Today's managing general agencies (MGAs) and managing general underwriters (MGUs) look vastly different than they did 10 years ago. The insurtech boom brought new tech capabilities to the space, including digital and analytics platforms, that have evolved the services MGAs/MGUs are able to offer. As a result, new business models have also emerged. Suffice it to say that there is no cookie-cutter way to establish an MGA these days.

SMA has spent the past decade tracking over 100 startup MGA/MGU entities, in addition to observing the developments at incumbent MGAs that are taking their offerings to the next level amid increased competition. New SMA research uncovers the six insurtech MGA business models that new entrants are pursuing today. Each model's focus ranges from MGAs that deploy line- or segment-focused businesses to serve niche markets, such as cyber or flood specialists, to MGAs designed to enable carriers to offer innovative products through digital channels.

In addition to the insurtech models, SMA's market analysis also sheds light on incumbent and traditional MGAs that have served the market for many years. Faced with new challenges, including changing customer expectations and increased competition, incumbent MGAs realize that relationships are no longer enough to stand out in a field of rivals.

See also: Best of Both: Bundling Parametric, Indemnity

These models illustrate the evolution of MGAs in recent years, and SMA expects further developments to unfold as transformation continues in the sector, including:

• Growth in MGA premiums,
• Continuation of new MGA launches,
• Increased M&A activity among MGAs, brokers and carriers
• Expansion into new product lines/segments.

What's clear is that MGAs bring tremendous value to insurance transactions, and new entrants are elevating services by driving innovation, conceptualizing new products and creating more and more specialization. The variety in MGA business models emerging across the segment will help foster a healthy and vibrant market that will continue for years to come.

One of the big themes I saw at InsureTech Connect in Las Vegas in early September was: Agents and brokers rule. 

While many of the scores of exhibitors and sessions still focused on making carriers smarter and more efficient, seemingly as many dwelt on how to make the lives of agents and brokers easier, more fulfilling and more profitable. That trend will play out over months and years, but it already shows up in two pieces I'd like to highlight this month.

One is the interview with Stephen Crewdson, senior director of global business intelligence, insurance, at J.D. Power. Its latest survey of agents and brokers finds improvement in satisfaction with how carriers are treating them, especially in commercial lines. The survey also offers suggestions (hint, hint to you carriers out there) about how to continue to make agents and brokers happier and more effective, especially for those who aren't in what J.D. Power finds to be the sweet spot for effectiveness -- those with two to 10 years of tenure with their current employer. Making technology easier to use ranks high on the list. Training on business development does, too.

The second is the article, "Sellers Need More Than CRM." You've heard from the author, Yamini Bhat, before, in an interview I did with her for the May newsletter on how agents can use an AI-based assistant to organize their calendars and their tasks to be radically more productive. In the recent piece, she expands on that interview to explain how to move beyond the limitations of today's CRM systems. The piece is worth a look.

Cheers,

Paul

P.S. Here are the six articles I'd like to highlight this month for agents and brokers:

SELLERS NEED MORE THAN CRM

Complementing a customer relationship management system with AI/ML-based solutions can harness the power of data within an organization.

IS YOUR AGENCY READY FOR AUTOMATION?

With the 21st-century shopping experience becoming a "buy now with one click" affair, consumers expect this across the board, no matter the industry.

A ROAD MAP TO INSURTECH DISTRIBUTION

When it comes to insurance, customers trust people more than tech. Customers want a credible human partner throughout the buying process.

HERE'S HOW TO CLOSE THE PROTECTION GAP

Shifting distribution tactics, focusing on more personalized coverage, designing new products and partnering across industry lines can all narrow the gap. 

In the increasingly complex world of risk and insurance, most risk managers are well aware of the number of potential risks that lie behind their brokers’ doors that can have major client-side impact. 

A big concern is the efficiencies (or lack thereof) their agencies have achieved on three mission-critical fronts: policy management and maintenance; risk placement; and risk advisory services. 

Why should the broker’s operational inefficiencies be a concern to client-side risk management teams? Well, a top priority is to keep broker partners ahead of the risk curve and ensure their policies at renewal adequately cover the business today – and tomorrow. Operational risk measurement and management has a major impact on insurers and their brokers’ financial risk. Reducing information asymmetry due to enhanced data and allowing better predictability is key to monitoring and managing operational risk. 

It’s increasingly challenging for brokers to deliver on this promise of risk mitigation. One solution is adopting smart technologies that streamline processes and make them more efficient. By digitizing repetitive work that is prone to errors and omissions, technologies enable broker organizations to become more humane, resilient to change and profitable. 

By 2025, according to the World Economic Forum, the amount of work done by machines will jump to more than 50%, most of which would be replacing repetitive, boring and low-quality manual work. AI technologies including chatbots, cognitive automation and robotics provide a streamlined, automated and quick insurance experience for its customers, and a highly cost-efficient process to the insurers. 

Insurance agencies have an opportunity to get ahead of this trend with technologies – artificial intelligence, machine learning and process automation – that will vastly improve how well they service client accounts. When this occurs, ultimately, everyone wins.

In Search of a Fix

Policy checks and risk placement at renewal remain big stumbling blocks for brokers. While largely manual solutions combining AI and machine learning are starting to make a dent in improving this process, there’s substantial room for improvement.

The numbers speak to the complexities.

Take a typical mid-market policy of 300 pages, with 3,000 or more line items on various schedules. It all needs to be checked for accuracy and variances with supporting documentation such as binding documents, endorsements and exclusions. The initial check – often outsourced – takes about 45 minutes, but then it comes back to the manager who spends another 15 minutes or more looking for variances and validating the policy in a side-by-side comparison. 

Each renewal (and new business) policy needs to go out to different carriers for quotes that are competitively structured and priced, comprehensive and right for the client’s needs. Comparing those multiple quotes to determine carriers that will be most responsive to each client’s risk success stories is painstaking, often requiring numerous hours for each client account. 

Multiply those policy check and quote comparison activities by the hundreds of policies handled by a mid-sized broker over the course of a year, and the high cost, frequent error drawbacks of the manual system become obvious. 

COVID-19 protocols disrupted these and other processes. That disruption, along with escalating turnover among experienced insurance personnel and outsourcing resources that became more restricted, has hamstrung agency operations. Those challenges have led to significant backlogs that delayed policy deliveries by months and created rising E&O risks – and claims – for brokers.

The risks of continuing with inefficient solutions are mounting. Insurers like Lloyd’s of London and some regulators in the U.S. are clamping down on the delays in final delivery of policies. Financial penalties make good incentives for improving the process. Even better than simply avoiding punitive measures, the cost savings for a broker are substantial if an automated, digitized process is adopted.

See also: Why Are We Still Talking About Digital Transformation?

Toward a High-Tech/High-Touch Experience

Solutions are available that address brokers’ administrative risks from within – in a way that focuses on the customer/risk manager experience and leads to vastly improved alignment between them. The stakes are such that investing in these advanced solutions is no longer optional. 

By harnessing state-of-the-art technology – artificial intelligence, machine learning, natural language processing (NLP) and cloud – the broker is better-equipped to extract information from unstructured data. Among the benefits:

• A faster and more accurate policy-checking process. Enhanced analytics of policy limits, deductibles, exclusions and demographic information means potential errors and omissions are identified and corrected with speed and accuracy.
• Improved review of carrier quotes. Multiple quotes and important features (like premium pricing and limits) can be efficiently compared, and the analytics of their variations used to guide recommendations to best meet the client’s needs. No longer will brokers be constrained by the labor-intensive manual process of collecting and analyzing the quote data.
• Claims automation. AI-driven touchless claims make claims management more efficient, accurate and, ultimately, faster.

In the end, as more agencies move to adopt advanced capabilities, the trend will work to the risk manager’s benefit. Smarter and more efficient broker operations will mitigate the hidden risk to clients of high-volume, rushed, rote tasks that can lead to oversights and a tenuous work product. 

Better yet, when the power of technology is leveraged by brokers, it frees them to provide an improved, high-touch, consultative customer experience. Better use of data improves the broker’s insights into the client’s seen and unseen risk challenges. Those advances foster the kind of relationship that keeps risk management teams ahead of the risk curve, whatever circumstances their businesses face. 

It’s the kind of risk mitigation everyone can understand.

The future landscape of the P&C insurance market is being largely determined by the technology decisions companies make today. Is your business keeping pace with the rapid advances in property risk data and analytics?

The digitization of core processes, the increasing migration to the cloud and the explosion of insurtech companies has set a foundation for a new generation of property risk data and analytics. The accessibility and quality of property data has exploded – and simultaneously become drastically more cost-effective. The ability to store or access such data via the cloud and the ready availability of APIs to connect to sources of data has translated into an explosion of data that can be instantly delivered and leveraged by underwriters. 

Still, many insurers are operating in the past. To illustrate, consider that 30% of legacy systems do not have data on the location of a property’s nearest fire station or fire hydrant. Yet, that data is readily available and has a significant impact on the estimated extent of potential fire damage to a property. Or consider that lightning risk is often not considered in most property risk evaluations, yet the data for that $1 billion claims category is also readily available. 

Most current property risk models rely heavily on data and evaluations based on a property’s ZIP code, a practice that dates back to the 1980s. Yet, technology and data exist today to evaluate more than 1,000 risk data points for every single property in the U.S. And these geospatial hazard ratings are much more comprehensive and precise than the current zip code and census block-based practices.

In a recent study, the global consulting firm McKinsey reported that best-in-class insurers are “putting distance between themselves and competitors” by applying advanced data and analytics in underwriting. They cite these insurers reducing loss ratios by three to five points, increasing new business premiums by 10% to 15%, and improving retention by 5% to 10%.

See also: Biggest Operational Risks of 2022

As the McKinsey report states, “external data is the fuel that can ignite the value of analytics.” By leveraging next-generation data and analytics, insurers can gain deeper insight into risks across the insurance lifecycle, from risk selection to pricing: 

Risk Selection - Through access to internal data and integrating the right mix of external data, and then integrating that data seamlessly into the risk-selection process, insurers can better screen applicants. Insurers can classify applicants using risk models based on their underwriting principles to determine whether to cover or renew a client – and determine the amount of premium they should offer to that client. With next-generation data and analytics an insurer can select good risks and avoid the risk they do not want to underwrite. Of course, the idea is not to eliminate losses completely but to eliminate highly identifiable and highly probable losses. 

Prefill - Another point of the customer journey that can be made significantly more efficient and effective using the right next-generation data is in the interview and screening process. Using traditional data systems, the screening and interview process can be cumbersome, but with next-generation data integration, you can match and prefill data for prospects and customers quickly and inexpensively. Minimizing the number of questions, you need to ask a potential customer or client can dramatically help speed and smooth the screening and sales process.

Pricing - With quick access to and integration of the right internal data, and cross-analysis with a broad array of external data, insurers can more effectively make their case to regulators on pricing – and can more accurately and appropriately price policies to reflect the actual inherent risk. With most current systems, a property owner in a ZIP code with an F wildfire rating, perhaps a home in an urban area of that ZIP code, likely pays the same premium as a home that is actually in peril of a wildfire due to its proximity to forests/wild areas with dry brush. If a customer lives in a significantly more fire-prone property, they should be paying more than those in a low-risk property.

Targeted Marketing - Marketing is really one of the almost untouched or greenfield areas where insurers have yet to apply advanced data and analytics. Being a leader in the application of next-generation data in marketing can really make a competitive difference, particularly for small and medium-sized insurers. Marketing should really be seen as the starting point of risk selection. If you are smarter and more targeted about whom you market to, you are going to be able to produce stronger, less risky and more profitable leads.

There is tremendous value in closely integrating greater property risk data and analytics into the underwriting process to drive greater insights. And the time for updating your property risk data and analytics is now. Being ahead of the curve can be a real competitive advantage.

The insurance industry has long sought a solution to address the lengthy and costly delay between the time of accidents and the notification of a claim, also known as FNOL (first notice of loss). 

Successful integration of crash detection into claims automation efforts has gone unrealized because of difficult technical challenges, lack of innovation and existing solutions that hinder adoption. Fortunately, there are technologies being introduced into the market that are game-changing, because they offer a combination of low-cost software-as-a-service (SaaS) models, smartphone scalability, artificial intelligence, intelligent crash data and reliable crash detection at all speeds, including slow ones. In fact, new crash detection technologies could more aptly be referred to as FNOI (first notice of incident), in which a crash alert is made on a near immediate basis. 

The auto insurance claims industry has long been attempting to transform the existing claims processing model, which is a highly complex, manual, paper-based and labor-intensive process that is not consistently meeting expectations. No one is happy with this model, from the boardroom to the policyholder. However, transforming to a modernized, digital and self-service claim model has proven challenging for a host of reasons. 

In recent years, the industry has had mixed success with attempts to digitize claims via app or on-line options for starting a claim, for using photo estimating and for handling e-payments. Barriers remain to advance process transformation and customer adoption, especially around FNOL. There are numerous process steps to be addressed, including the initial detection of an incident. 

A Digital Claims On-Ramp

Promising technology and expertise to create FNOL solutions was recently announced by CCC and Sfara. With the digitization of the front end of the auto claim process, insurers can now extend and accelerate claims automation across the entire claim process, from crash to payment and subrogation, finally realizing the goal of a straight-through-processing.  

There are significant benefits to straight-through processing, for both policyholders and the companies that support them, be those automobile OEMs or auto insurers. The desire to see these benefits realized has driven innovation and will accelerate adoption. 

U.S. auto insurers could experience $15 billion of savings through improvements in loss costs and loss-adjustment expenses. This figure is based on an estimated $1,000 in savings through automation for the 15 million insured auto accident claims that occur annually

These savings arise from reductions in loss adjustment expense (LAE), including claims intake costs, attorney involvement and injury causation investigation. Improvements in loss-cost management include more accurate damage assessment, fraud detection and deterrence and higher direct repair program use. 

The data captured in a mobile crash detection program, when integrated with insurer and partner claims management platforms, will dramatically improve and compress the auto claims process cycle and costs in a number of ways; 

• auto damage assessment (estimating)
• repair parts identification and procurement
• salvage management of total loss vehicles
• personal injury assessment and causation
• liability determinations
• fraud detection
• audit rules

See also: First Steps to Digital Payments Processes

Barriers to UBI Adoption

After approximately 20 years in-market for telematics, only 16% (albeit growing) of U.S. private passenger auto drivers have participated in some form of telematics auto insurance programs from pay-as-you-drive (PAYD), also known as pay by the mile, and usage-based insurance (UBI), which monitors and uses driving behavior for some time to determine auto insurance premiums.

Contributing to this slow adoption are factors that we think ultimately disqualify UBI as a possibility for claims automation:

UBI Technologies Are Not Sophisticated Enough

Many UBI programs have begun to deploy, or at least study, crash detection but have noted some inherent limitations in capability, including challenges with: the associated necessary telematics hardware (dongles, tags and sensors, Bluetooth pairing) and an equally challenging deficiency with false positive suppression. In some cases, it’s widely known that false positive crash detection rates of 30% are standard, especially at lower speeds, where the majority of accidents occur. That issue renders UBI technology essentially useless to claims processing.

They Aren't Designed as Claims Support

UBI programs were designed to be more of a growth strategy -- "switch and save" -- and less to support claims processes. As a result, their supporting technologies didn’t require precision or much sophistication, both of which are required for automated claims processing.

For instance, in assessing driving behaviors for UBI programs, the data is averaged over trips and time. As a result, catching even “most” trips is not necessary. So, it also wasn’t necessary to have exacting "trip start" technologies. But if your goal is to capture driving data leading up to a low-speed collision, your “trip start” tech must be highly sophisticated and fine-tuned. 

Additional Hardware Is Required 

Anyone running a UBI program that required the connection of dongles, tags or other aftermarket devices quickly learned just how difficult it was to get customers to use them, no matter how easy they were to install. Even ardent hand-raisers for UBI programs offering savings and discounts just didn’t install the devices, no matter how many times you reminded them. The result: high friction and low activation. Plus, costly communications programs to urge customers to install the devices. 

UBI programs entail substantial complexity, parts supply, manufacturing, transport, inventory, customer shipping and returns. Even though these can be managed, the complexity can damage customer experience and increase churn. Getting customers to install equipment continues to be a hurdle, and the equipment cost -- ranging from $12 to $60 per driver -- needs to be amortized.

See also: Past, Present, Future of Telematics, UBI

Smartphone Technologies Offer Best Market Penetration

The essential differences between UBI and other crash detection solutions are the underlying technology, as well as their intended purpose.

Smartphone-enabled crash detection will not only simplify the claims process for drivers following an auto accident and provide greater safety and convenience to those involved but will become the “on ramp” to accelerate claims digitization by insurers. This will make digital FNOL a reality and will speed the arrival of the long-sought vision of “straight-through-processing,” starting with the ability for insurers to contact their policyholders following a detected incident. On average, customers wait up to five days to eventually make a claim. By reversing this current sequence of events, insurers can efficiently and quickly reach and serve their customers in their time of need.

As evidenced by the success of the App Store and Google Play, the smartphone app is the ultimate distribution mechanism, with over 140 billion app downloads in 2021 in the U.S. alone. Innovation starts with new smartphones and always improving sensors that are constantly updated by the end user (as they upgrade models). Smartphones have become incredibly powerful sensing and processing devices to support 3D gaming and numerous uses. The introduction of mobile-based AI, capable of operating directly on these phones, is accelerating innovation at an incredible pace.

Using Intelligent Collision Data to Drive Claims

The CCC Intelligent Solutions partnership with Sfara offers insurers real-time access to mobile crash detection data designed to accelerate and enhance claims outcomes beginning at FNOL. CCC's cloud will ingest from Sfara multi-sensor accident intelligence data, including on speed, point of impact and direction of force, and other pertinent high-frequency data. Participating customers can then leverage that data through CCC's existing workflows, powering auto physical damage claims and supporting the customer’s ability to estimate damage severity, schedule timely repairs and beyond, creating more straight-through experiences for drivers and insurers. In addition, accident data could also inform potential likelihood of fraud and crash reconstruction.

This announcement reinforces the apparent technical strides made in smartphone accident detection viability, so we took a closer look. Sfara’s website and writings indicate the use of a multi-layer AI approach, first with “ultra-low speed impact detection,” which is then complemented by a second layer of false positive suppression technology called “ESP” (extended sensor processing). Low speed and consequently lower severity/less damage is a distinguishing factor here, because the majority of auto collisions are indeed at lower speeds and are generally below the average collision repair cost of $3,800.

Although comparatively higher speed/severity accidents are cited in the marketplace as common crash detection use cases, it is actually more difficult to detect moderate to minor incidents; false positive crash alerts have been unacceptably high. Insurers would rather not contact their customers only to find the crash alert was a “false alarm,” phone drop or some other scenario unrelated to driving a car. Thus, crash detection has been limited to those more severe accidents. 

Low speed/high frequency claims are of great interest to insurers when it comes to serving customers and wringing out inefficiencies while modernizing the claim process. In other words, reliable low-speed crash notification has been the missing ingredient in promoting digital FNOL adoption, which, in turn, will further enable digital self-services throughout the entire process. Additionally, gaining more immediate telematics information on the cause of an accident can streamline subsequent claim investigation phases. The ability to immediately validate the essentials, such as time, date, location, speed, direction, vehicle information, etc., amplifies the value to crash detection.

We fully expect smartphone-only crash detection availability and accuracy to enable widespread adoption of automatic accident notification and claim activation by both insurers and drivers in the near term. Essentially, this is FNOL in reverse; carriers can confidently contact the policyholder to offer support and open a claim.

This low-cost capability coupled with ubiquitous smartphones will result in a breakthrough in the auto claims process and related services. The benefits of reliable real-time crash detection and digital FNOL are just too compelling to ignore, and carriers that do not offer it will be at a competitive disadvantage.

Let the next step toward end-to-end claims automation begin.

The P&C insurance industry has always been a little obsessed with using personas as a proxy for desirable customer segments. None of these has received more attention than the Robinsons. Based on a consumer profile that contains households who own a home and a car and place the insurance on both with the same insurer as a bundle, the Robinsons represent the crown jewel in customer lifetime value. Accordingly, they have become the objet du désir for carriers of every type.

Progressive disclosed as much in its Q2 earnings report, calling out the Robinsons segment by name as a key growth target. However, despite the interest in courting the Robinsons and, more generally, getting high-value customers into bundled insurance relationships, the segment is very much at risk right now. Thanks to a combination of rising premiums and increased adoption of usage-based insurance (UBI) programs, customer retention in this prized segment is at risk of a divorce.

Bundlers at Risk

In fact, according to the J.D. Power quarterly Insurance Loyalty Indicator and Shopping Trends (LIST) report, quotes on new auto insurance policies have held steady at 12% during the past two quarters as customers continue shopping for alternatives to steadily rising premiums. On top of that, we’ve found that customer frustration with those rising auto premiums is driving significant declines in customer satisfaction with home/auto bundles, with 31% of bundlers now saying that they “definitely will” switch their home insurer if they switch their auto insurer after an insurer-initiated auto premium increase.

Put simply, the data is telling us that insurance bundlers—without question the most valuable segment of P&C insurance customers—are starting to fall out of the Robinson family tree as they search for cheaper alternatives. And that’s a problem.

You see, insurance executives have been working for decades to find ways to deepen customer relationships at a household level, and the current customer reaction to rising prices flies in the face of that strategy work to expand customer lifetime value. 

Companies that have invested in analytics that help them understand insurance decision-making for every household situation on a near-real-time basis have committed to a strategy to find ways to react quicker to changes in the most valuable customer households to retain them and sustain a strategic profitability advantage. 

The most advanced companies in this space have been pushing to make every interaction a moment of both trust and advice where they actively listen for changes in a household to deepen the relationship with the customer. Sometimes that advice is “you need lower insurance costs” – enter UBI, where your amount of coverage/insurance can stay the same or go up, while you pay less due to driving less, driving better or both.

See also: From Risk Transfer to Risk Prevention

Keeping the Robinsons in the Family Tree

If insurers are interested in stemming the tide of defections among the Robinsons segment, they need to get serious about tracking every aspect of the Robinson customer experience and act quickly to close any gaps where they are losing them to cost pressures and other variables. 

In a word, they need to get serious about personalization. The ability to make great advisory recommendations often comes at key transition points in the life stages across insurance neighborhoods. What’s new is the focus on the continuum of household living situations expressed in terms of the people living in spaces, with cars and drivers. 

This vaults the simple view of four basic types of households to upward of 48 different combinations that describe an “insurance neighborhood” in every realistic scenario—from a family with a basic home-and-car bundle to a multi-generational household with cars, boats and home policies—and can be seen uniquely.  Even someone who is currently without an insurable asset can count as part of a family tree. There are a lot of reasons for being between homes and not needing a car that don’t mean you are not still a member of the family, a loyal customer or someone who may become one.

This new expression of personalization extends the industry’s reach to achieve their obsession with potential super bundlers and lifetime loyalists. Yet, now more than ever, product decisions of necessity may be putting strategic retention goals at risk. That focus needs to shift from short-term, product-centric gains to long-term, lifetime value. 

Increasingly, the path to delivering on that goal is rooted in real-time, granular customer data that lets insurers understand the detailed behaviors occurring within their most desirable customer segments and intervene before it’s too late. Retaining customers when they are getting a different car or a different house or driving a different amount shows personalization that counts

ITL

When you take a historical view, you see that a lot of the initial enthusiasm about the insurtech movement had to do with disintermediating agents and brokers. The idea was, let's go straight to the customer and cut a bunch of expense. But at InsureTech Connect in Las Vegas in early September, carriers and insurtechs were falling all over themselves to talk about all the things they were doing to court agents and brokers. Your survey, which found agents increasingly satisfied with carriers, seems to me to support the idea that the thinking has shifted throughout the industry. Is that what you see, too?

Stephen Crewdson:

I think I would agree with that. Certainly, we're seeing carriers recognize the importance of the independent agency channel. That importance is not diminishing. If anything, it may be increasing in some areas of business.

We also survey consumers. And we've seen that the optimal experience for a customer is what we call an omni-channel experience. If I need to, I can reach my agent. If I deal with a call center, the person there is equipped and empowered to handle my issue. If I need to do something very simple, like making a payment or confirming that a payment was received, technology can handle that. I don’t need to wait on hold while the agent is doing something else to just have a 20-second transaction.

Carriers are also seeing growth through the agency channel. So, I think the independent agency channel is still very strong and isn't about to go anywhere.

ITL

When you talk to agents and brokers, do they mention anything in particular that they think the carriers are doing better?

Crewdson:

In commercial lines, we saw an increase in agents' satisfaction with carriers for five out of the six factors we track. Satisfaction with the quoting process is up. So is satisfaction with product offerings, customer service, support communication and commission. The only factor where we didn’t see improvement was in claims, which makes sense given all the bottlenecks in supply chains. Think about used car availability, new car pricing, all the things on the auto side that go into a claim that are extending the timeline for getting them settled.

Agents are basically telling us about the problems we’re already hearing about from customers.

In personal lines, the only area where there was an increase in satisfaction was in commission. Everything else was flat or down a bit.

Larger agencies tend to be much more satisfied than smaller ones on all six factors.

ITL

That makes sense to me, given the amount of technology that's being injected into the sales process. Bigger agencies would seem to be better able to receive that kind of technology to improve connections.

Crewdson:

There's also a personal element. More agents are saying they had an in-person interaction with a carrier this year – nearly one-in-three, where the highest number we’d ever seen before was 23%. There seems to have been a pent-up demand, and that face-to-face interaction does happen more often with the larger agencies, obviously, because there's more business being placed.

ITL

What do agents want to see now from carriers?

Crewdson:

The top thing is ease of navigation. A lot of carriers are going through platform upgrades, and it can be difficult for agents to keep up with all the changes that are happening. Even with a steady platform, the leading ask that agents have is easier navigation in the technology.

They also want more clarity around the information that's being provided to them, and they want the ability to customize it—maybe I can tag some information so it’s more readily accessible to me and don't need this other information over here that isn't relevant to what I'm selling.

ITL

Any other themes that we should explore?

Crewdson:

We've found that there’s a distinct pattern related to tenure with a business – not how long you’ve been an agent, but how long you’ve been at an agency or working with a carrier. Agents with less than two years of tenure or more than 10 are much less satisfied than those in that sweet spot between two and 10 years.

ITL

Interesting. When you’re new, you’re maybe floundering, and after 10 years you’re maybe jaded. What can carriers and agencies do to increase satisfaction—and, I imagine, productivity—for those outside the sweet spot?

Crewdson:

One is to make sure support material on the website or dashboard is easy to find—that reduces what you called the floundering. Another is to have at least one training session a year—everybody wants help figuring out how to build their book of business.

For longer-tenured agents, make sure you're flexible with designing and onboarding policies. Also, offer non-commission incentives such as trips, which are very popular. Provide a lot of communication with the agents and support for specific targeted industries for those agents writing commercial lines.

If you do all those things, agents register even more satisfaction than they do in that two- to 10-year sweet spot.

ITL

Sounds like great advice to me. Thanks, Steve.

And, for those who want more information, here is the full study.

I’ll always remember the first question I got on my first book tour. This was in 1993, after I’d published “Big Blues: The Unmaking of IBM,” drawing on my seven years of covering the company for the Wall Street Journal and chronicling how the most admired and most profitable company in the world had lost its way. I started the tour with a radio host for morning drive time who asked, in that highly caffeinated way, “Okay, Paul, what the HELL happened?”

That’s the question that has been rattling around about insurtech this year, as the big publicly traded companies have seen valuations crash and as funding has become iffy. So, to try to get a handle on what’s going on, I chatted recently with Chris Cheatham, now at Bold Penguin, whom I’ve known for years and who has lived most of the insurtech experience over the past decade.

His take is basically that the first wave of insurtech is done. It lasted from about 2011 to 2021, and “it was pretty good. We got some stuff accomplished.” He thinks a second wave will last from roughly 2022 to 2032 and is way more optimistic about where insurtech goes now. “I think you’re going to see a hockey stick-like improvement in terms of efficiency driven into the insurance industry,” he said. “I think the AI stuff is really going to take hold.”

He says underwriting will get way faster. (Don’t get him started on a submission he reviewed recently for a cyber policy that was so long he couldn’t view the email string in Gmail and had to download it via a data service.) He thinks MGAs will drive all sorts of innovation, that the messiness in today’s approach to lead generation will get cleaned up… and much more. But don’t use the word “disruption” around him. He’s allergic to the word “disruption.”

Excerpts from our intriguing interview follow.  

First, some background on Chris. He founded a startup called RiskGenius, which helped carriers and brokers analyze and compare policies and coverage language. That small-startup experience became a big-insurtech experience when Bold Penguin bought his company two years ago and he became a senior executive there. (His current title is "product evangelist.") He then went through an insurtech-incumbent merger, when American Family bought Bold Penguin last year. So, he pretty much covers the waterfront. 

Now, his observations:

On Disruption in the First Round of Insurtech

“There was no disruption. The biggest disruption was just allowing other parties to enter the process, the APIs [application programming interfaces] that let banks and other non-insurance partners pass leads into companies.”

On Speeding Up Underwriting

“Let's imagine all the friction being removed for an underwriter. They receive a submission, which goes through an extraction tool. The data then is hit against a third-party database to confirm it, flag issues in real time and present it all to the underwriter immediately.

“I think underwriting will speed up a lot. You won’t have these giant email threads, where people are just trying to figure out what's in the submission documents. I will never forget the time somebody forwarded me a cyber submission packet that was basically just an email thread that was so long. I couldn't even access it in Gmail. It was the most confusing thing I've ever seen, just because people had been going back and forth via email for so long.”

On Real-Time Quoting

“It can’t be that far away – 10 years maybe – that you’ll type in the [commercial] risk you’re trying to insure, and you’ll get quotes in real time.”

Currently, he says, the Bold Penguin platform will prompt you with options as you type in that you’re trying to find insurance for, say, a roofer. “Let's say I get three options. If I click on one, immediately I see the carriers that will give me a quote. I can then dig in, maybe specifying a roofer for manufacturing buildings or with solar panels on the roof. The eligibility of carriers updates in real time. What we'll get to is seeing the price in real time. Today, you still would have to have an underwriter review everything after a quote is offered, but eventually we’re going to get to quoting and binding in real time.”

On the Future of Brokers

“There will definitely be people that try to remove that broker. But we're really far off from a florist, say, understanding which insurance to buy for the business. Until you solve that problem, you're going to need agents. And to solve that problem you’re going to have to unwind hundreds of years of case law and hundreds of years of insurance clauses, then figure out how to explain those in real time to people so they know what they need. It’s really tricky.”

On the Future of MGAs

“There's just more capital looking for alternative insurance distribution models, so somebody who sets up an MGA can find somebody to back them more easily than in the past. APIs make it simpler, too. It’s just so much easier to connect a technology platform, like surety bond distribution platform, to some carrier that has their digital appetite figured out. You can go as niche as you want because it’s easier to spin up these MGAs. I just saw someone offer a Metaverse insurance product, right?”

On Lead Generation

“In both personal and commercial lines, lead generation is this really weird, murky place. Everyone complains about bad leads. Everyone seems to be recycling a lot of leads. And Apple just complicated the issue by increasing security and privacy on phones. I don’t know what the solution is, but I think there will be a fundamental shift on lead generation.”

On Advice for the New Round of Insurtechs

“I would completely stay away from the word ‘disruption’ when you're talking to insurance people. Building a new customer experience is not disrupting insurance, and I cringe when I hear people making claims of disruption. Don't tell people that, because they don't want to hear it. If you’re really going to disrupt some part of the industry, just go do it.”

Cheers,

Paul

Multifactor authentication (MFA) is no longer preferred security protocol—it is a must. But what makes for a successful MFA implementation? It’s a pretty daunting idea at most organizations, but with the right plan, you can make it work and benefit from it.

At the Hartford, we accomplished both internal and external use of MFA and had a smooth time of it. Our success was largely attributable to an excellent change management strategy and thoughtful execution. I’d like to share some of what we did to help others with their MFA onboarding process.

The first step was putting a lead in place who was an expert at change management. We decided to start employing MFA within our own company first—a sort of test drive before making the ask of our broker partners. Our change leader assembled a team, which had representatives from every department at the Hartford. They did a deep dive into our structures, networks and capacity before ever promulgating even a draft of a solution. That months-long research effort gave them time to learn where our strengths were and where there might be a learning curve.

In the initial stage, we developed a set of benchmarks—key performance indicators—such as the acceptable number of attempted logins, successful MFA logins, denials of access and help desk calls. After extensive communication to and education of our staff on the importance and use of MFA, we deployed it internally. 

As MFA went live inside the Hartford, we measured against our key performance indicators to identify problems so we could target corrections to smooth the process before external rollout. We took comments and sought feedback. By the time we moved to external rollout, pretty much all the bugs were removed, and we had a good sense of MFA’s effect on logins and help desk demand, among other systemic processes.

The next step was rolling MFA out to our broker and other partners. 

External rollout

Once we had the internal MFA running smoothly, we turned to a select group of agency partners who were willing to work hand in glove with us to implement MFA as part of their interface with us.

We spent time educating the brokerage principals and tech staff about what would be required. That included making sure everyone received their own user ID and password, conforming their systems to certain technical requirements and going through a validation process. All of this is fairly straightforward for most IT staff, and our team was versed on training in case it was needed. 

We started communicating with our partners about five months before we turned on MFA. We also had a dedicated help desk, and those specialists would reach out to any group that was having a problem and help get them over the hump. Working with this first batch of agencies gave us good insights for how to improve our outreach as we expanded our efforts to more users.

On the user side, most people are already familiar with MFA through their bank or another institution, such as a computer or cell phone company, so the concept isn’t a shock to the system. If the hidden, technical interface is working well, most people do little more than grumble about the extra step. Then it becomes second nature, and those who think about it are grateful for the added layer of security.

We took a tiered approach. We onboarded 5,000 users one week, then 10,000 the next, etc., bringing on about 90,000 users, the whole time confirming our key performance indicators were within our benchmarks. To ease the actual go-live experience, we sent a daily countdown message to users when they signed on to our systems: “30 days until multifactor authentication will be required for sign-on,” etc. When you do that enough, people can’t wait until that message is gone and MFA begins!

One thing that was particularly important was making sure this was an enterprise effort. For example, producers might talk to only their favorite underwriter, so that person would need a way to escalate any concerns from the producer up to the change management team. Providing that pathway was a very successful and smart thing to do and allowed us to prevent having “silent” pockets of discontent that could manifest in a reduction in business. I’m happy to say there were no serious problems at all, but it was good that everyone on our side knew how to pass along agency information if it did come in.

By taking metrics seriously, we were able to compare implementation across our partners: MGA versus retail agent versus payroll company. Our hypothesis was that there wouldn’t be a difference between the segments of our external partners, and that was true. But that might not be the case with every organization that launches MFA.

See also: 4 Technology Trends for 2022-2023

Lessons learned

We found that both internal and external users were very happy to have a long lead time, a lot of transparency into the reasons for MFA, help with the technical aspects of implementation and suggestions for educating staff. We also decided that some of those key performance indicators were worth integrating into our monthly evaluation of how things are continuing with our agency and other partners. 

We think both the KPIs and process-transformation efforts gave us an improved methodology for other change management in the future, so that’s a real bonus from this process. 

We also know without a doubt that MFA will give us added protections from some of the most common cybersecurity breaches. If someone does get hold of a username and password, having that secondary layer of authentication should put a halt to unauthorized access to our systems. All in all, MFA is beneficial for cybersecurity at a time when bots and bad guys are working 24/7. I hope your rollout goes as well as ours.

With nearly half of Generation Z coming from racial and ethnic minorities, the workforce of America is entering a new era. If diversity, equity and inclusion (DE&I) haven't been a priority at your agency, it's time to start thinking about it.

Once a year, as an employee, you may receive an email asking you to attend a meeting with a guest speaker or a training video about DE&I in insurance. Once these activities are over, your day carries on, and the topic may not be mentioned again for another year. If this is you, then DE&I is a moment for your company, not a movement, and it's going to be slow to change.

With a study of North America, Latin America and Pacific Asia showing that 51% of companies have not set diversity and hiring goals, it's clear that many global employers don't believe that it affects their business. Nonetheless, DE&I significantly affects the insurance industry, affecting employees, customers and profits.

Let's look at how you can start making a difference and address DE&I within your insurance agency.

Why You Should Care

As insurance agents, your main job is to represent your client, advise them on the coverage they need and help them find the best policies from the right carriers, and who wants to work with an agent who doesn't understand the client's diverse employee and client base? This isn't just about ignoring HR hiring objectives; this is about limiting your business opportunities if you fundamentally ignore DE&I.

If you want a happy, productive and stable workforce, then DE&I needs to be on your radar: A survey by CNBC showed that nearly 80% of employees wanted to work for a company that values DE&I.

Diverse and inclusive workplaces are not only beneficial for HR departments by reducing the risk of unconscious bias but have also proved to boost worker productivity. Data has shown that, compared with individual decision makers, diverse teams make better decisions 87% of the time. Due to the blend of background, culture and experience, truly balanced and diverse teams can be the competitive advantage your company needs.

Start Measuring

You can't get your ducks in a row without knowing what you're working with. So, the first thing to do when looking at DE&I within your own company is to measure. Businesses need to analyze their representation statistics to discover areas in need of improvement. Start with asking questions like: What employee segments do we want to define (age, race, gender, ethnicity)? How do we want to measure those segments (by department, level or location)? Then you can answer the question--are we a diverse workplace? Once you've got the answers, you can start analyzing why and start driving change.

Underrepresentation often comes down to unconscious bias in the hiring process, which affects every industry--and insurance is no different.

The only way to address our biases toward characteristics is by recognizing them, which is particularly important for company leaders and those involved in recruitment. One way to discover your bias is by taking the Implicit Association Test. This measures your automatic preferences by measuring the time taken to classify concepts into two separate categories. For example, the test would measure the time taken for an individual to classify gay people with ideas like good and bad.

Businesses can also provide training and workshops for all team members on a company-wide scale. It's important that teams share their bias with others in a safe space so everyone can learn from other people's views and opinions.

See also: Underwriting Small Business Post-COVID

Employee Resource Groups

Another opportunity to encourage DE&I is engaging with employee resource groups (ERG). By encouraging employees who are passionate about a common characteristic they share, whether it be race, ethnicity, gender, religion or lifestyle, you are fostering a supportive and inclusive environment.

Providing groups with executive sponsorship allows them to elevate the conversation around the needs and interests of that group and provides them with essential funding. Companies can take inspiration from others, like Liberty Mutual Group, which sponsors seven different ERGs within their business.

ERGs are essential for insurance businesses, as they can be a safe space for new employees to meet like-minded people and work as a form of casual mentoring and professional development. The resource groups can also be a space to collect feedback about specific issues, which can be presented to upper management.

For those within the insurance industry looking for ideas and advice--such as establishing ERGs--The Enlightened Agent podcast is an interesting and educating listen. In each episode of the DE&I Series, different professionals discuss how to improve and enhance the insurance industry, DE&I and businesses that shape the world. By listening to business leaders' stories and guidance, you can implement the best DE&I practices in your company.

Embracing Neurodiversity

More recently, companies have become increasingly aware of an untapped talent pool--the neurodivergent job seekers. Neurodiversity refers to people with different neurological functions, meaning they process and learn in an atypical way. Many other conditions could fall under this category, including autism, ADHD and dyslexia.

People with these conditions are massively underrepresented within the job market, and unemployment for neurodivergent adults can be as high as 40%. Unfortunately, employers have long held the view that people with these conditions are not conducive to the workplace.

Brains that work differently actually give companies a competitive advantage. Neurodivergent candidates can be highly efficient at recognizing patterns, mathematics and memory tasks. By recognizing and celebrating those who fall under this category, you can start demystifying the stigma associated with those behaviors.

One way to begin widening your talent pool to include neurodivergent candidates is through partnerships. For example, Marsh McLennan, an insurance broking and risk management giant, partnered with the national non-profit, Ambitious About Autism. Through this three-year agreement, they aim to make more employers autism-confident and provide hands-on insurance internships to young autistic job-seekers.

See also: How to Provide Better Coverage for Employees

Being interested and caring about DE&I within your company is not only an excellent ethical decision but also good for business. By 2044, more than half the U.S. population is projected to belong to a minority group, so by embracing and celebrating diversity within your company you are future-proofing it, too.

Einstein stated that the definition of insanity is doing the same thing over and over and expecting different results. So, how can we revolutionize the insurance industry if DE&I is still ignored and companies keep hiring carbon copies?

It's time for change.