Disruption in the Early 2000s

Early in my career in Insurance, I got exposure to this new(ish) thing called “The Internet” that was threatening how we had always done business. To give you a sense of how early it was in the Internet’s life, Google was still a small player in search, with most of its larger competitors at the time being companies that do not exist today. Amazon had only recently expanded outside of books, and analysts still saw no future for the company. In Insurance, the new idea was that people might actually want to get a quote online, if not buy and service their policy there, too. Brokers and agents, it was foretold, would cease to exist as online aggregators and portals with names starting with “E-” (the prefix “i” had not yet become popular, apparently, with Apple only using it on iMacs and iBooks, having not yet invented the iPod) or ending with “Exchange” (or some clever misspelling of the word starting with an “X”) cropped up left and right. 

What we were looking at was potential disruption in a major way. While it was never clear which disruptive threats would materialize and actually cause a shift, it always felt clear that many carriers would not be able to keep up with it and therefore faced a high probability of being left behind. And if we were not left behind, our broker and agent partners or investment in any direct sales force and local office network would be.

This was a scary time.

The fear was not irrational. We faced many good reasons to believe we would be left out in the cold, and we were not alone in these thoughts. Insurance is heavily regulated, so managing this sort of disruption across regulators in 50 states plus those in various international jurisdictions was complicated, if not a complete non-starter. Having to file product changes, wait for approvals, get licenses, risk running afoul of existing regulations with our actions, etc., are all serious issues. And if our compliance constraints could be mitigated, how would we navigate channel conflict effectively? Would our brokers stop sending us business if we participated in one of these online exchanges? Would our sales staff quit and move their customers to a competitor if we started quoting online? What about our technology? Could we even make all of this work when we’ve struggled to meet timelines, budgets or scope with technology projects before?

You know how the story played out.

Despite those fears and the disruptive threats around, not only did my carrier survive and thrive, but so did most carriers (and those who did not were not taken down by Ecommerce disruption). Similarly, so did the agent and broker channels, and they do to this day despite continued talk about the end of the agent model. Despite all the threat and doomsday predictions, the industry players and dynamics remained largely unchanged, but with some new tools growing up around us.

This is useful context for several reasons when considering the disruption we see in the industry today. We should not swear it off, nor should be quiver in our boots and do nothing. As with the changes in the industry brought about by the Internet in the early-2000s, we need to see how the emergence of new tools and new tech-enabled competitors can be something we can benefit from by engaging with.

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This post is inspired by the upcoming book, The Future of Insurance: from Disruption to Evolution, coming out June 24th, 2020 at Connected Claims USA, written by Bryan Falchuk and published by The Insurance Nerds.

Pre-order your copy today at future-of-insurance.com.

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