Not a good news for InsurTech industry as Vertafore’s latest survey states that customers are not ready to replace the traditional insurance with a digital one.
Vertafore, the leader in modern insurance technology, today released survey data that reveals consumers are not interested in completely replacing traditional insurance agent purchasing models with technology, despite recent hype around the growing InsurTech industry. Vertafore’s survey, which polled more than 1,200 consumers about insurance purchasing preferences and technology adoption, found only 23 percent would be comfortable sharing their personal data with an InsurTech startup in exchange for a cheaper rate. In addition to personal privacy topping the list as a concern for consumers, dealing with humans rather than technology was also cited as a preference when dealing with all forms of insurance. In fact, the majority of consumers (78%) would prefer to work with a real person when reporting an insurance claim versus submitting one online.
“Technology investment is absolutely crucial to the success of the insurance industry, however, it’s important to remember the vital role agents play in the process. When consumers are making decisions around protecting their most valuable assets, like their home, they want to know they have a trusted advisor for support and guidance when needed,” said Bruce Winterburn, VP of Industry Relations at Vertafore. “But the underlying trend this data really speaks to, is that even at the most basic consumer-level, fundamental change to the insurance industry will come through the agent, and not necessarily from new entrants relying solely on technology to disrupt or innovate.”
Today, many InsurTech companies are creating solutions that remove humans from the purchasing process, leaning on technologies like chatbots, artificial intelligence, machine learning and peer-to-peer models. However, survey data from Vertafore shows consumers may not be ready for these newer purchasing models.
- Artificial intelligence technologies are of particular concern for consumers, with nearly 60 percent indicating they worry these technologies could automatically deny them coverage that would otherwise be offered by a human agent.
- Most consumers (72%) also shared they would be uncomfortable purchasing insurance through a chatbot.
- Nearly half (49%) of millennials (ages 18-25), indicated a preference to purchase all forms of insurance through a human like an insurance agent.
- When it comes to peer-to-peer insurance, three out of four consumers don’t even understand the term and more than half (51%) would be uncomfortable purchasing insurance that way.
Despite this trepidation among consumers, global investors have continued to pump nearly $6 billion into the InsurTech industry over the past three years (CB Insights). “We’ve seen several InsurTech startups enter the market, claiming to simplify the process for consumers, only to find they are out of touch with their preferences,” said Larry Hagerty, SVP and head of regulation at Vertafore. “While innovation is great for the industry at large, it must not come at the price of consumer privacy and trust.”
Thriving in an industry as dynamic as insurance requires a balanced approach of creating meaningful and lasting relationships, and embracing technology that adapts to the changing marketplace. For more than 45 years, Vertafore has empowered the modern insurance agent with technology solutions to make their businesses successful, while mitigating compliance risk. Today, Vertafore serves more than 500,000 users across agencies, carriers, MGAs, MGUs, and state governments.
The Vertafore survey, which was conducted in November 2016, polled 1,294 U.S. residents, of which approximately 48 percent were males and 52 percent were females.