In 1997, the CEO of a Silicon Valley company told me I should give up on being an insurance broker and look for a new job because I was about to be disintermediated. Technology would let carriers and clients connect directly, and nothing I did could stop the movement of history.
Well, I ignored his advice, and the brokerage part of the insurance supply chain has grown by a factor of 25 in the past two decades.
But many people are now warning again of disintermediation. Was my friend just too early in his prediction? Will the doomsayers be right this time?
In a word, no.
First of all, disintermediation rarely happens as rapidly or completely as the technologists tend to think, with their binary, one-zero, on-off approach to the world. There are actually many more bank tellers today than there were when ATMs were introduced decades ago and were supposed to put tellers out of business. Remember when realtors were going to disappear, as buyers and sellers connected directly? Realtors are thriving. Even travel agents are still around despite the spread of sites like Expedia. There are only about 40% as many as there were two decades ago, but they deliver more value now, because they handle more complex problems or have developed specialties, such as exotic fly-fishing vacations that few have the expertise or confidence to plan on their own.
See also: Why Aren’t Brokers Vanishing?
Insurance is even less likely to face disintermediation than bank tellers, realtors and travel agents because, if you think finding a fishing guide in Alaska is hard, try explaining how a workers' compensation “experience modification” is factored or how the Affordable Care Act will affect the buying public if the new administration has its way. Even though the rise of comparison sites suggests that policies are easily comparable, they are not. It takes sophistication, based on lengthy experience, to help a client evaluate his or her needs and to sort through all the carriers and policy options to find the right fit. Product, price and relationship all have to fall into the right place at the right time.
Besides, as the founder and chairman of Insurance Thought Leadership, I have a ringside seat on the startups that are providing tools that will make the broker’s role even more important than it is now. In addition to the main site, where nearly 800 thought leaders have published more than 2,500 meaty articles on innovative ideas, we recently launched the Innovator’s Edge
, which is tracking the more than 725 insurtech startups. I can say with confidence that the role of the broker will broaden for the foreseeable future.
Here are just some of the companies that will help ensure that all of us brokers have a Happy New Year – and many more to come:
– This startup, run by Chris Cheatham
, uses artificial intelligence to instantly compare and contrast policy coverage and produce a report in layman’s terms. That helps clients see what's going on. It also helps brokers keep track of changes in policies, making back offices much more efficient -- serving clients better, at lower cost.
The RiskGenius solution plays into a trend that seems to be generally missed but that will be profound, in insurance and elsewhere. While some entire jobs will be automated -- look at what robots are doing to many manufacturing jobs -- the broader effect is that pieces of jobs will be automated. It used to be that every senior executive had a secretary, but as typing, some answering of phones, some scheduling and so forth have disappeared from assistant jobs, the span has become one assistant for every two, four or even larger numbers of executives. The same sort of winnowing of functions will happen with brokers, because of solutions like RiskGenius'. Brokers and brokerages will take on more strategic work as they let go of the more mundane tasks that can be taken on by technology.
, run by Thomas Gay
, likewise makes brokers more efficient as we prospect for business. While social marketing and social selling have attracted so much attention, but haven't panned out, Refer.com scours the internet 24/7 to find topics of interest to prospects and puts them in an email format. The system prompts the broker about the optimal pace at which to send the emails, providing a high-tech, high-touch approach that can build the sort of referral network that brokers crave.
, whose CEO is Michael Jans
, offers complementary capabilities by automating marketing campaigns -- for instance, sending out emails on clients' birthdays, as policy renewals near, etc.
, which has the good fortune to have ITL advisory board member Donna Peeples
as its chief customer officer, can greatly improve customer service for larger brokers. Pypestream's chatbots mean that customers can text queries to brokers -- a means of communication that so many prefer these days -- rather than call and wait on hold, negotiate a phone tree or face some other indignity. The chatbots filter through the texts, query any and all back-office systems that have anything to contribute and answer routine questions so fast that Pypestream sometimes has to slow the response so the client isn't tipped off that it's really dealing with a computer. Clients are happier, and brokers offload routine questions so they can handle more substantive issues.
where Chet Gladkowski
is chief marketing officer and chief information officer, also can make brokers much more efficient by providing what it calls verification as a service. GAPro addresses the huge time sink that is certificates of insurance. These are important, because they let parties to a deal know that other parties are carrying the requisite insurance -- but they're only as good as the paper they're printed on (or the PDFS that contain them). Just because someone can show he had insurance a month ago doesn't mean that certificate is still in force today, when the deal is finally coming together. Brokers spend an inordinate amount of time verifying these certificates -- but GAPro automates all that, so it's possible for everyone to know in real time the insurance status of all relevant parties. Again, this means faster and better service for clients.
automates loss runs and the processing of claims data, simplifying a complex, painful process and letting clients and brokers see on a dashboard all the claims they've made under an insurance policy.
, whose founder is Peter Blackmore
, helps brokers extend risk management services to small businesses. These services had previously been practical only for larger businesses, because of the expense of the work involving in identifying and mitigating an individual business' risks. But Risk Advisor has automated the process so much that far smaller companies can enjoy the sort of attention and expertise that big clients have traditionally received. That change pushes brokers in the direction that both they and clients would like to move: The brokers will increasingly help prevent losses rather than coordinate payment after losses occur.
, whose founder and CEO is Robin Smith
, provides arms and legs (and brains) to brokers for any sort of service. Her 30,000 "Lookers" across the U.S. are currently handling tasks such as taking photos and gathering other information after car accidents, but their work is really limited only by our imaginations, because they give us the sort of inexpensive, free-lance workforce that Uber has brought to transportation. How valuable is the sort of service that WeGoLook can provide? Well, Crawford just announced that it was buying 85% of WeGoLook in a deal that puts a $42 million valuation on this young startup.
See also: Calling all insurtech companies – Innovator’s Edge delivers marketing muscle and social connections
This list of seven companies is just the start, as a visit to the Innovator's Edge
will show you. So, my bet is that if my Silicon Valley friend and I reconvene in 20 years, we'll see that the role of the broker has become even more strategic and has moved by leaps and bounds beyond where it is today.