(Image source: PolicyGenius.)

Insurance industry disruption is moving faster in distribution than any other functional area, and direct-to-consumer insurance broker PolicyGenius (Brooklyn, N.Y.) presents a case in point. Launched in July 2014 by former McKinsey consultants Jennifer Fitzgerald and Francois de Lame, PolicyGenius offers a guided digital alternative to the kitchen-table conversation with an insurance agent. Fitzgerald and de Lame built the concept during a 6-month leave from McKinsey to attempt to solve the problem of engaging self-directed consumers effectively for insurance purchasing. During that period, they developed a model that showcased several proof points for potential investors.

PolicyGenius’ process offers consumers what it characterizes as open access to unbiased insurance information, tailored advice, and accurate, instant quotes, bringing the entire decision-making and shopping process online. The company’s leadership team includes both insurance subject matter experts and professionals from other walks of life, including marketers, startup specialists and creative designers. PolicyGenius’ investors include the venture funding arms of prominent insurers—AXA, MassMutual and Transamerica—as well as independent venture firms. PolicyGenius currently markets Life, long term disability, renters and pet insurance.

Insurance Innovation Reporter recently caught up with PolicyGenius CEO Jennifer Fitzgerald to talk about where PolicyGenius is, how the company’s leaders think about insurance distribution, and what the future may hold for the company.

Insurance Innovation Reporter: Last month PolicyGenius announced the closing of a $15 million Series B funding round led by Revolution Ventures.  Tell us where you are in your development as a company.

Jennifer Fitzgerald, CEO, PolicyGenius:  We’re still very small company, we have about 23 employees now and have reached an exciting inflection point. Twelve months ago we were asking the question about how to engage consumers digitally—“Is this something that a small startup can do? Can we make an impact as a very small company?” We’ve resolved some doubts, have had great feedback from companies and insurers.  Today the question has shifted to, “How do we scale?” We’ve had more demand than we can handle. We’ve grown our presence to reach more consumers to learn what it is that they want.

IIR: What did the consumers tell you?

JF: We heard a lot of, “This is great, exactly how I wanted to do my insurance shopping, love the modern user experience, that you guys use friendly conversational plain English to talk about my insurance needs.” They liked the advice approach rather than a salesy one. We got a lot of, “when are you going to do this for health?”

IIR: A theme we’ve pursued at IIR is that technology is enabling a new kind of customer experience, but that approach requires a degree of honesty and trust that hasn’t necessarily prevailed between insurers and policyholders. Do you agree? If so, how does that influence your strategy?

JF: Yes, I think so. None of the big insurance companies excel at digital, especially in reaching young consumers with expectations of greater transparency and unbiased experience. The exciting thing about internet and digital channels is it puts more power in hands of consumers. Content is so much more freely available nowadays. You don’t have to rely on what one agent tells you at take it as gospel. It empowers consumers to make more informed decisions—and for smaller companies like us to go against big incumbents.

IIR: Name-brand insurers are typically carriers. But as a distributor, don’t you have a kind of symbiotic proposition for them? You also have insurance carrier investors.

JF: The venture funds of three insurance companies are our investors rather than the carriers directly. Those funds have a mandate to find companies and entrepreneurs to complement their core business. With all three of those investors we have a very arm’s-length relationships—we can still make independent decisions about what’s best for the company and our customers without any bias and they get to see how a 21^st century company does business. They get to learn and get insights from this channel, how we do things in a very fast moving company. And we get access to leadership at the carriers.

IIR: And what about the distribution angle? Presumably the carriers would want you as an agent.

PolicyGenius Secures $15m through Revolution Ventures-Led Series B Round

JF: Sure, at the core we’re just another distribution channel for them—and to segments of the population that their existing channels aren’t reaching. There’s an awareness on the part of carriers that traditional brick-and-mortar agents aren’t reaching younger consumers. That is in part because they are going up market because the economics don’t work for them otherwise.

IIR: How is PolicyGenius looking to meet consumer expectations both in the buying experience and in terms of services that must depend on back-end integration with the carrier?

JF: That’s an evolving process with us. It takes a while to get deep into the integration. We’re working to deepen that and make it a much more seamless experience. It’s a challenge the whole industry faces. It takes time to develop APIs, for example.

IIR: What does the part that PolicyGenius tackles mean for customer ownership?

JF: In that regard, it’s no different than what brick-and-mortar agents do. We’re the broker of record on policies we sell and it was important for us. Focusing solely on lead generation is very short sighted when there’s an opportunity to develop a relationship around the whole financial protection portfolio. Both carriers and agents struggle with this. Customers are open to a single source of a consolidated and deeper relationship with a service provider. And we’re seeing that with the customers who say they love what we’re doing with life insurance and ask when we’re going to do it for health. People are looking for that one point of contact with an entity that they trust.

IIR: How would you characterize where PolicyGenius is now in its evolution, and what is the company’s longer-term vision?

JF: Where we are now is making progress on the first part of our customer journey—advice; everything a customer would do with a traditional insurance agent. Including identifying what’s the best policy for their needs and reviewing and binding coverage. We’ve built decision support and provide a good underwriting experience. The next step is improving and automating the back end, the underwriting experience with turnaround time on fully underwritten products such as life and disability. People don’t think about insurance every day so you have limited touch points, so you want to have as robust an offering as possible on your site. When you do have customers’ attention, you have to make it count and make sure it’s a great experience.

IIR: Is it fair to describe PolicyGenius as a sales organization, but with automated diagnostic capabilities that enables you to make sure you address all of a customer’s exposures?

JF: Yes. It starts with understanding the consumer which sounds very basic, but I can’t tell you how many people I’ve spoken to in the industry that operate under erroneous assumptions about customer preference or otherwise don’t understand the consumer decision journey—how at each step they want to be engaged, and when. That’s how you make it better. Then building around that rather than saying, “Here’s the process.”

IIR: Outside-in thinking?

JF: Absolutely, and understanding insurance consumers in particular very

IIR: What is driving changes in how consumers behave today? Is it all a matter of a demographic cohort growing up with technology—or are there other anxieties shaping consumers’ behavior. Various studies have affirmed a disenchantment arising out of the financial crisis of 2008.

JF: I think the rising generation places emphasis on good citizenship, transparency, and has a distrust of large financial institutions which predates the financial crisis. That’s one part of it. There’s also the changing nature of work, the fact that people change jobs every few years—very different than old model of staying with a company and retiring. That changes the way people think about providers. New economic models that have emerged around the sharing economy, Uber and Airbnb, are pushing incumbent companies to deliver services and offer products differently. All of these things are happening at same time, leading to interesting changes in how consumers behave—and you have to adapt your offering accordingly. Social media potentially makes every interaction with a company a very public one. I think it has changed in a good way because it brings accountability.

IIR: Are you an organization that insurance carriers should fear?

JF: Absolutely not. They should celebrate and work with us. We are reaching consumers that they’ve been unable to reach—for example, the digital consumer, the younger consumer, the consumer seeking great content and unbiased advice—which we are in a position to deliver better than a big insurance company.  We position ourselves as a partner to the carriers.