Is the insurance industry just a place to make money, or is it a powerful space for innovation?
For more than 15 years, Insly team has been a main contributor to innovation in the insurance industry. We were the first ones to launch Internet sales, along with price comparison in 2001, and we changed the way insurance is sold in several sales channels (banks, leasing companies, car dealers, gas stations, etc.). We introduced the concept of wholesale brokerage to Estonia (hardly a new concept in London) and we are currently building the first global Cloud-based software for insurance agents and brokers.
These changes to our approach have significantly improved our efficiency, but it is quite clear that the insurance industry (brokers, agents, and insurers) has not progressed at the same pace. The question is – Why not?
The answer is not as simple as one may think.
Insurers may have a lot of money to invest, but they lack both the flexibility and the motivation to change their ways of doing things. They are also struggling to factor in legacy systems and a number of other considerations. The best that they can do is slightly modernize their client fronting solutions, but a massive overhaul to how insurers operate is simply unrealistic.
Brokers and agents, on the other hand, are often small companies that lack the resources to invest on a serious scale, which means that the payoff is small. Many seem to be somewhat old-fashioned and unable to drastically change their established practices. Perhaps the most obvious evidence of this came from our small market survey in London, which revealed that only 2 out of 10 insurance broker CEOs have LinkedIn accounts.
Besides the individual actors’ unwillingness to adapt and modernize the industry, the regulations for compliance also pose a significant obstacle to reform and innovation. Anything that has the smallest chance of being non-compliant is quickly rejected, as the industry has continued to accumulate regulations and confusing “legalese” that makes it intimidating to think too far outside the box. When large sums of money are in play, those companies are obviously at the biggest risk, and they actually employ people on their payroll to caution them against risky maneuvers. The compliance officers on the payroll of large companies are also tasked with preventing risks and signing off on any new ideas before they are enacted.
Change comes slowly in certain industries
Change comes slowly in certain industries, specifically when a new idea is viewed as being disruptive. Major changes usually result in shifts to power dynamics, so to protect those vested interests, lobby groups and the framework implicit in the business model make it very difficult for these new ideas to come into play without being tied up in legal battles over compliance. Entrepreneurs struggle to break into this industry for precisely that reason; we have seen it happen with each and every one of our innovative ideas – without exception.