Last week something interesting happened to me. An investment group sent a small team of folks down to our agency to discuss what kind of technology our clients or our agency would benefit from. They flew in from out of town to talk about our industry because of all the noise that is being generated by other investors and startups. This group did not have any knowledge of insurance whatsoever but knew that they wanted to get involved as there was money to be made. During that meeting, I laid out what I saw as some fundamental challenges to our industry, which prompted this article.
We hear a lot about disruption in insurance. "It’s coming, and it’s going to change everything" is kind of the mantra, but we don’t dig into the specifics much. This is an attempt to lay out how these changes will manifest and why. This will be specifically directed at insurance agencies and why I feel we are the most vulnerable and have the most work to do to survive.
Why is there so much attention on insurance agencies now? In the last decade, technology has transformed the way we communicate, experience transportation, and access various conveniences. Most easily disrupted industries have already been shaken up, but now, technologists are turning to entrenched industries with much sweeter upsides, like insurance. The recurring revenue from premiums, combined with a built-in profit model, makes the insurance industry an attractive target.
The Zenefits Effect: Zenefits showed the tech world how to break into the insurance industry. By offering technological platforms that solve business problems while managing insurance premiums, Zenefits and its successors have created a new dynamic. Agencies are now competing not just with other agencies but with tech-savvy startups providing platforms tailored to underserved niches.
The Challenge for Brokers: Most agencies are small, with limited IT resources and legacy systems. A 30-person startup focused on modernizing insurance for SMBs can outpace traditional agencies with sleek platforms that offer policy management, analytics, training tools, and more. Meanwhile, agencies struggle to dedicate enough resources to innovation, often viewing IT as a cost center rather than a strategic asset.
To remain relevant, agencies must ask themselves:
- What do we need to be doing to remain relevant?
- What can we do better than anyone else?
- How do we use technology with limited resources to make a difference?
- How do we quantify value to our clients and carriers?
- What specific problems can we address better than emerging platforms?
- How do we create a culture of constant improvement?
More and more companies are entering this space every day, and this is not something that is going to go away. Agencies must evolve or risk losing business to new players who are better equipped to meet modern demands.
If you have answers to these questions or would like to share insights, I’d love to hear them and exchange ideas.
Thanks for reading.