In case you missed it….
We are officially in a new decade.
The 20s have begun, just as Insurance Soup, the free Facebook group for Agents, brokers, and team members is reaching our 30s… in the very beginning of our 5th year.
30 what? 30 THOUSAND active members. Join today!
On to the show.
With the dawn of a new year and a new decade we are bound to see some pretty big changes in our industry the next 10 years or so.
I decided to whip out my crystal balls and make a few predictions for the decade to come… so here is my list of 7 things to expect in the insurance industry in the 2020's
1 – We are going to see a LOT of large, established companies from outside the industry join the fray.
We already know that Amazon is pushing into the market. Exploring both home and auto insurance, and a new emerging health insurance plan called Haven; it is evident that this is a space Amazon is interested in… but who else is thinking about jumping in the pool?
Well Walmart has jumped into the Health Insurance space partnering with Directhealth.com to bring plans to market.. and while already owning one of the country’s largest pharmacies
CVS and Walgreens already offer small-scale clinics in some retail locations and both have plans to expand those services.
Costco is already selling auto and home through Ameriprise.
With all these mega box and online retailers pushing into the industry and consumers looking for easy experiences and transparency do not be surprised if in the future you will be asked by your cashier at Walmart if you would like to put next month’s insurance premium on your card at the point of sale.
How will all of this impact the local Agent at the Agency level?
2 – The Rise of Data
Data has become a tremendously useful tool in calculating rates throughout the history of our industry but never has it been so abundant. Carriers large and small are all beginning to look at tons of data points that barely or did not even exist just 10 years ago. While your MVR, CLUE, credit report, and zip code may all have played factors in the past…. The future will consist of models that incorporate data received from smartphones, telematics, drone data, video monitoring, and more.
That data will affect underwriting in ways that are currently not easy to predict but many of the newer data points being studied show far more accuracy to pricing a risk than older models.
But the future of data is not simply in underwriting – There are programs in development already that are able to study algorithms on a mass scale to predict the future needs of your clients and when they are most likely to actually want those needs….
Imagine getting a notification that 5 people in your book are probably at the right stage to buy life insurance because they just turned 40, make over $100k a year, have a large mortgage balance, are the primary wage earner, and have a 13-16 year old child who will be starting college within the next 5 years.
3 – Self driving cars
Now I am not sure to what extent this will impact the roads by the end of the decade but my prediction is that the self-driving car will be relevant and on the rise by the end of the 20s. They will be available to the public but probably still very expensive.
It brings about a ton of questions as to how to insure, though. How can you be held responsible for an accident that occurred while you were not driving?
Does the liability fall back on the manufacturer?
Does the cost roll back into the sale of the car? Does it reflect in loan payments?
With new cars all coming equipped with WIFI and the manufacturers already able to run diagnostics on most newer cars virtually, will there be a “big brother” element that is introduced at a higher level than the consumers perceived intrusion of privacy of telematics that allows insurance companies to get a true idea of how everyone is driving whether they like it or not? The data already exists and the manufacturers have access to it.
Could it lead to a significant reduction in consumer auto insurance premium and if so how do Agents make up for this loss of income in their business?
There have been bold predictions claiming that cars of the future may not even be able to go over the speed limits as the car will not accelerate faster than the limit.
Self driving cars have implications far and wide in our world.
4 – Smart Homes
Smart homes are on the rise and the number of things your smart home can “do” to protect your home will only continue to increase. Imagine a pipe busting in your home and your house knowing to shut the water lines off. Imagine a fire breaking out in your home while you sleep and the house notifying the fire department at the same time your fire alarm wakes you up out of a dead sleep. Considering a small fire can double in size every 30 seconds that extra 3 minutes can keep the fire from becoming 4-6x as big a problem to put out... while saving that much more of the structure from peril.
5 – Weird new product types
With the rise of the digital age and there being so many industries that operate digital and virtual there will be a significant need for new products. Interesting and weird stat – 2 out of 3 kids growing up today will find careers in fields that do not even exist yet. One of the more interesting policies I uncovered while researching this article is from a company called Insurninja –
What does Insurninja cover? Virtual video game profiles and characters. With the amount of time, resources, and money many gamers put into building their stats online the losses have true real-world impact on financial stability and have become an all new coverage type that did not exist a short time ago. Ridiculous? You may think so but don’t go telling Chad. He’s got Deathknight all the way up to level 62 and it has taken him 3 years…..
6 – The rise of Insurtech allowing smaller carriers to compete better with the larger carriers.
While I have always believed that the captive model is being eroded every day simply by the amount of information available to Agents on social media these days.. the independent agent is becoming more and more agile and competitive every single day with the advances in technology that they have access to that the captive agent is not allowed to use.
As more Insurtech companies get their footings and deliver impactful services to the “small guy” expect the smaller carriers and independent agents to be able to deliver on many of the things that the large carriers are either doing extremely well right now that small agents are not… or to outperform the giants in niches that render large carriers irrelevant
Open APIs allowing technology and software owned by different vendors to communicate with one another will only expedite the closing of the gap as one of the largest problems facing independent agents and smaller carriers is getting all their systems to sync up and talk to one another. The mere elimination of manual data entry from one software or service to another is enough to provide smaller companies a nice amount of
Many smaller carriers and independent agents do not have the ability to provide some of the easier communication access points that the big boys all have standard but with automation, chatbots, a rising comfort in Virtual Assistants, and a reduction in cost around app creation, and the rise of social media… smaller carriers and independent agents are able to provide the same types and levels of service across the same communication channels as the big boys with ease.
7 - The Decline of the Captive Model
Now I am not going to be so bold as to say it is going extinct. But the reality is as the world continues to get smaller and Agents continue to have access to more and more research, peers, and information the migration will continue to pick up speed.
Many of the captive carriers such as Allstate have expanded their offerings to now let independents sell their policies while others like Nationwide will be out of the captive game by July of this year. Farmers seems to be consolidating in many areas of the country as well with District Managers all making their way to the unemployment lines and Agents that miss their production numbers by the slimmest of margins being told to kick rocks and close up their Agencies.
Compound that with the smarter, savvier consumer who is able to do more research and pursue the type of experience they want out of their insurance and the cookie cutter, one product fits all, one culture fits all captive model will continue to struggle until they evolve.
That is not to say these companies will go away. My prediction is quite the opposite. As more and more enter the independent model system I predict that many of these companies will thrive more than ever before.
As a captive not being able to place turndowns anywhere means letting good business walk. Having a home for them while they fit the larger carriers mold a little better can keep clients unhappy with a carrier in house with an Agent until it is a good time for them to return.
8 – Health Insurance will remain a hot button topic with no clear path solution.
That’s all I am going to say about that to keep the comments section clean.
What kind of predictions do you have for the next 10 years in our great industry?
Weigh in below!
Also, if you haven’t already done so… get in Insurance Soup would you? We need your experience and your insight…. And with 30,000 of us already very active and talking shop… there’s a good chance you may need one of us, too.
2/1/2022 02:41:54 am
What an exquisite article! Your post is very helpful right now. Thank you for sharing this informative one.
Leave a Reply.