Insurtech is bringing change to the industry. But what does that mean for producers?
Insurtech is a broad topic that encompasses everything from automation to the cloud, analytics, and machine learning; a growing line-up of new technology-driven products for the insurance industry; and an array of companies that make those products. It’s a complex and rapidly evolving landscape that is expected to bring significant change to the industry. But a key question is, what does it mean for producers?
The short answer is that it is likely to make their work lives easier—and along the way, open up some new opportunities. “It’s not just technology entering the insurance space, it’s technology-driven innovation and new ideas,” says Greg Hoffnagle, a partner in the Financial Industry group and Insurance practice at the Goodwin law firm in New York. And a lot of those ideas are focused on changing the industry’s sometimes cumbersome sales and client-service processes—on “reducing the friction for users and trying to figure out how to do things faster and more easily in the insurance space,” he says.
To a great extent, insurtech innovation is not just about specific new tools. Instead, it often means connecting and combining numerous technologies to create more streamlined processes and capabilities. And it often involves partnerships designed to bring together the right technology and expertise. “There are tech startups coming into the space that don’t know much about the insurance industry space per se—the regulations that cover it or the terminology and mechanics of it,” says Hoffnagle. “These innovators don’t know insurance, but they know there’s a better way.”
In particular, Hoffnagle says, these industry newcomers sometimes have trouble understanding and complying with the complicated regulations governing the industry, which vary from state to state. Technology-enabled partnerships can bridge those gaps by combining, for example, the deep industry knowledge of large carriers with the technology-driven innovation of the pure insurtech companies.
“It’s not just technology entering the insurance space, it’s technology-driven innovation and new ideas.”
Case in point: Streamlining annuity sales
These realities are leading to the creation of insurtech ecosystems that encompass a variety of companies and technologies. “An ecosystem can enhance and integrate disparate technologies that financial professionals use, and they have really begun to improve the user experience,” says Brock Scheck, vice president of Insurtech Partners and Platforms at Global Atlantic Financial Company. Take, for example, annuity products, which have not always fit smoothly into the producer’s process for managing other investments. Whereas stocks, mutual funds, and bonds can typically be managed through a single investment application, annuities have been dealt with separately. “The financial professional may be using three or four different technologies to complete the annuity-selling process, moving between things like wealth management tools and an annuity store that lets them look for products,” says Scheck. The process is complicated, and, from the client’s view, it may feel like the annuity is not an integrated part of their plan.
Insurtech innovations can help with that challenge. Global Atlantic has started working with one ecosystem that includes a core platform provider that offers technology for bringing together several technologies and types of expertise. This makes it possible for producers to connect via the platform with insurtechs that provide investment platform tools for asset tracking, research, and so forth, and with structured markets that let them find and analyze annuities and access relevant licensing and training content for those offerings.
The result is essentially a simpler, smoother experience, with the ability to work through one point of contact. “The financial professional can search annuities by feature, by carrier, whatever attribute they want, and then use really robust capabilities to research, compare, and back test various annuity products for a specific client, working with actual specific products, not a generic annuity product,” says Scheck. “You can also find the most efficient allocation to an index, based on that client’s risk tolerance.”
Once an annuity product is selected says Scheck, “you can then run our illustration software for the client, and once they sign off, submit the application electronically, right there. In terms of the user experience, it’s all on one single platform—you’re just toggling between tools, rather than leaving one and going to another and another.
“When you sit with a client and pull out your iPad, you will be able to take them through their entire portfolio and retirement goal progress, including annuities,” Scheck continues. “You might show them where there’s an income shortfall, then change variables on the fly, run Monte Carlo scenarios with different assumptions and so forth to show them how their investments can work together—rather than pulling out paper copies of annuity annual statements. So now, we’re starting to bake annuities into that holistic view that you can show your client, and the annuities can be managed like any other assets in the portfolio.” This streamlines the process for producers and creates a client experience that can potentially increase sales.
Growing connections, increased choice, and a better experience
More capabilities are likely to emerge, because this platform/ecosystem approach makes it possible to easily add new technologies and new capabilities on a modular basis, as they emerge. For example, one of these new capabilities now taking hold is known as an Outsourced Insurance Desk (OID). OIDs are the regulatory connectors licensed to offer annuities and other insurance products. They can partner with agents who aren’t licensed to do so, such as registered investment advisors, and act as the agent of record on their behalf. This makes it possible for those agents to discuss annuity products with clients and thus offer them more options.
Insurtech is still a relatively new area, and there will no doubt be much more to come. “People are super bullish on this space,” says Goodwin’s Hoffnagle. At his firm, venture capital and private equity clients rarely used to express an interest in the industry. Now, however, “there probably isn’t a week that goes by without another VC or private equity client asking us about the insurance industry and insurtech companies,” he says.
As technology-driven innovation continues to reshape the industry, producers are likely to benefit. “You are going to have more choice of tools in the future, because they will be increasingly connected, and you are going to have more product choice,” says Scheck. “For you and your clients, the experience is going to keep getting better.”
What it means for you
Insurtech is reshaping the insurance industry, and these changes are starting to find their way into the day-to-day work of producers. This trend is in the early stages, but it is bringing financial professionals a range of benefits, including:
- Simplified, more efficient processes
- Comprehensive “one stop shopping” for investment products and applications
- The ability to seamlessly include annuities in investment portfolios
- More choice in tools and methods of working
- Better experiences—for themselves and their clients
- Easy access to future technology and process innovations