The rise of subscription services and embedded insurance points towards changing distribution models for the insurance sector. However, intermediaries still dominate the sector, and commercial lines can’t be bought with a single click.

“Embedded insurance has been the hottest topic at ITC, although there are different definitions,” said Sebastien Bert, Head of US Strategic Partnerships, Swiss Re. “More companies are going to subscription models, and what’s more subscription than insurance?”

Many retailers enjoy the valuable advantage of customer engagement and usage data, he suggested – and want to own more of the insurance stack. “We predict many companies will become insurers, getting beyond distribution, taking on more risk and more of the operations involved,” Bert continued.

“The death of the agent is largely exaggerated”

“There are ten times as many insurance agents in the US as travel agents,” said Bert. He also noted that 90% of agents are owned by their principal, whose average age is 55 – making demographics alone a driver of change as principals approach retirement.

“The death of the agent is largely exaggerated,” cautioned Jim Dwane, CEO, bolt US. “They’ll be around long after everyone in this room, playing an important role in transactions.”

Opportunities for commercial and specialty lines

Personal lines are increasingly saturated with insuretech, but commercial lines offer lucrative insuretech opportunities, suggested Ryan Cole, Head of Everest Re’s eIQ Innovation Team.

“When I look to the future, consumer products and personal lines are still going to be the lion’s share,” said Cole. “But – and it’s a big but – there’s a huge opportunity for commercial and specialty lines to leverage underwriting data in a totally unique way.”

However, trusted advisory by brokers will remain valuable to the commercial insurance buying process, speakers agreed. “We’re still building what embedded is and what it means to us; right now, it’s an amazing lead source for a lot of insurance and different companies,” said Nicole Farley, Vice President of Carrier and Enterprise Relationships, Bold Penguin.

She underlined flexibility as core to future products, while distribution strategies will aim to increase automation – but leave room for intermediaries. “In the commercial space, the agent or broker isn’t going away,” Farley said. “We won’t lose the need for product expertise, but it’s going to become more mobile, online, with fewer calls and less face-to-face.”

The complexity of commercial lines products will determine its value chain, stressed Matheus Riolfi, CEO & Co-Founder of Tint. “Commercial lines are going to be complicated and harder to make it a feature of something else,” Riofli said. “The other extremes are guarantees and short-tail damage products, where there is no need for a broker and agent, that we will see different shapes and forms for sure.”

Bert warned that mixing new products with new distribution simultaneously is a recipe for failure, while new in insurance usually means a high investment bar. “One of the things I recommend not to do is to have new distribution and new products,” he said. “Who’s making the investment? From a macro standpoint, how do we enable this, working with partners who can execute?”

The MGA as a low-barrier entry route

Dwane emphasized the managing general agent (MGA) model as a low-barrier entry route embraced by many data-led insuretech startups and retailers embedding insurance. “The MGA represents the fastest, most effective way to build protection solutions; as a technology provider, that’s an enabling capability,” he said.

Flexibility will be needed in combining datasets from embedded insurance with traditional underwriting data, said Cole. Bringing together data will not be straightforward for specialty products, he warned. “The mentality of a quick win in embedded insurance, a perfect digital journey, structured data ready to go, is not how it works with more complicated journeys,” Cole added.