Major U.S. insurers are joining new digital exchanges to sell not only their own policies but also those of rivals, a fresh twist in an industry known for fierce competition.
The powerful new platforms, including Semsee, bolttech, Bold Penguin and Uncharted, pull data from many carriers, allowing agents to see multiple quotes for policies, much the way travel agents see competing air fares.
Chubb Ltd, Travelers Companies Inc and Liberty Mutual have signed on recently as have agencies that also sell policies, executives said.
“The eyeballs are enormous and important to them,” said Philip Charles-Pierre, New York-based co-founder and chief executive officer of Semsee, which focuses on commercial policies. Many insurers have recognized that “if a large agency is using the platform, you need to be on that platform.”
The growth of digital distribution represents a shift in how insurers compete in markets for auto and homeowner coverage as well as business and commercial lines worth hundreds of billions of dollars annually, experts said.
Carriers also benefit from being able to meet more of a customer’s needs, even if they are not selling their own policy.
“It’s all about who owns the customer relationship,” said Mark Breading, a partner at Strategy Meets Action, a management consulting firm in New York.
The industry has been moving away from “captive” agents who sell only one firm’s policies, but digital exchanges are accelerating the trend, said Matt Leonard, an Oliver Wyman partner who works on insurance.
“The whole process is now supercharged by technology and a broader marketplace of players,” he said.
Partnerships with the exchanges have grown over the past five years. Despite digital revolutions in other industries, many insurance customers – especially small businesses – prefer to work with agents who can explain policies and find the best prices. As a result, the online tools insurers created on their own did not take off as expected.
The exchanges now allow agents to offer customers better prices and satisfy a wider range of needs without necessarily harming profits, executives and experts said.
“Chubb is actively engaged with a number of partners in this channel including bolttech and Bold Penguin,” said Sean Ringsted, chief digital officer at Chubb.
Rob Schimek, bolttech’s CEO, offered an example: A company that writes policies for autos but not homes can use bolttech to offer homeowner coverage from other carriers. That keeps customers from shopping elsewhere. The auto-policy company earns a sales commission on the homeowners policy while the other insurer gets the premium revenue.
“Carriers are dying for access to distribution,” Schimek said. If insurers don’t want to offer policies through the exchange, they will not have access to the customers of other insurers on the exchange, he said.
Bolttech, backed in part by Chinese billionaire Richard Li, recently closed on a $180 million funding round and expanded its reach to 26 countries from 14.
While exchanges bring more customers, they pose a threat by allowing smaller insurers with specialized policies to reach a large market, said Matteo Carbone, founder and director of IoT Insurance Observatory, a research group.