect with the players who are taking this thing for the long ride, because I’m taking it for the long ride and I hope to see you there.