As the insurance industry increases its technology adoption, it brings to light market challenges that could be addressed and improved with these advances.
Clearsurance chief executive Mike Crowe noted in an email exchange that one of the biggest challenges in the industry currently is the relative lack of knowledge among the general public about the processes that go on behind selling insurance.
Crowe’s company is a start-up that launched in December 2016 with the goal of providing neutral reviews and ratings for insurance companies and quotes to consumers to aid in the purchasing process.
In its initial forays into the market, Crowe said the company found a gap in the path to purchase.
“Many users believe that their broker or agent is their actual insurance company,” he said.
“Most insurance consumers do not realize that agents and brokers sell proprietary insurance products and have to be ‘appointed’ by the insurance company. Few consumers realize that agents and brokers have financial incentives to…concentrate premium with a small number of insurance companies to maximize their own commissions.”
Thus, he said, the relative opacity with which the industry operates results in products and services that do not provide full benefit to the policyholder.
“The natural result of this financial model and arrangement is that consumers do not receive competitive, comparative bids from the open market,” he said.
However, technology could change that. The insurtech start-up proposes to inject more transparency and objectivity into the process by providing company ratings and reviews in a business model similar to TripAdvisor and Yelp, which crowdsource user feedback on travel and dining out, respectively.
Want the latest insurance industry news first? Sign up for our completely free newsletter service now.
Part of Clearsurance’s strategy is to collect data from company self-assessment and customer ratings, as well as independent metrics to assess an insurer’s reputation and put the information on its platform.
Currently, it uses, among others, the Net Promoter Score; the retention index, which measures the likelihood of a customer coming back to their insurer to buy a policy; and overall customer satisfaction rating. A claims satisfaction index is also in the works.
The platform then provides the information to the user within minutes, along with quotes for policies.
Crowe said that the company aims to be a “neutral” source of such information, to aid in better insurance purchasing decisions.
“We expect that insurance companies that have invested in customer service and technology, but may not have massive advertising budgets like Geico, Esurance, or Progressive, will not just be able to compete on price, but price plus service. Our thesis is that many insurance consumers will choose the best combination of price and service,” he emphasized.
However, Crowe noted that as selling insurance becomes more direct because of the increasing use of technology, the broker and agent will not become totally irrelevant.
Rather, he said, it can be used as a tool to aid in the fulfillment of their evolving role in the industry.
“It’s in the broker’s best interest to arm their customers with as much data as possible, especially if it is easy to understand and access,” he observed.
Additionally, he noted, “as technology evolves and underwriting becomes simplified as a result of access to big data, brokers will have to reinvent themselves to better articulate the value they create in the insurance purchasing value chain.”
“(We believe) that there will be a continuing role for brokers and agents, especially when it comes to more complex or nuanced risk as you see with high net worth individuals,” he added.
.jpg)
