The insurance industry has been slow to adapt to new technologies, but all that is set to change. Insurance startups are finding new and creative ways to fully utilize today’s technology, and older, more established companies might want to pay attention.
These startups range from simple policy comparison platforms to direct sellers that reach out to their consumers via online services. Health and auto insurance lines are
the most popular targets for startups. And the most innovative ventures are receiving a healthy injection of cash.
Since early 2010, more than 290 investors have lent their support to tech-savvy insurance companies; tech insurance startups have raised an impressive $1.39 billion since the start of 2014, according to a report by CB Insights.
While startups and traditional insurers both offer the same types of policies, it is the convenience offered by the former that wins them more customers. Most startups use the
direct online distribution system, allowing consumers to easily shop for insurance without the need for a broker. Many startups are also developing other technologies, such
as smartphone apps, to improve consumer experiences.
Some industry professionals don’t see the online distribution of policies as an immediate threat to traditional sales.
“Incumbent carriers cannot turn their backs on the agent and go direct-to-consumer without the risk of offending their agent networks,” said Ovid CEO Peter G. Colis in an opinion piece on TechCrunch. “So much existing and referral-based business is at stake that most carriers do not allow consumers to purchase insurance online – they make consumers purchase through an agent.”
Despite this view, Colis believes insuranceagents can be ultimately replaced with software. He also thinks that, with time, “new carriers will be born, and incumbent carriers
will hopefully wise up.”
Fortunately for brokers, current statistics show that agents are still the go-to for all things insurance – for now. More than a million insurance agents are currently operating in the US, selling 100% of all commercial policies, 95% of home policies and 70% of auto policies.
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