Five Ferris State students joined Dr. David A. Brown for the 2019 MAIA Convention at the Amway Grand Plaza in Grand Rapids, Michigan. Students attended sessions to learn about resolving insurance coverage and claim disputes, the future of “InsurTech,” and privacy issues. In addition, they participated in a networking happy hour, and heard from industry leaders on tax issues and innovation in the insurance industry. The convention concluded with a trade show exhibition featuring dozens of insurance carriers and service providers.
There was celebration in several corners of the insurance industry (particularly in the agency system) this past week as news broke that Google was pulling the plug on its insurance-shopping comparison site, Google Compare. Carriers are certainly open to all cost-effective distribution models for the insurance products that they sell, but there still exists an uneasiness with the online distribution model that emphasizes price as they key differentiation above all else. Commoditization of the insurance product and service is a race to the bottom, as the industry knows all too well. Independent agents, on the front lines of the industry, know this better than anyone. Which is probably why there was rejoicing among the independent agents I was hanging out with earlier this week at the MAIA convention when a speaker mentioned the Google Compare news.
But the story is not over. Online insurance distribution is not going away. CoverHound (one of Google’s partners) said that this may just be a temporary hiatus for Google Compare, allowing Google to re-tool and re-brand the online comparison and distribution service. CoverHound itself continues to offer insurance comparisons online. There is also comparison and purchase opportunities from the likes of PolicyGenius. In short, it may be welcome news to insurance agents that Google, with its billions in cash and technological deep bench, has exited the marketplace, but the game is not yet over. In fact, it’s still early in the first quarter.
Consider the birth of Lemonade as a peer-to-peer insurance carrier who coincidentally (or perhaps purposefully?) also made news this week with the hire of high-profile behavioral scientist, Dan Ariely. If you haven’t heard about Lemonade yet, think of it as the logical extension of the peer-to-peer networked economy that has given us Uber, Airbnb, and countless other industry earthquakes. Just as Uber totally disrupted the taxi market, and Airbnb has dented (if not disrupted) the hotel industry, Lemonade could have the same effect on insurance. Uber and Airbnb also upset the existing regulatory framework in their respective industries, and Lemonade might do the same to insurance although they seem to be moving more cautiously than their more brash peer-to-peer brethren. Lemonade recently announced reinsurance partners that include several industry stalwarts.
Can peer-to-peer insurance work? Let me put it this way: I’m not going to bet against it. Will it disrupt the insurance market? Absolutely. Is it the death knell of the independent insurance agent? No way. The insurance product is far more complex than taxi rides and overnight stays. I believe that there will always be a place for insurers and agents who provide real risk management services (personal and especially commercial), and win business by marketing more than just a commoditized price. Keep that in mind every time you sip your cool lemonade drink during the summer months ahead.
Earlier this week, it was my pleasure to attend the 2015 Michigan Association of Insurance Agents (MAIA) annual convention in Mt. Pleasant, Michigan. The accompanying photo captured Ferris students Jay Miller, Corey Bledsoe, and Cody Simons, along with yours truly, Dr. David Allen Brown in front of the Ferris State University booth in the exhibit hall.
The educational and experiential benefit for the students in attendance was very apparent, and all three students shared with me how valuable this conference was to them. They were able to network with many industry professionals (many of whom are eager to hire them upon graduation!), and also with fellow students from the Olivet College insurance and risk management program. The convention offered educational sessions on topics that included ethics, certificates of insurance, and the new insurance challenges posed by developing 21st century business models such as Airbnb and Uber.
For me personally, I enjoyed the opportunity to see many industry friends and colleagues again. The insurance industry is truly a relationship business, and it is never more apparent than when everyone gathers for conventions such as this one. The MAIA membership and its supporters who attend this convention are the best of the best, and I hope that students are inspired to devote themselves to this industry based on the fine people they met this week.