Q&A Guy Weismantel

Why is the insurance industry vulnerable to technological disruption?

It’s not just the insurance industry. Literally every industry is under disruption. In transportation, they can’t find enough truck drivers because of the disruption with e-commerce. The ripple effect goes across industries: You add a camera to the back of a car for a rear-facing view and you reduce the amount of fender benders. That has an impact on auto body shops.

Insurance is susceptible, in part, because it is slow moving and it is risk averse. Just the size of the market is too large to ignore. In the last three to five years, you’ve had multi-billion dollars of investments come into start-ups. About a billion of that has come in the last six months of last year. The pace is picking up. There are companies being started and funded every month that are doing nothing but thinking about how to capture some of that $2 trillion market.

What are the trends driving the disruption?

The key things to watch out for are the changing ways that people want to interact with their agency or their carrier. That goes to the technology that we use in our personal lives that’s now ubiquitous. The expectation of younger people is that same level of service and ease of use will be available in how they interact with insurance brokers. There is a big technology challenge that we need to meet, especially from the agency side.

There’s a second one that we hear from our customers that’s much more around do we have the right insurance for what people want to insure? You have a generation of people buying fewer cars. As people change their driving habits or their housing habits, it’s more and more about will I have the right insurance to fit what people coming into the marketplace really want?

Where are the new competitors coming from?

They’re coming from lots of different places. You have people who are trying to build a better mousetrap from the outside. They see inefficiencies (and that’s not unique to insurance) and say I can do that better. Then there are companies who are saying I wouldn’t do it that way if I were building it from scratch. I would do it totally differently.

There are companies that have nothing to do with insurance that are saying what if we provide an offering, because we have great brand loyalty and people would naturally buy from us. There are a lot of little start-ups that are focused in the carrier space or policy administration or paying commissions better.

It’s all around where is the inefficiency and how can we solve it. We’re trying to do that from within the industry at the same time lots of other people are coming from the outside. It’s really a great time in the industry.