On Second Thought, Insurtech Next Insurance Thinks Agents Have a Role After All
Next Insurance has begun formally marketing a portal designed to help independent agents quickly quote and sell its policies.
Next said the system, dubbed “Next for Agents,” had been in beta testing since April 2019, though more than 3,000 agents are already using the platform, including some from BTIS, London Underwriters and First Connect Insurance.
The insurtech startup focuses on commercial insurance for smaller businessowners, and its policies zero in on areas including general liability, professional liability and commercial auto insurance. As envisioned, independent agents can quickly quote and sell those policies now either through Next for Agents or through other independent agent platforms.
Next CEO Guy Goldstein has previously argued that agents were no longer a necessary part of the equation if the buying process became automated, particularly for commercial lines.
“If computers can give you exactly what you need, why use an agent?,” Goldstein said back in late 2017.
Earlier in 2017, participating in Carrier Management’s Future of Insurance Series, Goldstein predicted a future without agents, thanks to insurtech advances in the digital buying process.
“There is little doubt that the entire insurance process will be direct and online in the future. There will no longer be the need for a mediator (in this case, an agent) between the insurance provider and the customer, as this online system will enable the customer to buy, maintain and handle claims all in one place,” Goldstein said at the time.
He noted then that “the insurance system today is built on agents, actuaries and underwriters, who will be replaced with simple-to-use online interfaces, algorithms and artificial intelligence.”
This would happen, he predicted, because “with less personnel required and new technologies introduced, the costs of insurance will dramatically decrease, freeing up more of the insurance premiums to pay claims as opposed to serve the internal needs of the insurer.”
Sofya Pogreb, Next Insurance’s chief operating officer, said that the insurer still believes it needs to automate the insurance process and simplify things for its U.S. small business target clients, and notes that agents aren’t part of that mission statement. That said, Pogreb accepts that some clients still like their independent agent in the mix.
“We do hear from small business owners who prefer to work with an independent agent – in most cases, it’s a preexisting relationship that the customer appreciates and finds valuable,” Pogreb told Carrier Management via email. “We do not want to prevent these customers and the agents who serve them from accessing our product (in fact, we’ve seen agents purchasing coverage for their customers on our platform “incognito” in the past several years, without making any commission on it – the product and service is just that good!).”
Pogreb said the company sees its platform for agents as also improving on the status quo, offering them “a highly attractive alternative to the options you have today – our coverage is robust and tailored, we are typically significantly better priced, the purchase process is an order of magnitude simpler and faster, and our servicing capabilities are best-in-class, both in terms of speed and quality.”
Eventuallly, Pogreb said, the expectation is that small businesses will increasingly shift over to buying direct.
“This is an evolution we have observed in a number of other financial services verticals and, in our opinion, is only a matter of time. However, some businesses will continue to work through agents as they value the relationship and the in-person interaction – and we want what we’ve built to benefit those entrepreneurs as well,” Pogreb added.
How It Works
Next For Agents is designed to help agents approve and sell more policies by obtaining decisions instantly on all quotes. It also activates policies in minutes, and eliminates the need for paperwork by keeping the whole process online. Next said it also helps reduce operating costs by taking responsibility for servicing customers, and boosts client satisfaction by providing “simple, affordable and tailored coverage” to its small business clients.
Next Insurance, which started out as an MGA, sells its proprietary policies only, either on Next carrier paper or State National paper, depending in which state the policy is sold, a spokesperson explained to Carrier Management.
State National is a fronting company for the Next program and doesn’t take on any of the balance sheet risk connected with these policies or is involved in the underwriting, according to the spokesperson. Next proprietary policies sold on State National are 100 percent reinsured by Munich Re.
Source: Next Insurance