Companies today have two choices: evolve with technology or go extinct.
This certainly holds true for the insurance industry where emerging insurance technology (insurtech) is putting pressure on many in the industry who are slow to adapt. As you can see from the timeline above, this isn't exactly new. And in case you don’t think it could happen to you, the following examples show this belief can turn disruption into failure no matter WHAT industry you work in!
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Ah, Blockbuster. The company was once the industry leader in video rentals (I still have my blue Blockbuster card somewhere I’m sure!), and as technology evolved from VHS to DVD, the national chain adapted just fine. They had the proper supply chain and logistics in place to support the status quo. But the company soon became stagnant, failing to respond to video-on-demand services and video rental kiosks. Famously passing on on the opportunity to acquire fledgling DVD by mail company Netflix, and the rest is history.
Much like agencies facing evolving insurance technology, Blockbuster held onto an outdated system just long enough to fail. A company that once boasted over 9,000 stores had been reduced to about 50 franchise-owned stores by 2015. And now it’s Netflix who’s facing their own disruption as the king of digital video content.
If you happened to photograph the damage to your car after a fender bender in the '80s and early '90s, it was likely on a Kodak camera. For decades, Kodak's technology was untouchable as the company dominated the photographic industry. From the 1900 release of the iconic Brownie camera to the handheld camcorder, technological innovations kept Kodak at the top. But Kodak didn't respond as digital technology emerged, and the company is now a shell of what it once was. I still can’t quite believe that they didn’t foresee the coming tsunami of digital relevance to the industry—it somehow feels wrong that they’re not a part of the digital discussion. And yet, here we are.
Myspace is a perfect example of agency management gone wrong. It was profitable at first, but only focused on connecting people on a single level. Facebook figured out this wasn't a recipe for success. Mark Zuckerberg knew people wanted to connect on various levels, and this knowledge turned Facebook into a global force.
Facebook's dominance in social media technology may have caused Myspace to let its guard down. Either way, Facebook surpassed Myspace in unique visitors by 2008. In 2011, Myspace sold for only $35 million, and while it had 1,600 employees in 2009, this number dropped to 200 in just two years.
If you're Googling the latest in insurance technology, you can thank Xerox. The company invented Ethernet, the computer mouse, and the desktop computing that made everything easily searchable through folders. Sadly, it wasn't just a lack of evolution that held the company back.
When experts at Xerox came up with the aforementioned breakthroughs, the board of directors thought they were wasting time. In fact, engineers were ordered to share their innovations with other companies. This led to Apple piggybacking off their work and taking it to new levels.
Unfortunately, Xerox faltered as a technology disruptor, and because of that, you know this company more for copy machines than the computing innovator it once was.
Mutual Benefit Life Insurance Company
Finally, we have one more example, this time from our own industry. The Mutual Benefit Life Insurance Company (MBLIC) was once called the "Tiffany" of life insurance companies. During the ‘80s, though, it didn't respond to an overheated real estate market quickly enough. Although it had been around since 1845, the company would dissolve in 2001.
Many insurers could go the way of MBLICT thanks to new industry disruptors. Esurance, for instance, lets users insure their vehicles via the Internet. Progressive, on the other hand, caused disruption by showcasing its own prices while simultaneously providing its competitors'.
Other companies made even bigger waves. Zenefits created cloud-based software that finds insurance quotes and manages a company's employee benefits. Even Amazon has created ALife, a nearly automated insurance provider, and Google stepped into the arena with Google DirectLife to provide users with several insurance quotes at once.
Why Companies Fall Victim to Disruptive Technologies
"In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment."
Charles Darwin wrote that statement almost two hundred years ago when he observed how species evolve. Had Mr. Darwin been the CEO of a modern multi-national organization, that same comment would not look out-of-place in a year-end status report. All industries need to evolve to keep abreast of innovations and ever-changing trends. However, unlike the natural selection that Charles Darwin referred to, changes in the industry are measured not in eons, but in mere years or even months.
The insurance market is not immune from make-or-break technological innovation. New technology like wearable devices that gather lifestyle and health data give insurance organizations an unprecedented amount of data on the risk profile of their clients. Information about exercise habits and other vital statistics are relevant in assisting companies to draft health insurance on a personalized level and price policies based on risk. Other inventions, like the self-driving car, will pose new challenges to insurance companies -- like who would be at fault in an accident.
Technology will continue to change and set the pace for the insurance industry. Although technological innovation claimed its fair share of victims, they were either slow to appreciate the magnitude of the oncoming change or too blinded by past successes to look to the future. Innovation should not be feared; every firm has the potential to become disruptive innovators themselves.
The issue of falling victim to disruptive technology is actually less about the larger industry as a whole and more subjective, ultimately falling on your plate, the agency principal. The question is not “is the insurance industry going to exist tomorrow?” (Will robots will not replace humans?). Rather, “Is my agency putting ourselves in the best situation possible with the technology available in the market to meet and exceed the needs of our customers?
If you’re not addressing this question…look around you, look at your competitors, look at people in insurance industry that are attaining success and break down their strategy so you can steal what works for them and apply it to your own business (don’t reinvent the wheel). I think it’s important for you to go through the process, but I also think it’s pretty clear from the examples above (companies operating outside of the insurance industry) that the path to success starts with a strategy that lifts the customer experience up as the core focus. The revenue will follow.
The insurance industry has been disrupted, where do you go from here?
The disruption is already happening.
Step 1 - Don’t freak out. There are many examples (many on our blog) that show how the insurance industry is adapting and using technology to change the way they operate to provide their customers with better experiences. This is a good thing for everyone and this is only going to increase over time as the industry continues to mature in regards to its use of technology.
Insert customer experience graphic
Step 2 – Honestly assess the customer experience you offer and compare it with your competitors.
Step 3 – Honestly assess the employee experience you offer and compare it with your competitors. This doesn’t mean you have to go commando and sneak into a competitor’s office to steal their secrets. Go to a networking event and have casual conversations about the impact of technology solutions on employee performance. Does new technology help your agency recruit millennials? Does licensing software help expedite the licensing process speeding up producer validation time? These are all questions you can start exploring today at no cost yet the answers to those questions could have monumental impact on the way you run your business and its success. There is a final step to Step 3 – talk to your employees about the experience they’re having with your current agency management system or comparative rater and the workflows it provides. As the agency principal you need to lead this discussion and promote an agency culture of openness that makes people feel comfortable sharing their discontent in a positive healthy manner that can lead to real change.
Step 4 – Explore Vertafore’s resources. The blog is a great place to start, but we also have a ton of topic specific education material created guide you through the difficulties that come with working in an industry that is constantly evolving.
Step 5 – When in doubt, speak with a solutions consultant. Our account manager’s work with more insurance agencies and agency principal’s than any other technology provider in the insurance industry. If you have a problem, the chances are extremely likely that our solutions consultants have addressed a similar problem with an agency of a similar size in the past. They have the experience to quickly digest your situation, identify the real issues, and provide a path forward. The phone call is free. Just use the contact form at the bottom of the page and we’ll reach out.
I want to end by referring back to the five examples of companies that didn’t evolve quickly enough to survive. The main takeaway from this article is that the companies we’ve highlighted did not die because new technology was created, they died because they ignored the warning signs.
This is your warning.
Exceeding Customer Expectations
Meeting and exceeding your customers expectations is so critical to your agency's growth that we created a free guide to exceeding customer expectations and brought together leaders from the insurance industry to produce an on-demand webinar that you can watch at your convenience. We really hope that you find the materials useful. Simply click below to watch the webinar.
Ms. Clark is member of Vertafore's inside sales team based out of the Bothell office. She has over 10 years of experience in the Insurance industry working for companies like State Farm, Kibble & Prentice, and Veracode. Ms. Clark's experience as a CSR, Producer, and Account manager makes her uniquely qualified when it comes to understanding the needs of her clients. Connect with her on LinkedIn here: https://www.linkedin.com/in/arleahclark