Insurance agents and brokers are at risk of losing younger business owners to tech-based competitors thanks to significant inefficiencies and waste in the industry, the founder and CEO of a technology-based insurance startup claims.
Matt Miller of Embroker, a commercial brokerage that offers a cloud-based risk and insurance management system to small and mid-size businesses, spoke on what he views as the industry’s lapses during a webinar Thursday sponsored by Chromium Branding Agency.
“Insurance has not kept up in the advancements seen in other parts of society in terms of technology,” Miller said. “The core job of the insurance broker is still taking information from a customer, taking that to the carrier and taking information back to the customer. There’s not a lot of technology involved in that process, and it’s a huge pain point for customers when brokers use their time on inefficient workflows.”
Those inefficiencies are manifest in insurance premiums, in which roughly just 50 cents of every dollar spent by the customer goes toward settling claims.
Miller added that brokers have historically benefitted from the complex, opaque nature of commercial insurance, which prompts few small- to medium-sized businesses to review their policies and consider more appropriate or better-priced coverage.
As technology emerges to bridge that gap in education, however, brokers may receive some pushback on the value of their service model.
“I think what brokers haven’t really done is empower the customer,” Miller said. “They’ve created a role where they’re absolutely critical to the customer instead of allowing them to take ownership of their own risk management through tools, resources and expertise, providing guidance where they need it.”
By leveraging its own software, data and predictive analytics to allow business owners to upload and analyze their own coverage, Embroker is attempting to address this pain point. It results in coverage better suited to the insured, demonstrates the value of the firm as an intermediary and frees its brokers to provide more consultative services, says Miller.
While this type of approach may not appeal to older business owners who place great stock on a personal relationship with a local insurance broker, it is proving popular with certain industries and demographics. Technology companies, for example, account for a high number of Embroker’s clients, as do young people.
And as millennial business owners become an increasingly powerful force in the marketplace, traditional brokerages may grow to regret not accommodating the group’s preferences.
“I understand how powerful those relationships [with the broker] are, but if you look at how branding and trust works, you see that younger people often trust brands more than people,” Miller said. “We want to build that trust by being highly confident and highly efficient, and we’re attracting people who want a different model, one that’s not as reliant on their broker taking them out to lunch or dinner.”
Embroker has partnered with 10 commercial lines carriers, including major names like The Hartford
, and is licensed in all 50 states.
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