Good to Great in the Insurance industry:

I’ve had some great discussions with some very smart and passionate people over the last few weeks, really interesting dialogue and thoughts going around the industry (many more after my post Lemonade insurance: is it for me?) which is exciting to experience.  I encourage all readers to reach out via email or comment below.  

The topic of Insurtech is quite polarizing and has people falling into a few different camps.

  • A majority of the folks I have discussed with (where I started), are cautiously optimistic.  Excited about the new technology but concerned about the disruption, as historically the industry has been a “people business” or “relationship business”
  • Some people are in the camp of Insurtech is taking over a $1T industry, they can be identified by panic, the “insurance world is coming to an end”,  “your wrong”, “you don’t know anything about insurance”, etc.
  • Then there are the patient, disciplined, wait and see leaders…who I admire and the camp I am moving into.   These are those leaders who may set their organizations apart to go from Good to Great in the Insurance industry.

As you can imagine, with this much on the line people and people’s career passion it is understandable.

Good to Great Leadership

If you haven’t read the book, Good to Great: Why Some Companies Make the Leap and Others Don’t by Jim Collins – I suggest you read it.  But in the book he has a great chapter on Technology Accelerators and the impact on companies.  The example he uses about Walgreens and during the late 1999-2000 period (bubble) is a great example of patience and great leadership.

A quick summary from GtG: was introduced and IPO – people were predicting “new technology will change everything”, “the internet is going to completely revolutionize this business”, “build market share – no matter how expensive – and you win”.  The idea of building a great company was lost.  (If your not familiar with the mania of Dot com bubble- research elsewhere.)  At the high point, issued a challenge to Wallgreens.  What was Wallgreens response? They slowly began experimenting with a website, then they began to find ways to tie the Internet directly to inventory and distribution models, then finally bet big launching an internet site as sophisticated as more pure dot-com sites.   The results speak for themselves about Wallgreens and where they are now.

Again, read the book, but I think this has important takeaways for what is occurring in the insurance industry today.  The business model of (Selling prescription drugs 100% online) somehow did not have the success projected and the incumbent was able to prosper all the same.

Does this sounds similar to some of the new business models of today with a different product?

These companies were the “Uber of drugstores” before that analogy meant anything or Uber was an adjective/noun/verb…Anyone tired of hearing about the “Uber of Insurance”?   Is it possible that incumbents become the Uber of Insurance thanks to technology?  

Zero to One

If you haven’t read Zero to One, by Peter Theil –  I also recommend it.

There are many more takeaways then I will address here, but this is the most interesting to this discussion.  One of our readers even commented the same on LinkedIn.

To summarize: Computers are complements for humans, not substitutes.  The most valuable businesses of the next few decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.

Which business models in Insurtech violate this idea?  

Or is the compliment to consumers and empowerment eliminating the human on the other end?  

Takeaways from these books:

Technology induced change is nothing new.  The steamboat, the car, railroads, electricity, radio, personal computer, etc.  These technologies act as tools to improve productivity, and so will Insurtech.  See article about The future of insurance agents and brokers.

Great companies find the way to adapt and endure.  But they act with patience, discipline, and execute once the path is clear.  Technological sophistication will be the way Insurance companies differentiate.  Not the tech but the selection of the appropriate technologies.

Customers will obviously have a choice to decide what to do- which is great news. Smart companies will indeed make the appropriate changes to lower their costs (expense ratio) and others who don’t will be disrupted. Lowering the costs to consumers will occur and that is a great thing.

The industry mania will subside as people start to see how difficult it is to move customers on a massive scale, especially when incumbents take the appropriate steps to implement new proven technology.

There is a long list of companies that were technology leaders but failed to prevail in the end as great companies. Technology will not be the driving force that turns a good enterprise into a great one, nor by itself prevent failing companies from dying. 


The thing I have noticed about predictions (much like opinions): everyone can have one, they are easy to craft, much easier to rip apart someone else’s prediction, but accountability for predictions is something good forecasters will come to love.  Especially Good to Great Insurance companies will come to love.

It will be borne by Underwriting results and borne by those who had the patience to invest in the right technologies.

I welcome your comments, thoughts, and predictions below.  

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Arnold Smith

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