If you are like most insurance professionals today, life is good. You built a nice practice or a successful agency. You live a comfortable life in the suburbs with a country club membership, a yacht on the lake, and a vacation home in Florida. I am stereotyping, of course. It is a fact, however, that most insurance professionals have great and rewarding careers, and we’ve grown increasingly accustomed to the good life our industry provides.
While the insurance industry is comfortable, it could be argued that it is lacking in innovation. Why change our business model when it has been the backbone of our success for the past 60 years? I know that some of you will disagree –- in less than 20 years, we have witnessed this industry make the transition from paper rate manuals and binders to state-of-the-art online quoting and rating platforms. Insurance agents now make use of smart technology, and some carriers have even introduced usage-based insurance policies.
Here is the real danger: in a world where business models change overnight, the industry is not innovating fast enough. Take a good look around you — consider what Uber did to the taxi and limo business in a matter of 2 short years. Think about what Zenefits is doing to the employee benefits market. It is a matter of time until some Silicon Valley startup comes up with a technology to make most of us (underwriters, brokers, and agents) obsolete.
Imagine the following news release:
Google announces a whole new way to insure large commercial trucks. The joint venture with Freightliner and Samsung offers an entirely different way to manage your truck insurance program. Imagine that your truck comes equipped with a factory built-in system that includes:
GPS unit to track location, speed, and the direction of travel.
Camera system to capture video feed of the driver, road, trailer, and all sides of the truck.
Completely integrated Log Book system
Safety analytics to help motor carriers identify problematic behaviors and trends — and to reduce the cost of compliance.
Driver recognition system that monitors the overall health of the driver and alerts the motor carrier if the driver exhibits patterns of fatigue or impairment.
Truck Insurance premiums are calculated as a composite rate based on a number of variables, including miles traveled, area traveled, time of travel, presence of unsafe “events” such as hard braking or fatigue. Each driver is individually underwritten, in real-time, based on hundreds of factors. At the end of the month, the system calculates the monthly vehicle insurance rate and automatically charges the motor carrier’s bank account.
The technologies described above already exist, and it is only a matter of time until someone connects the dots and flips our traditional carrier-broker-retailer business model upside down. How many of you think that this is a real game-changer? How many of you think that this will make the jobs of thousands of underwriters, brokers, and agents obsolete? It is not a matter of “if” but a matter of when this technology will get implemented.
It’s time that we go out of our comfort zones and start embracing radical changes to our business models. We need to start working on all levels to make sure we are prepared for what’s ahead.