Insurance carriers and agencies everywhere are facing a new reality.
While other industries were early adopters of machine learning and AI, our centuries-old insurance industry lagged. Now, traditional processes simply can’t keep up with today’s 24/7/365 economy or efficiently serve volume, transactional business.
Insurtechs are now driving much-needed change—and adoption is happening faster than many of us expected.
Why? Simple: COVID-19. Rocked by the pandemic, our world was massively disrupted and made inherently riskier.
This shockwave to the insurance industry led to a broad recognition of what I identified years ago—that we need to be more responsive to changing conditions, drive greater efficiency and effectiveness across the distribution chain, and harness cutting-edge tech to get us there.
As in Tony Caldwell’s Insurance Thought Leadership piece, How Carrier Tech Drives Agency Change, I see that carriers and agents can reduce their costs by working more closely together—and that technology will play a critical role in this, whether via the carrier or the agent.
After spending 18 years of my career selling insurance for low complexity risk, it was clear to me that these transactions should no longer be touched by human hands, yet they still are. Fortunately, there’s now a wealth of opportunity to drive efficiency and effectiveness in this low-risk volume and transactional business.
When agents digitize their distribution processes and carriers adopt innovative products that leverage AI and machine learning, they can:
- Entirely eliminate human handling costs and errors
- Realize instant cost savings in their pricing models
- Harness the data necessary to deliver continuously more accurate pricing—and all in real-time
So, then, how do we get there?
I happen to take a different view than Tony Caldwell when it comes to insurtechs. Rather than seeing them broadly as a direct competitor to traditional insurance carriers, I see a place for them as the ideal carrier partner—especially in light of the vast sums being invested in insurtech right now. Take Q3, for example. Approximately $2.3 billion was invested—the highest quarterly financing volume ever. These well-funded insurtechs have developed precisely the digital solutions that carriers need—and they can offer a rapid path to both real-time data and visibility at a granular level.
Gone are the days of the “thumb in the air” rule. Insurtechs can empower carriers to assess risk more quickly and accurately than traditional insurance models, delivering greater control over their costs through dynamic pricing.
What’s more, highly flexible insurtech platforms can empower traditional insurance carriers to rapidly respond to changing environments and thus deliver added value to clients. In the early days of the pandemic, for example, my team at Loadsure removed perishable food exclusions and offered immediate extended cover at a reduced premium far more quickly than traditionally achievable. This flexibility not only immediately delivered needed products, at scale, it also allowed us to support the critical COVID-19 relief effort and mitigate supply chain disruption.
As carriers now search for ways to lower their underwriting costs and boost profitability, they’d be wise to look to insurtech MGAs; they’re well-positioned to help them achieve those goals. And, where those MGAs are driven by a belief that technology’s purpose is to serve people, where building community—with both customers and carriers—is an intrinsic part of their DNA, they’ll find that they can build a more sustainable business, as well.
2021 will undoubtedly be an exciting year in the insurance industry—and I’m beyond proud to be a part of this evolution.
If you have any ideas you’d like to share, please reach out to me. – Johnny McCord