In its nascent years, the insurtech space seemed poised for runaway success and growth. But the realities of the market, in addition to declining valuations, have caused insurtechs to reconsider some of their core assumptions and go back to the drawing board. 

Crucially, says Ryan Toner, EVP of Sales at Afficiency, insurtechs may have rushed to automate distribution, bypassing agents in the process. Consumers need an agent to walk them through insurance options—especially life insurance products. But that doesn’t mean agents should stick to old-school sales strategies, either. In an interview with The Financial Revolutionist, Toner explains what caused insurtechs to pivot back to agent models, outlines the ways technology can help agents sell to consumers, and describes the future of tech-driven life insurance. 

This interview has been edited for length and clarity.

The Financial Revolutionist: How has Afficiency’s original scope of work changed since its founding?

Ryan Toner: The original premise for the business was to provide an API and allow that API to be embedded anywhere—whether the Starbucks app or Quicken Loans. What we found was that consumers know they need life insurance, but they don’t know enough to buy it themselves and do the transaction online. 

So now we’re going back to the agent—which is where everybody’s going. Now the question is how to make tools available to agents or agencies that can make the life insurance buying process simpler, and make that transaction easier. 

Traditionally, for an agency, the process takes six weeks, and now we can make it take 45 seconds for them. Giving the agent a better experience also lets them sell more and sell better. It’s shifted a lot over the past three years, but that’s where our guns are pointed.

Why conduct such a big shift?

Consumers lack crucial knowledge, like knowing what a beneficiary is or a secondary beneficiary is. You’ve got to throw an agent into the mix. And so we’ve focused on how to make a better agent experience where there’s already a transaction occurring. We were probably too far out on direct-to-consumer strategies, but everyone was too far out on it. 

The difference is that we don't have a brand, because our model involves being the entire technology stack in the life insurance carrier without the risk. We can build, file, and price a product and get it in the market in four months. It typically takes two years to bring a product to market. With distribution through an API, you can design bespoke products without legacy overhead, so the transaction can happen faster. That's kind of our magic right now. 

So you’re back to employing more humans. What kind of feedback have you received from agents?

Agents have asked us to fill out their portfolio. And so we’ve moved from simple products to far more complex products. We’re putting out a more complex life insurance product early next year that can’t be sold direct to consumer.

Does Afficiency want to tap into underserved markets? How does one go about doing that in the life-insurance space?

Commission structures and the turnaround time for life insurance incentivize going after high-net-worth individuals. An agent isn't going to take a $400 policy and touch it six times, but if the agent can touch it once and make $400 in that same transaction, that’s a different story. We build products that are easy to understand and easy to purchase, allowing the agent to get more life insurance in the hands of more people, and that’s a good thing, especially for underserved communities.

And using our technology makes it easier to cross-sell and upsell. Pre-approving customers for life insurance when they get homeowners insurance, for example. We’re opening up that market, too. 

Do you anticipate appetite for those kinds of products changing one way or another in the midst of market volatility? 

We’ve seen a retraction back to the core business in some cases—wanting to protect the golden goose. But others, for example in the mortgage space, where refi demand is gone, have seen an opportunity to take their platforms and put them into new sales. Similarly with home and auto shops, who now have an opportunity to keep a customer on the books for a year or two longer. I don't think there's any one right answer, but the question of cross-selling is definitely more of a conversation right now.

Where do you see the market a year from now?

The core differentiator the life insurance carriers have traditionally had is pricing. And if carriers want more applications in the door, they drop their price. That's it. But I think where the business is going—and we skate where the puck is going—is if we can get into the market at scale, which I think we can, it won’t be from a race to the bottom on price, because agents see through that because they make less, but by making up for lower price through speed. That will be the biggest change. But I don’t think that’ll happen within a year. 

How long will it take?

I think it's 36 months before you start to see products that look and feel like ours.

Any final advice for The FR’s readers?

Don't be afraid to take risks. I think our industry is risk averse. Progress wasn't made without risk.