Insurance sales and the debate over agents
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At the dawn of the insurtech age, up-and-coming players saw direct-to-consumer (DTC) channels as not just the way of the future, but the only way of the future. Through intuitive self-checkout options and souped-up SEO, newcomers like Lemonade could box out legacy carriers and make agents a thing of the past.
But then the challengers hit a ceiling, struggling to find more customers willing to ditch agents as they purchased complex solutions.
“We’re going back to the agent—which is where everybody’s going,” said Ryan Toner, EVP of Sales at Afficiency. “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.”
Brokers and agents are almost a timeless component to insurance sales and maintenance pipelines. But they’re a largely aging demographic, and they haven’t been replaced by young agents at a 1:1 ratio. DTC sales strategies were both a response to that demographic prediction and the seeming irrelevance of agents in a digital age, and an effort to make that prediction a reality.
But insurtechs and the tech companies that bolster their ranks have recognized the ongoing need for agents and brokers, especially for more complex products like life insurance. Early-stage startups like Modern Life are taking a bet on agents’ and brokers’ continued relevance, and see their resilience as an asset.
“It’s one of our core beliefs that advice and advisors really matter, especially in life insurance because it's very complex,” said Michael Konialian, Co-Founder and CEO of Modern Life. “Advisors have been the cornerstone of that market for 150 years, and we think they’ll be there for the next 150 years; whereas many have focused on how to cut out the advisor or turn them into a referral source, we've had the opposite approach.”
To Matthew Jones, Chief Strategy Officer at Cowbell, advisors and brokers may see their domain shrink over time, with personalized insurance primarily served through DTC models (apart from high-net-worth clients and those with specific risk exposures), while commercial insurance will become their primary bread and butter. “They have a fiduciary duty here in the US, so there’s a dynamic which is conducive to distributing through brokers,” Jones said.
New technologies may strengthen personalized DTC models in the medium term. According to George Ravich, Chief Marketing Officer at Socotra, telematic data will make self-checkout options quicker by pre-populating checkouts with information the carriers already have on potential customers.
“The root of it is having sensors on just about everything that moves and the ability to take all this data into a platform and make sense of it in real time,” Ravich said. “Insurance has not been customer friendly, whether it's on online or with an agent: It involves 50 questions and getting back to you in two weeks… The march is to use all this technology to make the customer experience better, easier to understand, quicker to purchase, and easier to buy.”
With legacy carriers and new players like Modern Life sticking to agent-led distribution, insurance sales remain largely in the clenches of an incumbent professional class. But a confluence of new products, technologies, and startups suggests their territory may shrink over time.
