Tag Archives: esurance

What Will Operations Look Like in 2028?

In a 2011 article in Insurance and Technology, Kathy Burger enumerated several big technological changes in the insurance industry since 2001, including the rise of big data, the ubiquitous nature of cell phones and social media and an increased emphasis on data security and privacy.

Seven years later, these once-big innovations are par for the course. P&C insurers and insurtech companies are now positioned to use these tools — which scarcely existed in 2001 and which were only beginning to be broadly embraced in 2011 — as the foundation for the next wave of major changes in the insurance industry.

Now, let’s look at some of the biggest rising insurtech trends today to get an idea of where they’re likely to take us 10 years from now.

Auto Insurance

In July 2015, Jayleen R. Heft published an article at PropertyCasualty360 with the provocative title, “Will the auto insurance industry be obsolete in 20 years?”

Heft cited the work of Deutsche Bank research analyst Joshua Shanker, who argued that by 2030 self-driving cars and ride-sharing services would occupy so much of the automotive market that setting rates based on driving data would no longer be necessary. Instead, the companies behind these vehicles and services would simply “insure their cars like any other product,” Heft said.

While self-driving cars and ride-sharing services like Uber and Lyft are already shaking up the auto industry, predicting the demise of auto insurance by 2030 — or by 2028, even — may be premature. Pay-per-mile auto insurance is gaining popularity. Spearheaded by companies like Metromile and Esurance, the pay-per-mile model charges a base rate, plus a specified rate for each mile driven.

“Each mile usually costs a few cents,” Craig Casazza explains in an article for ValuePenguin. “So if you drive 200 miles per month at a rate of five cents per mile, you would be charged $10.” In addition, Metromile only charges drivers for the first 250 miles driven in any given day in most states.

Tracking Mileage With Telemetrics

Both Metromile and Esurance use telemetrics to track miles driven to calculate each month’s rate. Metromile calls its program the “Metromile Pulse,” and it uses the car’s OBD-II port to track mileage.

Other insurance companies have experimented with telemetrics for a number of years but haven’t connected rates directly to miles driven. Instead, they use the vehicle’s data to adjust rates in a more complex, less transparent manner, Casazza says.

See also: Future of P&C Tech Comes Into Focus  

The pay-per-mile model is increasingly popular with younger drivers, who often have the option to abandon their cars entirely for the convenience of Uber or public transportation, but who are happy to keep the freedom of their own vehicle when they feel they can more directly control its costs. For these drivers, who include a growing number of those currently under age 40, auto insurance may survive into the 2030s — although it may operate in a very different way.

Shanker’s prediction that auto insurance will fade into product liability insurance over the next decade, however, may be prescient. In an October 2017 article in Business Insider, Danielle Muoio explored Tesla’s partnership with Liberty Mutual to sell insurance as part of the purchase price of the company’s vehicles. The plan, called InsureMyTesla, factors in the car’s autopilot feature while setting rates and comes up with a lower cost than other insurance plans as a result, Muoio reports.

Insuring Shared Rides

Similarly, while ride-sharing company Uber currently requires drivers to carry their own auto insurance coverage while also providing supplementary insurance, the company may switch to providing all insurance coverage on its cars as it continues to move into the self-driving vehicle market.

Given Uber’s bumpy ride in producing self-driving vehicles, however, the company’s total abandonment of conventional auto insurance expectations for human drivers may be more than 10 years out, Tech Radar’s Leif Johnson and Michelle Fitzsimmons said in May 2018.

Adding Value and Processing Claims

“Digital technology destroys value,” warned a March 2017 article by Tanguy Catlin, Johannes-Tobias Lorenz, Christopher Morrison, and Holger Wilms at McKinsey & Co. According to the authors, “although digital technology propels some companies to become clear market winners, for many more its impact depletes corporate earnings and the overall value of an industry. Consumers, not companies, are often the ultimate winners.”

To stay relevant, the authors said, insurance companies must “meet customers’ expectations, which have been transformed by digital technology.”

In 2018, insurance companies seeking to stay ahead of the curve often accomplish this task by breaking down their own silos and presenting a quick, clean digital interface that makes it easy for customers to interact with the company and for staff to understand customers’ needs and provide clear, consistent answers.

Bridging Human and Automated Workflows

By 2028, companies are likely to have struck a balance between automation and human intervention — a balance that many insurers are currently struggling to find, Rick Huckstep writes in an article in The Digital Insurer. Automation offers both the opportunity to improve claims response and the challenge of providing the “human touch” that customers also demand, as Roger Peverelli and Reggy De Feniks put it in a December 2017 piece for Insurance Thought Leadership.

The goal will be to use automation in a way that doesn’t feel automated. As AI technology continues to develop, this goal may be fully realized within 10 years.

The automation of many of the current day-to-day tasks faced by insurance agents will, in turn, change agents’ jobs. Some commentators are already predicting that today’s field agents will be obsolete by 2023, replaced by “bionic agents” who have fully integrated digital tools, including AI and machine learning, into their work.

How Automation Influences Customer Expectations

Customers are already demanding the knowledge and flexibility a bionic agent exemplifies. As Jason Walker writes at PropertyCasualty360, “Consumers today want the ability to conduct insurance business anytime, anywhere for simple transactions, while at the same time be able to have a relationship with a professional to discuss complex policy questions or walk them through the claims process.” As this option becomes ever more normalized for customers, the demand for the same experience in insurance will rise. as well.

The result? By 2028, “digital natives” won’t only be insurance customers — they’ll also be insurance agents who leverage technology not only to serve customers but to demonstrate real value in the insurance process.

See also: Key Strategic Initiatives in P&C  

Automation and Claims Processing

Field agents aren’t the only insurance industry professionals who will see their work change dramatically by 2028. The ways insurance companies process claims will change, as well, driven in large part by customer expectations.

For instance, Ben Rossi writes at Information Age that about a fifth of young adult customers (ages 18–24) expect insurance companies to use drone technology to survey property damage and gather information for claims.

This idea “would have been unthinkable as recently as a couple of years ago,” Rossi says. Ten years from now, sending a drone to a damaged building or factory site may be as commonplace as sending a human adjuster has been for the past 10 years.

For many of us, 2008 feels like it was yesterday. In 2028, our memories of 2018 will feel the same — yet the insurance industry is poised to be eons ahead of where it currently stands, and insurtech will lead the way.

Traditional Insurance Is Dying

Finance. Taxis. Television. Medicine. What do these have in common?

They’re all on the long–and growing–list of industries being turned upside down by disruptive technology. 

The examples are legion. Once-sure-bet investments like taxicab medallions are at risk of going underwater. Bitcoin is giving consumers the power to bypass banks. Traditional television is at risk from online streaming.

Insurance Is No Different

In fact, innovative players have been disrupting the insurance market since before “disruption” was the buzzword it is today. 

Look at Esurance, which in 1999 rode the dot-com wave to success as the first insurance company to operate exclusively online. No forms, no policy mailers–it didn’t even mail paper bills.

By going paperless, Esurance told customers that it was the kind of company that cared about their preferences–and established itself as a unique player in an industry that places a premium on tradition. Insurance isn’t known for being innovative. 

Most insurance leaders operate under the assumption that if it ain’t broke, you shouldn’t fix it. And in a heavily regulated industry, that’s not totally unreasonable. 

But you only have to look at the scrappy start-ups that are taking down long-established players to understand what awaits the companies that aren’t willing to innovate.

Thinking Outside the Box

Take Time Warner–profit fell 7.2% last quarter as industry analysts foretold “the death of TV.” Meanwhile, Netflix’s profits are soaring beyond expectations–even as the risks it takes don’t always pan out. 

Remember the “Marco Polo” series that cost a reported $90 million? Neither does anyone else. But for every “Marco Polo” there’s an “Orange Is the New Black.” Highly successful programs on a subscription model show that Netflix’s willingness to take risks is carrying it past industry juggernauts.

The market is changing–and if you want to stay competitive, you need to use every weapon in your arsenal. Millennials aren’t buying insurance at the rate their parents did

To a consumer population weaned on technology like Uber and Venmo, the insurance industry seems positively antiquated. Facebook can advertise to you the brand of shoes you like–so your insurance company should be able to offer a product that you actually want.

The Information Importance

According to Accenture, “Regulated industries are especially vulnerable” to incumbents. When there are barriers to entry based on licensing requirements or fees, competition is lower. Decreased competition, in turn, leads to less incentive to innovate. This can leave regulated industries, such as insurance, healthcare and finance, in a highly vulnerable position when another company figures out a way to improve their offerings.

Other attributes that can make an industry vulnerable, per Accenture’s findings, can include:

  • Narrow focus: If a brand focuses entirely on cost savings, convenience or innovation, it isn’t effectively covering its bases. A disruptor that manages to offer two or three of these factors instead of just one has a near-immediate advantage.
  • Small scope or targets: Failing to expand offerings to all demographics can mean that industries or service providers aren’t able to replicate the broad reach of disruptors.
  • Failing to innovate: Disruptors don’t always get their product right on the very first try. Companies must innovate continuously and figure out ways to build continuous improvement into their business model.

Tech start-ups use information as an asset. How can you tell if information is a valuable weapon in the battle you’re fighting? 

“Big data” isn’t just a buzzword; industry analysts are calling it the wave of the future. At Citi, they’re talking about “the feed”: a real-time data stream that leverages the Internet of Things to reshape risk management. 

Auto insurers are turning to connected cars to let them reward safe drivers. Some life insurers are even offering discounts to customers who wear activity trackers.

It Can Happen to You

For most insurance companies, incorporating an unknown element into the way they operate is daunting. 

But talk to any cab driver, grocery store clerk or travel agent, and they’ll tell you that the only way to survive in a technology-driven world is to innovate.

Look at the insurance technology market to see what improvements you can incorporate into your organization, and think expansively about how you can use information: for agency management, to attract new customers and retain old ones, to expand your profit margins or to streamline operating costs. 

Your survival depends on it.

aggregators

The New Age of Insurance Aggregators

Tech innovation is coming to insurance, but where and when it strikes is uneven.  Auto and health insurance have been facing serious disruption, for instance, but for very different reasons (self-driving cars and telematics, vs. the ACA and hospital mega-mergers). Life insurance and commercial P&C are only now feeling disruption. Reinsurance and annuities are following behind.

To see trends, then, it can be instructive to focus on specific insurance functions rather than the type (market vertical).

Distribution — that is, sales and marketing — is one area that has been especially active compared with other functions such as underwriting, risk, investments, admins/support or claims.

Why disrupt distribution?

It’s where the money is. In general, when a P&C or life insurer gets $1 in premium, 40 cents goes to distribution (marketing/sales costs, i.e. the agent) and 50 cents goes to everything else (underwriting, claims, service/support, risk, fraud, product, executives, etc.). Only 10 cents is profit. The largest distribution cost is usually agent commissions, which range from 50% to 130% of a policy’s first year premium.

It’s easy for carriers to work with alternative distribution channels. Insurance carriers are used to third-party distribution. They have been using independent agents, wholesale agents and affiliates (e.g., sales through AARP) for years. Systems are already in place to easily take on new distribution outlets.
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The rise of insurance aggregators

Aggregators are simply comparison shopping sites — like kayak.com for insurance. They allow consumers to easily compare product features, carriers, coverage and price. They aren’t the only distribution disruptors, but new developments are making them more potent.

Comparison sites come in three general flavors: lead generatorscall-center-based agencies and digital agencies. From their websites, it can be difficult to tell them apart, but they operate differently and appeal to different investors.

Lead generators — such as InsWebNetQuote and Insurance.com — use a comparison shopping format to entice insurance shoppers to provide personal information. They then sell these leads, often to traditional brick-and-mortar insurance agencies. Lead generators specialize in either gathering lots of leads cheaply, or curating data to sell fewer but higher-value customer referrals. Lead generation is a specialized technique, an art even. But it’s mostly unrelated to emerging technology. It is difficult for non-lead-gen experts to assess the quality and sustainability of lead-gen platforms.

Call-center agencies can develop leads or purchase them; in any case, their call centers employ licensed insurance agents who make sales. A classic example: SelectQuote, founded in 1985 and known for its early TV ads, is now the largest direct channel for life insurance. Goji is doing this well in the auto insurance space and now has several hundred licensed call center insurance agents. Call-center agencies are also great businesses. Their core competency, however, isn’t technology. It is HR hiring and training. Hiring and training a large sales force and managing its churn is growth-limiting. A commissioned call center sales force might reach 300 agents, but it is almost impossible to get to 1,000 or more high-quality agents. Crucially, too, the model does not leverage technology, so margins depend on commissions remaining high.

Digital agencies allow customers to shop and buy entirely (or nearly so) online. Without a human sales force, they must create well-thought-out user experiences that make the process of buying insurance transparent and understandable. Typically, this requires building sophisticated interfaces into multiple carriers’ systems so that the customer experience is unrelated to the company selected. In general, digital agencies hire developer talent rather than sales talent. Esurance, one of the first successes in the space, was bought by AllState for $1 billion in 2011. A more recent example (and AXA Strategic Ventures portfolio company) is PolicyGenius, which is bringing this digital model to life and disability insurance.

I believe digital agencies are the future. They focus on technology to sell policies without the aid of a commissioned human agent. This is a crucial distinction because, while both call-center agencies and digital agencies generate income from commissions, call-center agencies have to split that commission with their licensed call center agent while digital agencies do not. This means that, at scale, digital agencies should have higher profit margins. In fact, it is likely that digital agencies will actually look to lower commissions to drive sales and to provide more competitive pricing than human agents or call-center agencies.

Insurance Aggregators 3.3.16.png

Insights from the U.K.

The U.K. insurance markets adopted the aggregator model earlier than U.S. carriers, which gives us a window into their potential future. What’s happened there shows us three things.

First, aggregators have captured a material share of the insurance market and are continuing to grow. A recent Accenture survey found that, in the U.K., “aggregators account for 60% to 70% of new business premiums in the private automobile insurance market” and that French aggregators have seen “18% average annual growth for the past five years.“ We’re already starting to see this in the U.S.: Oliver Wyman recently reported that “the number of insurance policies sold online has grown more than 400% over the last eight years.” Swiss Re said, “More than half of consumers say they are likely to use comparison websites to help make purchase decisions about insurance in the future.”

Second, aggregators eventually will compete with one another across all personal lines of insurance. U.S. digital agencies today focus on one type of insurance (life or auto or home), though they might claim to offer a few others. But almost all U.K. aggregators compete across all personal line insurance products.

Third, insurance carriers will get into the aggregator game. Two of the top three U.K. aggregators sold to U.K. carriers; GoCompare was purchased by esure, and Confused.com was purchased by the Admiral Group. Only MoneySuperMarket remains independent. And carriers are looking to create aggregators from scratch. Accenture’s report noted that 83% of U.K. carriers are “considering setting up their own aggregator sites.”

Start-ups, tech giants and carriers in the ring

Still, it’s not totally clear how digital distribution will play out here. Multiple start-up digital agencies have raised significant capital. PolicyGenius and Coverhound have raised more than $70 million, $50 million of it just in the last six months. This represents a fraction of what a major tech player (say Google or Amazon) could put toward an effort to enter this market. Interestingly, Google purchased the U.K. aggregator BeatThatQuote in 2011 and launched the California auto insurance aggregator Google Compare less than a year ago, but just announced it was shutting it down. That could be because Google Compare functioned as lead-gen for CoverHound and Google decided the fee it received per lead was cannibalizing its ~$50 per click ad-sense revenue from auto insurance search terms.

Long-term success in insurance requires focus, deep knowledge of the industry and deep knowledge of the consumer. Insurance is very different from most e-commerce products, and Google’s experience could be indicative of the difficulty big digital brands will have trying to crack the insurance aggregator market.

Finally, most large American carriers haven’t decided what to do. Purchasing an aggregator creates strange incentives, potentially driving customers to a competitor. At the same time, it also gives the insurer the opportunity to quietly select the risk it wants to keep and pass off the risk it’d prefer to give up. Progressive has had mixed success.

Final thoughts

I think the U.S. will see trends and dynamics similar to the U.K.’s, and soon. Within three years, the major digital agencies will start to compete fiercely, and, within five, one or more will have been purchased by a carrier.

More digital agencies also will tackle the complex insurance products: annuities, permanent life insurance and commercial insurance. Right now, start-ups are trying — Abaris for annuities and  Insureon and CoverWallet for commercial insurance — but their offerings aren’t yet as developed as Policy Genius or CoverHound.

Finally, I think the rise of digital financial advice platforms (a.k.a, robo-advisers or “robos”) give digital insurance agencies an interesting channel to consumers that will help at least one of them mature and grow to an IPO.

I asked two digital agency CEOs what they thought the future was going to bring. Here is what they said:

Jennifer Fitzgerald, PolicyGenius’ CEO, said, “Consumers are much more self-directed in the digital age, so the focus is giving potential insurance clients the tools they need — instant and accurate quotes, transparent product recommendations, educational resources — so they can go through the process at their own pace. Then it’s important be there for them with an intuitive, easy-to-use platform and service when they’re ready to buy. That’s the basis for the new wave of insurance education tools like the PolicyGenius Insurance Calculator, and is reshaping how consumers look at insurance.”

Matt Carey from Abaris said, “I think we’ll soon see a new wave of made-for-online products. Carriers have always gone to great lengths to create products that made sense for a specific channel.  The Internet will be no different. In our business, that probably means very simple lifetime income products that are subscription-based and have low minimums. Until then, I don’t think we’ll reach a tipping point in the migration from offline to online.”

What GoogleCompare Shows on LeadGen

Steve Jobs was famous for saying; “A lot of times, people don’t know what they want until you show it to them.” He was most often referring to focus groups and “industry experts” as the last places he’d look for ideas on innovation and disruption.

I’ve often wondered what Jobs would have said if asked to reimagine insurance distribution in America. I think he might have obsessed about a customer-centric mindset, a fierce focus on trust and a single place for managing risk. Not what you typically see from those trying to disrupt LeadGen in insurance today.

Others Will Follow GoogleCompare Out

TheZebra.com, Insurify.com, QuoteWizard.com, GoogleCompare … the list appears to be endless these days – represent a group of “innovators” who didn’t think what the consumer might want from an insurance experience, and in turn are delivering a toxic insurance shopping experience clouded by opaque offers like providing an Expert Virtual Insurance Agent. What’s worse, many in the FinTech vertical – investors and media alike — are talking about these “innovations” without ever taking them for a test drive. Imagine the editor of Car & Driver simply publishing the latest hype for a new Ford Truck model as gospel without taking the vehicle for a spin.

So, why not take a spin. Ask for a quote from theZebra.com or QuoteWizard.com, AND give the company your actual email address and cell phone number. Then buckle up. Calls… emails… ad nauseam. And most of the outreach is not even from the LeadGen company you connected to. In fact, most of these LeadGen companies don’t actually sell insurance. They simply sell the customer and everything the customer has shared about themselves to others. How can that be?

Their Words – Not Ours

TheZebra.com home page promises the consumer “insurance in black and white.” Reminds me of Apple when it launched its iconic iPod with the simple phrase: “1,000 songs in your pocket.” Pretty snappy. But unlike Apple, which simply delivered on its promise, here’s what theZebra.com says it will actually do to the consumer and the personal information she provides. (As it happens, the privacy disclosure about buying insurance “in black and white” is in grey on the Zebra.com website. As my Dad would say, there are some things you just can’t make up. These are actual excepts from the company web site. The boldface is ours.

SHARING OF PERSONAL INFORMATION

The Zebra may rent, sell or share Personal Information or Location Based Information it collects about you to or with third parties. Personal Information and Location Based Information collected from you is commonly used to provide you with products and services and to comply with any requirements of law.

By submitting your e-mail address and/or phone number (as the case may be) via The Zebra or our properties, you authorize us to use that e-mail address and phone number to contact you periodically, via e-mail, SMS text message, and manually-dialed and/or auto-dialed telephone calls, concerning (i) your insurance-related or quote requests, (ii) any administrative issue regarding our services and/or (iii) information or offers that we feel may be of interest to you. We may also send e-mails to you periodically regarding updated quotes or offerings. You may opt out of receiving e-mails from us at any time by unsubscribing as set forth in the applicable e-mail. Additionally, by filling out information on The Zebra as part of your request for information about insurance policies and quotations, you authorize us to provide that information to various insurance companies, insurance agents and other related third parties that participate in our network. Some insurance companies or third parties may then provide your personal information to their insurance carriers, suppliers and other related vendors in order to generate price quotations and information relevant to insurance policies that you have requested. These third parties may use the contact information (including telephone number(s)) you have provided to contact you directly with quotations by means of telephone (manually or auto-dialed), fax, email and postal mail, even if you have registered your phone number(s) on local and/or national no-call lists. You further acknowledge and agree that each third-party that receives your quote request from this website or from our affiliates may confirm your information through the use of a consumer report, which may include among other things, your driving record and/or credit score. For purposes of faxing, it is understood that insurance companies or third parties have an established business relationship with each user of this website, if required to comply with the then current law.

We may also share certain personal information or location-based information with institutions providing possible product offerings to you based on the information you submit through the Website (e.g. financial institutions and/or insurance companies), and/or certain The Zebra vendors in order to allow them to use that information to obtain and provide us with additional information about you, and/or product offerings that might be of interest to you.

Decades of Trust Put at Risk in a Digital Instant

Iconic insurance brands, like AllState, Amica, Esurance and MetLife – are just a few of the insurance carriers featured inside these LeadGen sites. This isn’t complicated. As consumers, all of us are very wary of providing our personal information to anyone – always looking for assurances that the receiver of our personal information is someone we can trust. As insurance professionals, we will always require personal, non-public information to underwrite risk. It is critical as an industry that we preserve the public’s trust that we will respect their confidence and protect their data.

In my company, we do a lot of work with financial institutions, and even though they might complain about regulatory overreach, most bank CEOs are proud to state in BLACK AND WHITE: We will not share/sell your personal information with third parties. Look at the fight Apple and Google are prepared to wage to protect the personal data on someone’s cell phone – so focused about protecting the assumption of trusted privacy implicit in their brands.

When insurance carriers specifically, and our industry in general, support or, worse, encourage these LeadGen models, they put our brands, our hard-fought reputation of trust, and an emerging generation of customer-centric, omni-channel-licensed insurance advisers at risk. Insurance isn’t a commodity as long as underwriting is required, and regulators require massive balance sheets to stand at the ready to settle claims. Personal information, whether provided person to person or online, or via virtual driving analytics aggregation tools – it’s the customers’ data. And we as customers want to know who they are giving it to and how it’s being used.

If carriers don’t question this toxic experience called LeadGen, you can bet consumers and their advocacy groups will shortly assemble a collective voice to express their dissatisfaction to regulators – and the regulators will be quick to respond. I can hear Sen. Elizabeth Warren and the Consumer Finance Protection Bureau (CFPB) decrying the misrepresentations and mistreatment suffered by the consumer when they provide their personal information under the guise of a black-and-white shopping experience — only to learn their information has in fact been down-streamed to others again and again. Our entire industry will be painted with a very unflattering brush. Just as the outlandish behavior of certain mortgage origination companies drew harsh scrutiny for all lenders in the last decade, think of insurance commissioners and Congress taking aim at the “grey print” of these LeadGen models: the CFPB alleging potential unfair, deceptive or abusive acts and practices (UDAP) violations because of the problematic impact on the consumer.

Going Forward

For the carriers, the dilemma is real. Traditional brick and mortar local agencies as distribution platforms are going away. They have no large, scalable, addressable markets that can be engaged digitally. GEICO is relentlessly accumulating market share by going direct to consumers. It’s almost understandable that, given those constraints, some of America’s most powerful insurance brands are putting their brand equity at risk on these LeadGen platforms in an effort to remain visible, reaching for any option to remain viable.

An alternative solution is emerging. Insurance cCarriers and our industry must focus on imagining a new type of licensed agent with the tools that will let them provide a transformative insurance shopping experience for insureds – a lifetime of simple, comfortable, obsessively trustworthy insurance purchases and service. And we, as agents, from the Big I on down, have to imagine a new generation of insurance advisers and insurance agencies. Think of them as meta agents operating in meta agencies.

Can we imagine a new generation of agent that can instantly access all of the public and non-public information about a customer’s character and collateral, deliver it to a stable of insurance carriers that are prepared to underwrite that risk, in exactly the format they need it in, get instant quotes from the carriers that reflect the customer’s risk tolerance and assets to be insured, be available to provide any of the advisory insights the customer might want – all exactly at the moment the customer has an insurance need? A new generation of agents, operating in a new generation meta-agency — fulfilled in their work as risk managers and customer advocates, operating in a seamless, frictionless ecosystem in lifelong service to the customer. And all with an obsessive commitment to trust.

Can you hear Steve Jobs in his iconic black turtleneck on stage wondering the same out loud?

A New-Generation Agent and Agency

A new generation of agent and agency is emerging – empowered and excited to deliver insurance solutions to consumers, operating inside companies that have long and deep trusted brand equity with the consumer, an obsessive commitment to trust. And, having earned that trust, these agents have access to everything a carrier needs to know about the consumer’s character and collateral, eliminating the dreaded “insurance interview and application” or, worse, “the LeadGen hustle.”

This new agent never prospects, sells or steers a customer – the agent simply focuses on delivering a frictionless shopping, comparing, buying and post-purchase service experience tailored to each unique customer exactly at the instant the customer needs it — again, with an obsession for trust. We believe the role of an agent, with a completely reimagined operating environment, is more important and more valuable than ever before.

A new generation of agents and agency is emerging – reimagined to reflect what the customer actually wants, even though, in the iconic words of Steve Jobs, “They didn’t know it.”

What Is the Killer App for Insurance?

Remember the must-read book Unleashing the Killer App: Digital Strategies for Market Dominance, by Larry Downes and Chunka Mui? I was lucky to get a signed copy at a Diamond Technology Partners event and hear them speak about the killer app. It was in 1998, the start of the e-business revolution, with the emergence of the Internet as a platform for a new business model. Every company was holding executive management strategy sessions discussing the book and brainstorming. In the insurance industry, many were putting up their first websites and beginning to think about e-business opportunities that could become their killer apps.

Many insurance companies failed in this effort. Their vision wasn’t big enough. Their desire to upend existing models wasn’t strong enough. Rather, they thought incrementally and cautiously. This resulted in strange hybrid solutions, such as websites with no integration to back-end systems. Requests were printed off and manually put into the systems. Many companies wasted time on vaporware — ideas that never got off the ground because of organizational angst or a lack of leadership.

The late 1990s were an exciting and painful time as we recalibrated our thinking toward an entirely new era of business. In spite of our efforts, we fell a lap or more behind in our race toward innovation.

But some companies succeeded. Think about Esurance and Homesite, startups that understood the opportunities and launched their businesses around this time. These companies exploited the dramatic changes introduced by the Internet and challenged one of the long-held business assumptions, that agents were required to sell and service insurance with direct-to-consumer models. As a result, they emerged as formidable, innovative companies.

Do established insurers have another chance to stay in the race?

Recently, I read the follow-up to the first book, this one titled, The New Killer Apps: How Large Companies Can Out-Innovate Start-ups, and another titled, Billion Dollar Lessons, both by Chunka Mui and Paul B. Carroll. Interestingly, the follow-up takes the view that decades- or century-long established companies can out-innovate today’s start-ups, many of whom are considered unicorns (pre-IPO tech start-ups with at least a $1 billion market value). These unicorns and other start-ups have emerged in the last few years with not only massive valuations but with real business models, real revenue and real customers — unlike in the first Internet boom. Think of Uber, Airbnb, Snapchat, SpaceX and Pinterest.

Even more compelling for insurance is the rapidly growing intensity of change being influenced by these companies. Consider Uber and the impact on auto insurance, Airbnb and homeowners insurance or Snapchat’s new payment options.

The authors are quick to point out what we should all recognize, that being big AND agile is essential in today’s rapidly changing world of converging technology innovations, including mobile, social media, sensors, cameras, cloud and emergent knowledge. They estimate that more than $36 trillion of stock-market value is up for “re-imagination” in the near future — meaning that either existing companies reimagine their business and claim the markets of the future or the alternative may happen and they may be reimagined out of existence!

When the authors compared successes and failures of established companies, they found that successful companies thought big, started small and learned fast. Failures commonly missed on one or all of these points. Is the insurance industry thinking big enough yet? Are companies innovating by starting small? And are they learning fast by experimenting, testing and learning from failures?

The only way insurers stand to catch up in a race where the trophy is not just success but also survival, is to out-innovate the competition, including the new competition from outside the industry looking to disrupt insurance. It’s possible, but it is going to require both wise technology investment and a whole new insurance business model mindset.