{"id":1548,"date":"2018-05-18T18:00:01","date_gmt":"2018-05-18T15:00:01","guid":{"rendered":"https:\/\/insly.com\/?p=1548"},"modified":"2021-10-26T16:01:44","modified_gmt":"2021-10-26T13:01:44","slug":"four-insurance-distribution-models-to-consider-as-a-start-up","status":"publish","type":"post","link":"https:\/\/insly.com\/en\/blog\/four-insurance-distribution-models-to-consider-as-a-start-up\/","title":{"rendered":"Four Insurance Distribution Models to Consider as a Start-Up"},"content":{"rendered":"
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Kyle\u00a0Nakatsuji<\/span><\/a>, the author of this article, was a\u00a0Principal\u00a0at<\/span>\u00a0<\/span>American Family Ventures<\/span><\/a>,\u00a0the venture capital arm of\u00a0American Family Insurance. There he focused on identifying and supporting early-stage companies affecting the future of the insurance industry. American Family Ventures invests across a variety of sectors, including IoT, fintech, SaaS, and data and analytics. Read the\u00a0<\/span>original article<\/span><\/a>.\u00a0<\/span>\u00a0<\/span><\/p>\n

Selling\u00a0insurance is complicated. Not impenetrable, but complicated. The sales process is sort of like a tangled piece of string\u2014 it\u2019s easy to see the beginning and end, but hard to figure out what\u2019s happening in the middle.\u00a0<\/span>\u00a0<\/span><\/p>\n

When you start untangling, you\u2019ll find prospect lists, telemarketing, direct mail, traditional marketing, and web-based lead generators uncovering and enticing potential customers. You\u2019ll also find captive agents, independent agents or brokers, wholesalers, direct telephone sales, the Internet, affiliates, carriers, and carrier-like entities selling various products.\u00a0<\/span>\u00a0<\/span><\/p>\n

Some of these strategies work in coordination or create feedback loops \u2014 a customer sees a TV ad, which prompts them to submit a form online, which adds them to a direct mail list, that points them to an online aggregator. That\u00a0puts them in touch with an independent agent selling insurance on behalf of a managing general agency\u2026\u00a0As\u00a0you can see, the number of distribution permutations is considerable. This also applies to insurance distribution.<\/span>\u00a0<\/span><\/p>\n

However, at\u00a0<\/span>American Family Ventures<\/span><\/a>, we appreciate simplicity. We classify insurance distribution\u00a0start-ups using four groupings: lead generation, agency\/brokerage, managing general agency (MGA), and carrier.<\/span><\/p>\n

\"insurance<\/p>\n

As pictured above, the primary distinctions between participants in each group arise from the amount of insurance risk they bear and their control over certain aspects of the insurance transaction (for example, the authority to <\/span>bind <\/span><\/a>and <\/span>underwrite<\/span><\/a> insurance policies). <\/span>\u00a0<\/span><\/p>\n

However, many other trade-offs await insurance start-ups navigating among these four groups. If you consider the evolution of digital customer acquisition, including new channels like <\/span>mobile-first agencies and incidental channels<\/span><\/a>, choosing a niche becomes even more complicated. <\/span>\u00a0<\/span><\/p>\n

In this post, I\u2019ll discuss some of the key attributes of each group, touching on topics relevant for start-ups new to the insurance ecosystem. Please note, in the interest of time and readability, this post is an overview. In addition, any thoughts on regulatory issues are focused on the U.S. and are not legal advice. <\/span>\u00a0<\/span><\/p>\n

LEAD GENERATION<\/strong><\/h2>\n

Lead generation refers to the marketing process of building and capturing interest in a product in order to create a sales pipeline. In the insurance context, because of the high-touch sales process, this historically meant passing interested customers to agents or call\u00a0centre\u00a0employees. Today, lead generation operators sell to a variety of third parties, including online agencies and digital sales platforms.\u00a0<\/span>\u00a0<\/span><\/p>\n

Let\u2019s consider a few key attributes of lead generation providers.\u00a0<\/span>\u00a0<\/span><\/p>\n