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December 9, 2016

Insurtech Takes Aim at Personal Lines

Summary:

Traditional distributors must be able to execute as efficiently as the newly minted distributors emanating from the insurtech world.

Photo Courtesy of Pixabay

If you have gone three days without seeing the term “insurtech,” well, you are probably on a remote Caribbean island with no means of connecting to the outside insurance world. Putting your head in the sand on some nice island might sound tempting, but there is an issue that any insurer with a vested interest in an agent and broker distribution model for personal lines can no longer afford to ignore the situation.

See also: Asia Will Be Focus of Insurtech in 2017  

SMA research indicates that 30% of the approximately 600 insurtech startups being tracked are focused on disrupting and displacing conventional distribution channels – the largest of all insurtech categories. What does this mean? With great urgency, personal lines insurers need to work with agents and brokers to ramp up connectivity capabilities so that traditional distributors can execute sales and service transactions at the same speed and efficiency as the newly minted distributors emanating from the insurtech world.

Most personal lines insurers are not asleep at the wheel relative to the overall situation. 64% of survey respondents indicate the top business driver for investing in agency connectivity is improved customer experience for the agent. The No. 2 reason for investment, agent/customer retention, follows close behind with a 56% response rate. Even though these two reasons correlate from a strategic and tactical perspective, 37% of respondents indicate they are mainstream investors in agency connectivity, not investing for differentiation, and a further 11% indicate they are not investing at all. This leaves a fairly large hole for insurtech-enabled distributors to drive straight through, gathering up customers … customers who used to be with traditional agents and brokers.

I am a big fan of remote Caribbean islands, so any reader who has been on holiday and without the insurtech ref is forgiven. However, creating seamless and transparent personal lines sales and service transactions between agents and brokers and insurers is critical. This is the personal lines consumer mandate!

There are competitors in the market who have figured out the technology piece of the equation. And no one can assume that tradition and familiar corporate logos are going to protect market share.

See also: The Future of Insurance Is Insurtech  

Our recent SMA report, Agent-Carrier Connectivity: Personal Lines Insurers, provides survey results and looks at the subject of personal lines agent connectivity. Last month, the commercial lines view of this topic was published. There are some interesting differences. In the next few weeks, we will close the loop with the agent and broker view of connectivity, so please stay tuned.

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About the Author

Karen Pauli, principal at SMA, has comprehensive knowledge about how technology can drive improved results, innovation and transformation. She has worked with insurers and technology providers to reimagine processes and procedures to change business outcomes and support evolving business models.

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