Technology is modernizing traditional business models. For example, when the transportation industry was uprooted by tech-enabled firms like Uber, which challenged the established taxi service by altering the user experience.
The rise of gig employees, or those who work with companies to provide services to the companies’ clients, is a common component between Uber and some independent agents. Gig employees emphasize technologically friendly work, informal communication, and straightforward innovation. About 25% of the current workforce is doing gig work, and this proportion will continue to increase as the workforce transitions to a more flexible working schedule.
Drivers no longer identify with a specific taxi or limo service – but rather are affiliated with ride-sharing platforms such as Uber or Lyft. Similarly, financial advisors are beginning to identify with insurtech platforms rather than established carriers within the insurance industry. These platforms will do more than address a specific need within the industry and serve as a central hub for advisors to center their practice around.
Uber became a popular alternative because technology provided a less expensive and more convenient experience for the user. Consumers can watch the driver travel to the desired location, see estimated times and ratings, and essentially choose how and with whom they are traveling. Insurance buyers are looking for the same experience when deciding on an advisor and different insurance policies.
How Insurtech Can Help
Carriers and agencies are now looking to insurtechs to develop a competitive edge and provide efficient transactions and greater personalization. Studies indicate that the vast majority of investment is going into direct-to-consumer insurtechs. The data provided through digital platforms allows insurance carriers to understand their customers better, price and underwrite policies more accurately, and provide more customized products to customers.
Though agencies use different technology solutions to fit this mold, the advisor plays a crucial role by offering guidance and a human component to insurance buyers. A survey from McKinsey of more than 2,000 executives indicates that “the companies with the highest revenue and earnings growth looked for digital opportunities across all elements of their business model, not just one or two, and either led the disruption or were fast followers.” Insurance companies that reconstruct their entire practice to compete in the industry are likely to lead the insurtech revolution. By reconstructing an entire business model and replacing it with efficient technology solutions, B2B companies are creating new ways of doing business that will change the way business professionals work. As insurtech becomes a necessary component in insurance business strategy, insurance agents and advisors will increasingly rely on these platforms for their livelihood.
Independent advisors have the opportunity to use the Uber-platform experience in the insurance industry to connect with and serve clients efficiently, creating benefits on all sides. Customers want to access insurance products across a range of channels and switch from one channel to another. Independent advisors can position themselves within this omnichannel approach by identifying with insurtech platforms that allow them to “acquire real-time quotations, make administrative alterations to policies, or notify a claim” (McKinsey 61). Carriers or independent agents will become a less attractive alternative than those associated with platforms. In turn, advisors that identify with an online platform will use it daily to see what is on their to-do list, manage policies and clients in their pipeline, and monitor other important aspects in their business. Insurtech platforms will be more than a simple solution designed to improve one specific aspect of their business; the platform will be their main touchpoint throughout their daily work.
Many prominent insurance carriers are following this trend. According to Maddock Douglas, it is likely that 67% of advisors will choose to identify with platforms rather than a company within the next four years. Millennials, the largest living generation, support the idea that online platforms will be adopted by advisors even sooner, and some insurance providers have already initiated a transition.
Ethos, a digital quoting website that provides consumers with applications and coverage almost instantaneously, has brought financial advisors on-hand to counsel and sell policies they offer. Ethos does not identify as an insurance carrier, but they white-label products for other insurance carriers. Their advisors do not identify with the insurance carrier – but rather, work as Ethos advisors.
Another example is Assurance IQ, a “direct-to-consumer platform that transforms the buying experience for individuals seeking personalized health and financial wellness solutions.” They are associated with Prudential Financial and utilize their financial advisors. However, those advisors are found within the platform and not within Prudential. Assurance IQ is looking to hire additional advisors to represent them as well.
Other direct-to-consumer platforms such as Health IQ and Policy Genius are looking to complement their online tools with financial advisors who are on hand to assist clients if they want a consultation. These advisors will identify not with the types of coverage they sell but, rather, with the platform they sell through. These shifts indicate that platform identity will overtake the insurance industry as insurtech becomes an integral part of the insurance ecosystem.
This transition may seem far off, but companies that hesitate to spearhead this shift will fall behind and risk losing business altogether. The McKinsey report states that there comes a tipping point in any industry where those who have not adapted their strategies proactively will disappear. Certain lines in the insurance industry, such as Property and Casualty, have already begun to acclimate, and others are slowly moving forward.
One platform that is pioneering this change is Link by LegacyShield, an online platform for communication between advisors and their clients. Advisors who manage their practice through Link can receive and deliver client information such as insurance policies securely. Their clients can work within the platform, inputting important information and sharing it directly with their advisor or any other trusted individuals, including family. Link allows advisors to grow their book of business organically while providing consumers with the quality and ease of use they desire.