Does InsurTech disruption end at distribution?

It may seem like the changing of the guard is occurring as InsurTech start-ups continue to grow in size and number.

Changes in cumbersome traditional models of distribution can be seen everywhere, as direct-to-consumer and usage-based models have become the expectation for customers in a digital age. Companies like Trov and Metromile have answered the call, making on-demand, usage-based insurance easy to buy and customized to the consumer needs. Recently, startups Insurify and Next Insurance went a step further, offering the ability to purchase coverage via Facebook Messenger chatbots that are able to mimic the one-to-one conversation that would normally take place with an agent. Chatbots also provide the added benefit of being powered by analytics that make fast, accurate pricing decisions. A more extreme departure from the traditional model is hard to fathom!

But where these companies will face a real challenge is not in the distribution, but in the back-end administration of the policies that they sell with such ease.  In many cases, the policies are underwritten by traditional carriers, which begs the question, “What has really changed?”

Yes, it’s easier and faster to buy a policy that’s customized to your needs, but the biggest pain point for consumers has always been the process of filing and settling a claim. With traditional insurers handling the nuts and bolts of the claims administration, insurtech companies are falling short of transforming the entire customer experience. Lemonade has taken a different approach, becoming a fully-licensed insurance company in their own right and they’ve demonstrated the ability to process and pay a claim in about 3 seconds. This kind of expedited processing, however, will be difficult, if not impossible for those startups that don’t impact the entirety of a policyholder’s experience.

This is where reinsurers have the advantage. This group of companies that has typically been a behind-the-scenes player in the game can now be the star, as they are not shackled with existing processes and systems that make it hard to change course to a customer-focused distribution model. This is not to say that traditional insurers are being left out in the cold. There is still ample opportunity to tune-in to customer needs and simplify a buying cycle that’s inefficient, complex and in stark contrast to industries that allows consumers to do almost anything through a smartphone app. The challenge will be to consider the entire customer experience to transform the end-to-end process.

Many traditional insurers have taken on the role of VC-backer, in what one can only assume is a plan to first build, then buy their way into innovation via acquisition of smaller startup companies. How this will play out remains to be seen. But one thing is sure, the power of data analytics will be key to the success of all insurers, old and new, as the customer and market demand faster and more agile transactions.



Kirstin Marr, CMO of Valen Analytics, has a passion for building companies that invent leading-edge technologies to improve customers’ lives and solve the inefficiencies that exist in traditional marketplaces. As the chief brand advocate for Valen Analytics, she helps pave the way for Valen’s clients to lead the innovation initiatives required to compete in today’s marketplace. Before Valen, she ran business to business marketing for internet technology pioneer and market leader, (now HomeAdvisor).

Kirstin has a long-standing commitment to philanthropy and community leadership. Most recently, Kirstin is leading the Insurance Careers Movement coalition, a grassroots initiative of more than 850 insurance organizations raising awareness of what insurance has to offer young professionals. She has been involved in several non-profits focused on Science, Technology, Engineering and Mathematics (STEM) education, among other non-profit causes.