Insurance Innovators Podcast - episode 96

On my travel back from ITC2019 I listened to episode 96 of the insurance innovators unscripted podcast. It struck me how much the industry advanced in the past fours year. Abel Travis and the insurance innovators podcast were there to mark the trail by providing us, the listeners, with interviews and stories from the people who made the change.

Here are comments and side notes from my interview with Abel.

The Future of the agents

I am Pro Insurance Agents! Insurance agents are not going away, but the composition of the agency and the roles within the agency are going to change. Several tectonic movements are affecting the independent insurance agents (IA) and the Exclusive (captive) agents (EI) business. For example, generational change, customer expectations, aging insurance products, and digital insurer. 

Lemonade and several other digital carriers and MGAs are a blessing to the industry. I don’t believe that Lemonade’s renter’s insurance product and Claims powered AI is a threat to the agencies. Furthermore, it is sharping the role of the insurance agent as an advisor and as a specialist. We have seen it with the Robo-advisors in FinTech industry. The Robo-advisors are helping to segment the value proposition of the financial advisors. 

Side note:

AI and fake-AI are critical for the functionality and scalability of automation and as a result reducing the marginal cost. I have nothing against “AI-powered services.” I am tired of hearing a pitch that the AI’s decision tree is limited to the format of a date. On the other hand, I love when a service proves that it can process a large number of data points, more than humanly possible, and returns in RT a result with a probability of accuracy.

BOUND (www.boundapi.com)

BOUND is an Embedded Insurance Platform. We help insurance companies to create new distribution channels and digitalize the traditional distribution channel - the agents. BOUND developed a technology to generate and manage online-quoting and binding capabilities at scale.

The Supermarket analogy

The agents are a local grocery or a large chain of supermarkets of insurance. They sell insurance product that they pack on their shelves. Continuing with this analogy, agents prefer to sell complex risk, a bundle of products that will result in high commission. Many agencies have a minimum policy premium threshold guideline that will promise a minimum ROI. So when a customer comes in to buy a can of soda, or candy, he is being ignored. 

Today, BOUND offers the carriers the ability to place “vending machines,” packed with their low-premium products in their agent’s online-supermarkets. As a result, the carrier increases its distribution capabilities; the agents can sell online 24/7 and utilize better their marketing budget.

Side note:

When we interviewed agents, we learned that in most cases, agents would sell the product that they can sell the fastest and not the highest commission. Agents prefer to sell a product that they can quickly bind so they can close the deal before they lose the customer. 

“Embedding Insurance is all about The Customer Journey”

The customer has a journey, and it is not to buy insurance. S/he is looking to buy a home, car, or start a business. Today, insurance companies pull people from their journey to join the insurance customer’s journey by bombarding prospects with ads. BOUND’s philosophy is that insurance companies need to be when and where customers need them. The insurers need to be part of the customer journey and embed their offers when and where it is required.

BOUND is not a LeadGen company. Our platform supports LeadGen and QuoteGen services with a CPA model. We do provide Business Development services to increase partnerships and new distribution channels.

Side note:

We have been working closely with Michael H. Byrne, formerly a partner with Drinker Biddle & Reath and now a partner with McDermott Will & Emery, to build the legal guidelines for embedding insurance.

What are the challenges for incumbents to work with startups and for startups to work with the incumbents?

Insurance companies look the same, but they are different. The challenge for startups is that they assume that they can use the same approach and value proposition with all of their enterprise customers. Furthermore, usually, they don’t know whom to talk to and how to identify if the person is in the decision-making hierarchy.

The insurance companies have challenges that most enterprises in a risk-averse industry have. First and foremost, is to identify the need and to evaluate startups that have the solution — the second, funding a PoC and a pilot in a timely manner. The third challenge is navigating the political waters.

How do you make sure that your advisory advice keeps the InsurTech startup relevant?

My value in the role of an advisory board is located on a plane created by three vertexes (i) a mentor to the founder to (ii) an SME to (iii) a business developer. The only way to provide sound advice is by following the changes in the industry, analyzing them, and providing an actionable recommendation. After all, I am the founder and CEO of my company, not his company. For the same reasons, I have an advisory board.

Talk to me about InsurTech LA

InsurTech-LA started out of passion. It is not a business. The goal of InsurTech LA is to bring together “makers” in the insurance industry that are based in SoCal. Our members are spread from CarpeData in Santa Barbara, down to HazardHub in San Dieng and Arkus in Tijuana.