Insurance Companies Should Embrace Their Roots in Technology. Here’s How We’re Doing It
The insurance industry has needed a serious overhaul for decades. When you look under the hood at an insurance company, you see it’s actually a technology firm — but, in most cases, a really inefficient and outdated one.
The work of assessing risk and providing home insurance is all done through software, yet traditional companies maintain huge workforces and expensive buildings they don’t need.
That’s why Kin has been able to successfully tackle this market that’s filled with age-old, well-established giants. Our nimble approach means we can seize the missed opportunities.
Kin CEO Sean Harper joined Kerry Lutz’s Financial Survival Network podcast to talk about how our tech-forward home insurance company is challenging the complacency in the industry and forcing the whole industry to move forward.
As Kerry says, “Change — while it might come slowly to an industry, inevitably it will come.”
In the interview, Sean touched on a few ways Kin is addressing some of the biggest pain points in the insurance industry. Highlights from the episode follow.
No More Intermediaries
The traditional way of buying insurance meant talking with an intermediary — an insurance agency — to understand your options and insurance needs. The cost of employing outside agents is extreme; it accounts for about half the cost of running an insurance company (excluding claims payouts).
On our website, you can run through coverage scenarios, learn about your options, and buy the insurance you need without an intermediary. It’s primarily self-service, which keeps costs lower because we don’t pay for agencies and all that overhead. On the consumer side, it’s a more efficient and more tailored process.
When’s the last time you visited an insurance agency? We’re guessing the answer is never. Customers rarely stop by those branches, yet they’re everywhere. There are actually more insurance buildings in most towns than fast-food restaurants. That’s a lot of waste for insurance companies.
When’s the last time you set foot in an insurance agency?
Efficient and Nimble Technology
The other thing you’ll notice if you pop into those insurance buildings is how insurance agents spend their time. Most of their work — that the company pays for — is spent wrestling with antiquated software and manually searching for data.
We know tons of data is available now directly from government sources and satellite imagery, so we’ve developed technology that can tap into that information. Instead of wasting employee time and energy, we use algorithms to learn everything we need to know about the risks of insuring a property — from exponentially more data points than an agent could collect manually.
Innovation in this industry is all about finding things that could be automated to reduce costs and improve the experience for consumers.
Unfortunately, the insurance industry — like a lot of financial services — is rooted in old ideas and slow to change. Most improvements to technology take months to achieve and end up being a Band-Aid on top of the tech that’s been around for decades.
Kin started from scratch with modern technology on purpose, so we can be much more nimble to changes in the industry and in the ways data is available.
Instead of wasting employee time and energy, we use algorithms to learn everything we need to know about the risks of insuring a property.
Passing on Private Jets
Bottom line: Insurance companies haven’t been great at finding efficiencies because they haven’t been incentivized to cut costs.
The leaders in the industry are so used to raking in money — and using it to buy private jets and other excesses — they lose sight of the cost side of things. When they take a closer look at expenses, they tend to overlook operational inefficiencies and focus instead on how to cut payouts on claims, shifting their costs to consumers.
Private jets just aren’t in the cards for us. Like a lot of privately held, investor-backed technology companies, we’re forced to be frugal. And our focus on efficiency means lower operational costs and a more profitable claims experience. These mean not only lower costs for us, but also for our customers.
This article is based on an episode of the Financial Survival Network podcast. Check out Sean’s full interview.