What Can Independent Agencies Learn from Lemonade and Other Insurance Disruptors?

October 15, 2018

The successful independent agents will be the ones who observe, learn and adapt to the advances that best serve their clients and communities.

With the insurance sector seeing an unprecedented flow of interest and investment in InsurTech, disruptive ideas and breakthrough technologies are trying to gain efficiencies across many points in the value chain: product delivery, underwriting, claims and administrative functions.

Lemonade is seen as one of the most innovative, using AI and bots to sell insurance, and adopting a model that does not place paying claims in conflict with keeping its share of the premiums. Whether Lemonade will be able to profitably expand under this model remains to be seen. While a cursory glance at industry message boards and social media discussions reveals strong opinions and no love for Lemonade in the world of independent agents, even the most skeptical can learn from how this start-up has branded itself.

  1. Buying insurance shouldn’t be so difficult. Simplifying the process and language of insurance would be great wouldn’t it? It’s understandable why many have anxiety about the process. Insurance uses a lot of complex language, the contracts are long, and only hold value if something bad happens. The purchaser is required to provide a lot of detailed, closely held information up front to find out the price later, or worse – receive a declination.Although independent agents hold no power over the insurance company information requirements or contracts, they most certainly can recognize and acknowledge the anxiety-producing process for what it is and deliver on a promise to guide clients and act as their advocate, as well as their advisor. Offer to educate. Summarize the policy terms for them. Point out gaps. Explain that the complexity is there to protect both sides from ambiguity and ultimately speeds up claims payments.
  2. Transparency builds trust. While the insurance sector hasn’t experienced the Occupy Wall Street level of outrage as the closely-related banking services industry, in the eyes of American consumers, insurance professionals hold a very limited level of trustworthiness. Trust is not a yes/no proposition, it is granted over time and nurtured over a culmination of behaviors and outcomes.Independent agents have more tools in their trust toolbox than they may realize, or this short essay has the space to address. Start by clarifying your agency’s promise to the people and community you serve. What value do you create? Is it prominently stated on your website, in your office, on your marketing materials, and by your people? Your mission statement must be more than inspiring and aspirational – it is essential that you can track it back to agency practices and actions.
  3. Designed for social impact. Let’s be clear, you don’t have to choose to either make money or do good things. You can, in fact, ensure your personal livelihood and run your business according to your values. Independent agents operate as small business owners who contribute to their local downtowns, communities, schools, and organizations in ways that Lemonade never can. SIAA is comprised of a national network of community-conscious small business owners, and together with its partners, SIAA has given back significantly more than Lemonade has in the past two years as a public benefit corporation (B-Corp).

While none of us holds a crystal ball on which InsurTech investments will prove the test of time, consumer preference and expectations will eventually drive change in the industry. The successful independent agents will be the ones who observe, learn and adapt to the advances that best serve their clients and communities.