Author: Philip Charles-Pierre
InsurTechs today are providing solutions that can help agents grow in an increasingly competitive digital market.
For many independent agents, the word “InsurTech” strikes concern. Many early entrants designed their business models around disrupting commercial independent agents in the same way that the prior generation of technology changed the personal lines landscape. However, the vision of replacing independent agents is changing as InsurTechs recognize the value that they bring to the distribution ecosystem. Many of the same companies that once sought to replace independent agents are now courting agents as part of their growth strategies.
There is sometimes good reason to be wary of “disruptive” tech companies that have pivoted to be agent-facing. Yet there are other InsurTechs that haven’t had to shift their models at all because they understood the power of agencies from the start. These companies are optimizing the current distribution ecosystem — instead of trying to replace it — by creating solutions specific to helping agents compete in a digital market.
As customer expectations for speed and customization continue to increase, independent agents will need to adopt new technology to stay relevant. Fortunately, there are technology companies that will make great partners by putting the agent first, and it’s important that agents are asking the right questions to identify them.
While innovation in the insurance space is driving more change than ever before, there also has never been a better time for agents to work with InsurTechs. Agents have more choice, and the risks for them to try new tools are incredibly low. Many new products are cloud-based and are sold on a subscription, which makes them easy to use, does not require a long contract, and many even offer free trial periods. Gone are the days of long, expensive IT implementations before even trying a product.
While the range of options is great for agents, it can still be challenging to find the right solutions, and agencies don’t have the bandwidth to try everything on the market. Add to that the fact that the technology vendors — in every industry, not just insurance — have a history of overselling and promising to fix all pain points, only to have the tools fall short once implemented.
Here are five questions agencies should ask to narrow their options and select the right technology solutions.
No. 1: Who is the primary customer? Many solutions tout benefits for agencies, but not all were designed with the agent in mind. Some products are created specifically for carriers or with the primary intention of selling directly to insureds. While agents might experience some benefits from the solution, such as faster claims processing with that one company, there are also limitations. For example, a solution might only work with a single carrier which means the agent needs to use multiple workflows to reach additional carriers.
Look for solutions where the primary customer is the agent. Key indicators include a willingness to partner with a variety of carriers, deep understanding of the agent’s specific workflow, and regularly soliciting feedback from agent customers on ways to improve the product.
No. 2: Does the solution play well with others? A solution is most valuable to independent agents if it connects to carriers they work with and other solutions they use. While few InsurTechs today can hit 100%, there are certain important indicators that demonstrate the vendor makes it easy to connect with and is willing to work with carriers, MGAs and other vendors. Look for InsurTechs that are not only willing to integrate or share APIs, but also have an established process in place for onboarding. Also, ask if it charges others to connect to the platform as it can be a red flag that the agent customer is not its first priority.
No. 3: What pain point is the solution solving? With so many solutions and too little time, it can be helpful to start from the inside out. Identify the pain points in your agency and then look for solutions that address those needs. If you don’t know where to start, make a list of the processes that are manual, require multiple logins and systems and take a lot of time. Commercial lines processes — both for quoting and binding new policies — is one example of a large pain point for many agencies. Solutions that make these processes more efficient and effective can not only save time within the agency but open up larger opportunities for growing their commercial books.
Develop metrics that will help you judge if the InsurTech is actually helping solve that pain point. For example, if the problem is the time it takes to provide comparative quotes, how much time does the tool save you per client request? How much more new business are you processing weekly?
No. 4: Is the pricing transparent? There should be no mystery about the cost of the solution and who is paying. If it is billed monthly, annually, or requires a contract, the tool should be upfront with its pricing model. Remember that a “free” solution can end up being the most expensive. If a solution advertises that it is free to use, it will likely end up taking a percentage of a commission if a policy is sold using it.
No. 5: Have you considered a full list of options? Don’t just limit yourself to the names you recognize. There continues to be innovation in the InsurTech market, and a newer startup might have a product that serves your needs better than an established player. But also realize that not all new players are created equal. You want to make sure the startup is sustainable. Besides looking at the solution itself, evaluate its partnerships with carriers and other industry stakeholders. And always ask for some customer references.
InsurTechs today are providing solutions that can help agents grow in an increasingly competitive digital market. But what may sound really good in a marketing piece may not tell the whole story about how well the solution will fit the agency’s needs. Agents should dig a level deeper and ask questions that reveal information about the vendor’s strategy, business model and focus to ensure they select the best options.