You may (or might not) remember that when Amazon.com began in the late 1990s, the only focus of the company was selling books online. One product category, one sort of manufacturer, one market focus — individuals who buy books. At that time, virtually everyone in the publishing industry scoffed at the idea that anyone would want to purchase a book they couldn’t first touch. Today, Amazon.com sells all types of products all kinds of manufacturers to any or all types of individuals and businesses every day of the year. Nobody is scoffing any more — except perhaps the insurance industry.
Just like the publishing industry two decades ago, the insurance coverage industry in facing a once-in-a-generation digital disruption and transformation, and I’m not sure the industry knows it. Let’s look at the distribution of insurance with the lens of an Amazon.com-like buying experience.
Most insurers and distributors automatically begin with the typical objections: “Insurance coverage is complex,” they are saying; or, “What about the regulatory restrictions?”; or, “My agents have to explain the product benefits to the customer.” The knee-jerk reactions seem sensible within an industry that is mostly agent-centric which seemingly treats customers with a minimum of some contempt.
We have, after all, built rules around every facet of insurance: who can buy, what they can purchase, when and how they can buy, who they are, where they are located, what they want to insure, how much insurance they need, how much it costs. You will find licensing and appointment rules, compliance and regulatory issues, insurance company underwriting requirements, rating rules, policy issue guidelines, premium remittance standards and distributor channel conflict rules, which may all be different depending on the kind of product – life, accident and health, property and casualty, individual, group, association, employer and so on. While many of those rules seem sensible, many others are simply vestiges of “the way in which everything has always been done.” That is a problem for our industry.
The reality is that the consumer doesn’t care about most of the nitty-gritty, inside baseball, that affects the suggestions above. The customer cares about finding yourself in control of the insurance purchase experience like he is in charge of almost every other shopping experience. That’s not saying the customer wants to do it yourself without an agent necessarily. However it does mean the consumer wants to be able to make that choice — and, today, she can’t. Increasingly, individuals are being schooled regarding how to buy everything with the convenience of a digital market; why not all their insurance?
It won’t be long before insurance consumers will expect to gain access to products from multiple carriers, shop, compare, buy their policy with the charge card they pull using their wallet and also have their policies, ID cards, welcome letters, privacy notices, etc. instantly delivered to their very own internet account (not via a carrier). What about the benefit of seeing a digital marketplace that remembers each consumer for subsequent transactions? Maybe like Amazon Prime?
I’ve always wondered what the executives at Barnes & Noble, Borders, Simon & Schuster, HarperCollins and Penguin (not to mention Circuit City and J.C. Penney and Sears) were thinking back in the 1990s as Amazon.com started to gain traction. I wonder exactly the same thing now about some insurance executives.
Savvy insurers and distributors will come across consumers where they would like to be met and transact business within the digital marketplace. Or they won’t. But if the industry doesn’t visit quickly, another person will – of that, I’m sure.
