(Image credit: author.)
Since I started my carrier in the insurance industry in 1992, most of the conversations about the future of the industry has been and still is centered on brokers, agents and carriers. However, due to the digital transformation the industry is going through, we must start talking about a wider range of basic roles in the industry. So, what are these roles?
The Consumer: It could be an individual or a company.
The Distribution Channel: There are many different types and they vary from country to country.
The Advisor/Consultant: These are mainly brokers and agents.
The Risk-Taker: These are mainly carriers.
The Service Provider: These include hospitals, car repair shops, adjusters, funeral homes, etc.
The Regulator: These may be on a country-by-country basis or, as in the case of the U.S., state-by-state.
The Reinsurer: These are mainly reinsurers and captives.
It’s important to know that a given party can play more than one role, for example, a broker or agent could have three roles—consumer, distribution channel and advisor/consultant. A carrier could have as many as five roles—consumer, distribution channel, risk-taker, service provider and reinsurer.
Are these roles going to disappear? No, but they will change and evolve due to technology. Are some of the incumbents players going to disappear? Yes, for a variety of reasons, but mainly because they won’t be able to adjust to the digital transformation that is occurring.
So how are these roles going to change and evolve?
The Consumer is going to have a 360 view of all his products, irrespective of where and how he got them. Therefore, he will have autonomy and control, requiring more and better advice. He will demand and be able to compare products from the palm of his hand in real time without limitations.
The Distribution Channel, when it comes to transactional products (Life, Health, Auto, Renters, PA, etc.) we will see big wholesalers/comparison sites such as Kayak, Amazon, Priceline and Alibaba. Complex products we will have specialist distributors.
The Advisor / Consultant: consumers are going to need more advice, because they will realize that they have more products that they knew about, due to the fact that they will have a 360 view of all the products they have.
The Risk Taker needs to become more efficient, and technology will allow them to achieve that. This is a must in the short term, since most of their products will become commodities and therefore will be competing mainly for price—especially on transactional products.
The Service Provider will need up-to-date information from clients in real time to provide a better customer experience. Technology will allow them to achieve instant access to customers’ data.
The Regulator. This is a tricky one but I believe they will adjust to the benefits that technology is and will be providing all parties in the insurance industry.
The Reinsurer. There is a great deal of debate about this role, but one can say confidently that the quality and timeliness of information reinsurers have access to will be much better. How this will affect how they perform their industry role is yet to be seen.
So how will these changes affect incumbents in the industry? This will depend on their willingness to adjust to the changes that are already occurring due to digital transformation. A key variable for incumbents to be successful will be collaboration between them and startups.
Finally, I believe major disruption will eventually occur, but it will come through a product or service that is developed from the consumer’s perspective, truly placing him at the center of the industry.