Going back to history, the introduction of the telegraph, the breakthrough technology of the era, made new marketplaces more efficient, drawing in more participants and helping to support a country’s economic growth.
A similar process is underway in insurance. Today, a digital insurance marketplace is emerging, fueled by technological advances and rising interest among insurance customers and intermediaries for faster, cheaper, and more adaptable ways to meet their risk-management needs.
Simply put, an insurance marketplace is a digital ecosystem that enables carriers, customers, agents, brokers, and even non-insurance participants to seamlessly connect, thereby transforming the way insurance products are distributed and purchased. The marketplace can create economic benefits for participants, spark innovation and improve price transparency, just as the formation of securities markets did more than two centuries ago.
For insurance carriers, a marketplace allows them to gain access to a larger customer base through a digital distribution channel. They can also collaborate easily with other partners, such as mortgage providers or travel companies, to offer a bundled product more efficiently than they can today. In addition, the data carriers gather by interacting in the marketplace can provide insights into potential new product offerings and help them improve the customer experience.
A digital marketplace envisions a new role for insurance carriers, one that can exist alongside their traditional functions. Carriers have long played a central role in the insurance ecosystem by developing distribution channels, managing captive agents and brokers, and coordinating complementary service providers — a process that can be complex and costly to operate. But in a marketplace, the carrier is a participant, working alongside other organizations to provide a seamless, one-stop experience for customers.
Many carriers are building the foundation for this new role through their digital investments. The pandemic showed insurance carriers how important technology was in enabling the shift to remote work environments while staying connected with distributors and clients. In a recent survey, it was found that 95% were already accelerating or looking to speed up their digital transformation. Among the priorities for the investment they cited were ‘data analytics’ and ‘digital channels,’ two areas that are important for developing an insurance marketplace.
With advanced analytics, for example, insurers can reconcile, combine and analyze data from multiple sources to generate real-time insights. The goal is to speed up underwriting and improve customer experience.
Consumers can also benefit from a digital insurance marketplace. It can create greater awareness about their need for insurance protection and give them access to a wider range of products, including risk mitigation and asset-protection services that can be difficult to acquire today. Most of all, it can provide a vastly improved buying experience, with quote comparisons across carriers and a fast and simple purchase process. In this way, the insurance starts to look a lot like the other services consumers have become accustomed to buying online.
Consumers seem open to new types of insurance products and alternative ways to purchase them. It was found out that auto insurance consumers were very comfortable with traditional coverage options, they also wanted greater control and flexibility. For example, ‘invisible coverage,’ in which insurance is included as part of a car purchase or lease agreement, generated interest, mainly among younger consumers. Online insurance purchases have become popular too for these digital natives.
Brokers and independent agents, key players in the insurance industry, have much to gain from insurance marketplaces, too. They can access carrier appointments that previously were out of reach because of premium or volume requirements, opening a more robust pipeline of sales leads. Agents can use the marketplace to get access to a greater number of carriers. And they can combine products from different carriers to create a solution for their clients — a capability that is very difficult to find today. They can also access a range of digital tools that can improve customer relationship management and help their business flourish by streamlining processes, reducing quote-to-bind times, and speeding renewals.
Perhaps the most exciting aspect of an insurance marketplace is its ability to bring non-insurance participants into the value equation. These are companies that provide ancillary services to insurance buyers. But they can also be companies that want to access the marketplace to package an insurance policy with their product, such as an equipment manufacturer offering a service warranty or a travel company providing trip insurance.
The insurance marketplace can also support a wide variety of standalone companies offering data analytic services on insurance.
In fact, this aspect of the marketplace is much like a smartphone app store. Over time, there could be hundreds of insurance apps to address various services, all available to participants who find them useful. And like an app store, rapid customer feedback will produce updates with new features.
These compelling benefits for participants suggest the digital insurance marketplace is likely to grow in the years ahead. Indeed, investors have begun to commit capital to the sector, and several insurtechs are working hard to develop their offerings.
An insurance marketplace puts the customer at the center, with personalized products and services based on data-driven insights. Consumers today expect continuous innovation in many of the products and services they buy, and insurance is no exception.
Insurance carriers, brokers, and agents should consider how they can get involved with insurance marketplaces as part of their distribution and product development strategy. Those organizations that move quickly to participate in this new arena can capture the opportunity for growth in market share, revenue, and profitability. The future is happening fast, and you don’t want to be left behind.
Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.