Digitizing Distribution in Local Markets
My dad was an insurance broker, which was actually the reason I never wanted to have anything to do with insurance. But when I realized that it’s an industry that has yet to be properly disrupted, I sought my father’s advice. He explained to me how insurance works, and I realized that insurance worked very differently from other industries that have already been disrupted by technology. Nine out of 10 insurance policies are sold via intermediaries around the world. One out of 10 are sold via direct channels. The direct share is not increasing over the last couple of years as much as experts have said. We call direct insurance the worst of all worlds, which means you have high customer acquisition costs. This also creates higher loss ratios than the other distribution channels if you compare it to brokers or agents or affinity channels, and you have a lower loyalty of customers acquired directly. It is very difficult to turn direct business profitable.
We decided that, instead of focusing on nailing the challenge of turning direct acquisition profitable, we are going to focus on digitizing the nine out of 10 policies sold via intermediaries. What we’re thinking about is the human. We want to power the human with technology and to be able to sell more insurance policies in a more customer-centric manner.