This article is part of Carrier Management’s series on the Future of Insurance.
Mike Albert, Co-Founder, Ask Kodiak, sees some disrupters working around commercial insurance carriers instead of with them as he takes a look into the future for Carrier Management.
Q: What major changes do you see on the horizon for the property/casualty insurance industry in the next 10 years?
Albert (Ask Kodiak): Change is on the horizon for the insurance industry, and it’s coming in the form of new kinds of coverage for new kinds of risk in both personal and commercial lines.
In personal lines, this means low-friction, time-of-need purchasing and more on-demand coverage. Big innovations in commercial lines will include the emergence of innovative new structures meant to bear risk in lieu of and in addition to traditional insurers.
In commercial insurance, we are now more likely to observe innovators going around traditional carriers instead of working with them. Limitations imposed by those carriers, some technical (e.g., the absence of business partner APIs), some procedural (e.g., onerous underwriting questionnaires), create too many constraints for those seeking to do something inventive or streamlined on the distribution side. Even though many write very standard lines, we see entrepreneurial companies in distribution setting up businesses that are more like MGAs, so as to have more complete control of the underwriting and pricing process for the products they’re marketing.
Capacity is a commodity, and these businesses demonstrate that. While traditional E&S players and even some U.S. carriers are providing it for this first generation of digital players, opportunities will emerge for new businesses designed for the sole purpose of bearing risk and delegating it to digital partners.
As business models continue to evolve, brokers and startups alike are beginning to cut out legacy carriers so that they can innovate in how products are underwritten and distributed. We’ll see more online everything and a much more difficult and competitive marketplace in which to build brand equity.
Q: What will insurance companies, insurance leaders, the industry and its workforce look like in the next decade? What risks will they insure? How will insurance products and services be distributed? (Feel free to focus on one of these aspects of change or several.)
Albert (Ask Kodiak): In terms of technology, the industry has flip-flopped between a preference for best-of-breed and suite solutions for decades. In spite of recent leanings toward the latter, the monolithic core system is destined to fall back out of favor as carriers embrace the flexibility and agility enabled by best-of-breed.
For carriers, a more competitive environment will drive an increasingly diverse workforce and less promotion-by-attrition.
The industry has plenty of room for new players in distribution and underwriting. Digital distribution + AI + big data + investor interest in the space will give rise to a new generation of specialized participants.
No one company will “win” insurance. Distribution and customer experience will be headlined by technology, but the category standouts will back up tech with human touch and expertise in elegant and efficient ways.
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