Agents will be the primary distribution force for insurance over the next 20 years. Brokers are not going away, and carriers will be the primary capital for the next 20 years. None of that is going to be radically changed.
At the same time, we do believe new technologies driven by cloud computing services, modern tools for managing and integrating external data, and algorithms driven by machine learning will fundamentally improve delivery of insurance to customers. As a carrier or an agency, if you don’t understand how those new technologies can be leveraged to improve your firm, then you’re going to be left behind. Not left behind as in you’re going out of business but left behind in that you’re not going to be defined as a winner over the next decade. We firmly believe that.
We also know—given we work with seven of the 10 largest carriers in the U.S.—that all of them are experimenting with different tools to improve their businesses by leveraging technology, data and machine learning.
What I do believe is that carriers miss the point if they don’t understand the power of external data or the difference between a machine learning algorithm and a classical actuarial model. And if you don’t have people inside your firm who understand the latest ways that online retailers and web firms are improving design to ensure customers or agents have a better end-to-end user experience, then you’re not going to be a winner.
Carriers and agents should be looking to insurtech firms for ideas and partnerships—not for an adversarial relationship.
In terms of AI, we use chatbots today as kind of a basic machine-learning application. We don’t believe AI will ever replace a human agent, by the way, but it’s a nice bolt-on to our customer interface. We use machine-learning models through digitization of calls to make our advisors smarter in the advice they deliver to customers. This AI-enabled approach helps our advisors better understand what products they should sell to certain customer segments.
Rather than focusing on cold calling, there will also be an increased opportunity to be much more targeted and strategic in how carriers and insurtech providers attract customers. I don’t know any customer now that doesn’t use multiple channels to research and understand what they should buy. They just don’t walk into an agent’s office. They have the internet, and they use it.
The industry is dealing with buyers who are more informed than ever, and that should play into how they deploy their SEO [search engine optimization] and SEM [search engine marketing] strategies. With this in mind, carriers and insurtechs should provide information that’s much easier to digest, since the modern customer expects an on-demand experience.
In our firm, we want to be the most technically driven, advice-oriented agency in the United States. Every single one of our customers talks to an agent. Again, we never want to cut out the human interaction since we know that our small-business owners want to talk to an advisor. It’s not that the need for agents will diminish. Instead, the winning agencies, brokerages and carriers will be the same ones that adopt the tools needed to make it just a much better experience.
One of the things I say to carriers is that insurance isn’t your product—the customer experience you provide is actually your product. When you’re an airline customer, the product is not just the physical transportation of the plane from point A to point B. It’s how easy and intuitively you can look flights up using the web interface, how available the call center is if you need to change the flight, and the service you receive from the stewards or gate agents. It’s all of those things. It’s not just the plane.
That’s true across every segment of the economy. That’s what the web firms figured out. They figured out it’s the end-to-end customer experience that really matters. That’s why they’re the dominant force in the economy right now, and insurance companies are going to begin understanding this—or they’ll get left behind.
Is there one crucial moment in that customer experience where technology really matters?
It’s not one. It’s everything. At least for us.