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Don't Fall Behind: Insurance Industry Lessons from Uber

Posted on October 22, 2015 by Guy Weismantel

 Digital Insurer Blog

You don't have to look much further than the list of apps on your smartphone to see one of this decade's most profound examples of technology disruption. Uber and Lyft have changed the face of on-demand transportation as we know it. According to the San Francisco Cab Driver's Association, some 1/3 of taxi drivers have recently ditched their employers in favor of an app-based transport service.

Uber mobile app

Serial entrepreneur Elad Gil writes that this is clear evidence of a "downward spiral" pattern familiar in every example of industry disruption. As taxi drivers switch to Uber, customers will begin using Uber because it's quicker and more available. The drivers will continue to switch to Uber, since the earning potential is higher, causing more buyers to defect to the app. Gil highlights that while the cab companies are taking action, it's likely "too little, too late."

Why Uber's Industry Disruption Matters
Some experts are increasingly predicting that the havoc Uber has wreaked on the taxi and limousine industries isn't limited. It may soon have a ripple effect on the trucking industry. As a buyer of supplies, why wouldn't you opt for delivery performed via a mobile truck brokerage app, if it decreased your response time and costs? While it remains to be seen whether major transportation brokers will be able to develop technology quickly enough to prevent total disruption, it's clear that the brands who adopt consumer-friendly mobile technology are likely to be those that thrive. Researchers predict that 40% of the Fortune 500 will disappear in the next decade.

Technology Disruption Occurs Constantly
It's not difficult to think of numerous examples of technology disrupting other industries. Remember Blockbuster video? They were quickly crushed by the new technology-based kid on the block, Netflix. Harvard Business Review's Scott Anthony highlights that Netflix's competitive edge was based on more than just technology; it was the total abandonment of late fees. These same fees made up "the vast majority" of Blockbuster's profits. While this remains a technology-based disruption, the fact that Netflix was able to so significantly improve on the video rental business model compounded their success.

Is Insurance Agency Management Safe from Disruption?
You may be holding on to the belief that insurance is somehow safe from the risk of technology disruption. After all, everyone needs insurance, right? Unfortunately, required industries are not safe from disruption potential. Furthermore, many thought leaders and subject matter experts believe that insurance is actually overdue for an upset.

As innovation pioneer Peter Diamandis highlights, insurance has operated for decades with "probabilities and imperfect knowledge." The information age has provided us with an excess of big data, which can be utilized for incredibly precise predictions of health, automotive safety, and weather patterns. The information and technology are there, and it's just a matter of time before insurance technology is permanently changed.

The First Signs of Disruptors
Disruption in the insurance space has already begun. Some of the first platforms to offer improved technology, more convenience for consumers and lower pricing include esurance, Geico, and Progressive. More recently, Google and Zenefits have entered the insurance space. It's up to today's agency management to become educated on insurance technology to avoid facing the same "downward spiral" as today's cab companies.

Interested in learning more about the potential for technology disruption in the insurance industry? Vertafore is sponsoring a free online forum November 4th, 2015. Come join thousands of insurance professionals and thought leaders to discover how you can not just weather the impending disruption, but how you can become a disruptor yourself. To learn more visit www.vertafore.com/disrupt.


Register Now


Mr. Weismantel is the Vice President of Marketing at Vertafore. With 20 years of marketing and financial leadership in companies such as Microsoft, Business Objects, Baxter HealthCare, Caremark International, and Expedia, Guy’s career has focused on bringing differentiated products to market and providing the “compelling reason to purchase” for customers and prospects alike.


Guy has a Bachelors Degree in Accounting from the University of Notre Dame, and a Masters Degree in Business Administration from the Kellogg School of Management at Northwestern University.

 

 
 

 

  • 11/10/2015 7:47 AM


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