COVU is on a mission to make insurance advice and risk management better and more accessible for everyone.
COVU is on a mission to make insurance advice and risk management better and more accessible for everyone.
Insurance was started by communities to help one another. If a community member suffered a loss, the entire community would come together to help and support them. Insurance is about the pooling of risk to take advantage of diversification and to protect people against losses beyond what they can individually afford. So when we talk about the future, it’s important to go back to the roots of why insurance exists. Insurance is as old as time, it made sense back then, still makes sense today, and will make sense in the future. While we don’t imagine the core concept needs to be disrupted, we do believe it is time for insurance to be reimagined for this century.
Insurance hasn’t evolved much from its core concept. We believe the future is about managing the risk of individuals as opposed to just insurance, and refocusing on what’s most important: The People.
Insurance is a $6T market. US Insurance is a $1.2T industry. $620B of that is property and casualty. 90% of all insurance sales in the US are through the agency channel, and the majority are independent. 82% of the 36,000 independent P/C agencies in the US are small to mid-sized, which shows how fragmented the market is. Many carriers are doubling down on the independent agency model because of their ownership over the current distribution, their expertise and trust for guiding the customers in making complex insurance decisions, and their local community access. They are expected to remain a dominant part of the distribution for the foreseeable future. An average agency has an 85% retention rate.
Even for the most commoditized lines, such as personal auto insurance, 80% of people who start the research online or fill out an application, buy after talking to a person. Insurance is complex, and the personalized recommendation from a live person is a critical component in the purchase journey.
To truly reimagine insurance, we need to start with accessing the end customers, where they are, and get involved in the customer journeys. Insurance is all about distribution, yet there are many issues with how it is done today. We believe to truly impact the lives of people and help them manage their risk smarter, we should first aggregate the current distribution and modernize agencies. Starting there is the best entry point to going deeper in the insurance value chain and modernizing the entire experience of customers at a large scale.
The best way to work with agencies is not to acquire them but to partner with them through providing strong value. Acquisition-only methods shrink the market size, are capital intensive, and most importantly remove the agent who is key to the relationship with the customer. The majority of the agency market wants to stay and grow their book of business.
The majority of independent agents feel that they are struggling with back-office and client servicing instead of focusing on growth. They are also worried about the new market dynamics and staying relevant in the future. Agencies typically spend around 40% of their revenue and 70% of their time on back-office.
They also understand the importance of evolving. 93% of agents agree that insurance customer expectations are evolving, and they will have to adapt. Many worry that newer tech players or larger brokerages will disrupt them in the long run. However, as small business owners, they struggle to stay afloat and maintain the status quo. They can’t afford the time and resources to modernize and grow independently.
COVID has also accelerated their issues around servicing their existing clients. There’s a massive talent shortage, added payroll costs are squeezing their margins. There’s also new challenges with managing staff and interacting with customers remotely. However, the majority also agree that COVID has also created an opportunity where they don’t need an office anymore and can move most of their operations and interactions online.
Overall, the majority of agencies want to focus on predominantly:
- Prospecting and selling
- Advising and building relationships
- Supervising their book’s profitability and performance
And they do not want to spend a lot of time on:
- Back-office and admin work
- Client servicing
- Selecting technology vendors to work with and integrating those
- Hiring and managing staff
- Maintaining their systems
By providing a digital end-to-end platform we can help them eliminate the back-office, save time and money, modernize the agency, and accelerate their growth. COVU’s package includes an AI recommendation engine, back-office RPA, customer interface for self-servicing, omnichannel communication, data pre-fill, business intelligence dashboard, market access, and much more.
There are many successful examples of this playbook in other markets and our team has many years of experience successfully operating and scaling them. Our aim is to bring this model to the US insurance agency market.
