To be an incumbent means you have been around a while. That sounds old-fashioned, out of touch and full of "good old days" stories. As I have been told, “past performance is not an indicator of future performance.” However, this is shortsighted because this disclaimer is usually accompanied by a chart showing why I should invest today because the future is predictable to some degree. Right?
In our fervor to embrace new insurtech companies, we may have missed the opportunity to learn from those that have seen the ups and downs. Those underwriting cycles seem to persist no matter how much data and technology we have today vs. yesterday or how many new Instagram followers I got this week.
Fundamentally, the challenges we face today: inflation, catastrophes, debt and destabilization, are not new to those incumbents. They are new to the insurtech community. The world is getting more complex by the day, and a solid foundation of the past certainly helps to pave the way through to the future. The trick is how to get rid of the “vs.” and replace it with “and.”
The airline industry is a great example of the evolution not revolution that can happen. The technology revolution in this vertical enhanced our ability to access travel, not to replace it. Using technology, the industry suddenly brought to life the infinite possibilities of traveling the world. I could now see myself on a beach halfway across the world. That excited travelers around the world and grew the industry from $1.9 billion in 2000 to $4.7 billion in 2019 (pre-pandemic). A fourfold increase. This wasn’t because we reinvented the airplane. We used technology to make traveling on an airplane more accessible and interesting to all. That is powerful.
The point is that we do not need to reinvent the insurance industry, we need to combine forces with the insurtech space and make it more accessible, understandable and interesting, to grow the market together. For the benefit of all.
Agent vs. Digital
So the next "vs." we are confronted with in the industry serves the same lesson. "The end of the agent is upon us" is as realistic as the end of brick and mortar. Oddly, these prognostications occurred about the same time. But within the last week I did business with both agents and brick and mortar, while also doing business digitally. I’m confused. This world is built on absolute statements because they are great headlines, but the truth is there are very few absolutes in this world except the ones your parents told you, death and taxes. Beyond that is pretty murky.
While our industry toils in absolutes, the real winners and breakthrough companies will figure out how to meld together the agent and digital in a seamless experience. The first step in doing this is in a realization that the agent brings things to the table that digital cannot, and vice versa.
Whoever effectively figures this out will align digital and people assets to create a great customer experience.
The retail industry is one that we can learn from, as they are years ahead of the ballgame, and you can start to see winners emerge. If you were a company built on stores, you moved to create a seamless online and digital experience that may lead you to a store, but your order could get dropped off at your front door or shipped from a central warehouse. Two-day delivery was cool; how about 20-minute delivery? For the digital native players, they realized at some point they needed local stores to provide personal services, convenient options or perishable goods. All retailers are being rewarded as consumer spending has been on a tear even through the pandemic. The winners make it so easy to spend money and get stuff that the only loser here is my bank account.
The point is, every time we get rid of the "vs." and insert "and," we grow the marketplace. The insurance industry could benefit greatly by partnering to build an agent and digital ecosystem.
Wait, did anyone ever ask the customer?
Funny how we can solve everything with solid academic theories and forget to ask the customer. This is exactly why this is my last section: to punctuate that our evolution as an industry needs to put aside our intellectual arguments and put the customer at the forefront of our decisions.
If we build our industry to create more value, be more interesting, be more accessible, then the overall spending for our products will increase. How many of us have used this statement, “for the cost of one Starbucks a month, you can cover your family,” and then nothing happens? This needs to change because that protection is more important than a cup of coffee, yet many people still remain without adequate insurance protection.
We all have work to do. The start of this happens when we replace "vs." with "and."
We can get back to our most important promise and be financially sound enough that no matter what happens we hold true to our promise to our customers.