Long before cellphones, Starbucks and Twitter, there was insurance. You can look back to the advent of society and find some form of the concept. In 4000 BCE Babylon, contracts protected merchants when cargo was lost at sea. In ancient Rome, burial societies paid the funeral costs of their peers using funds from monthly dues. In the 1930s, the Social Security Act ushered in unemployment compensation and unprecedented retirement benefits.

Yet, despite its long and vibrant history, the insurance industry has remained largely unchanged over the years—at least until now. Digital disruption is here, and it’s altering the face of insurance as we know it. Moving forward, agents must manage heightened consumer demands, shifting definitions of risk, and the prospect of big data and tech to successfully navigate industry changes.

And these changes aren’t just an evolution. They’re a revolution.

The Age of Self-service and the Digital Transformation

Insurance has evolved far beyond what it used to be. One such change relates to the way customers find and purchase coverage. Today’s insurance buyers demand a technology-inspired experience that can be done almost entirely virtually, and it’s reshaping the insurance industry.

For personal lines policyholders, nontraditional, technology-based insurance companies offer customers on-demand, pay-as-you-go coverage options that simplify the underwriting process.

Author Don Bailey has over 30 years of experience in the insurance industry, working in various roles spanning from underwriter to producer to CEO. Bailey was the former Chairman and CEO of Willis Towers Watson North America, President of Allstate’s business-to-business portfolio of companies and the President of Global Sales at Marsh. Currently, he sits on the advisory board at insurance technology provider Zywave and is a partner at Bristlecone Partners LLC, a growth and human capital consultancy firm.

Bailey is the Guest Editor for a section of the July/August edition of Carrier Management and the author of the previously published article, “Psychic Leadership: Why We Need It in a Crisis.”

On the benefits side, clients and their employees want more transparency and self-service options when it comes to their health and ancillary benefits. Providing self-service portals for plan documents, claims submissions and online enrollment is no longer a way to differentiate yourself from competition. It’s a standard offering that clients expect. And these expectations are growing by the day.

Whether they work with an agent virtually or the process is entirely self-service, consumers demand an element of technology throughout their entire buyer’s journey. As digital channels in insurance continue to gain traction, agents must adapt in order to survive. This is especially true when you examine other seismic trends affecting today’s agencies, including a new definition of risk and the arrival of big data and innovative tech.

The Shifting Definition of Risk: Big Data, New Tech and the Sales Revolution

As innovation in the industry grows stronger, agencies are witnessing a fundamental shift in the very definition of risk.

Major insurance institutes like the International Risk Management Institute (IRMI) describe risk as “uncertainty arising from the possible occurrence of given events.” Using this definition, it’s best to think of risk as the probability of a cause and effect. How likely is it that a fire will break out and destroy a business? If a person gets into a car, what are the odds of an accident? As a person ages, will they be prone to more illnesses and need access to better health insurance?

This is traditional risk calculation boiled down to its most simplistic form, and it hasn’t had to change much over the years. That is until data and technology began to influence the insurance market.

Today, insurers have insight into risk at a micro level, thanks in part to the vast amount of information available at their fingertips. It’s no longer an inexact science, and underwriters can tell you how likely a workplace fire is based on the industry the policyholder operates in and the kinds of equipment they use. They can tell you the odds of an auto accident based on an individual’s location and driving record. They can even tell you what types of illnesses an individual is prone to based on demographics alone.

Insights of this kind change how we think of and calculate exposures. But this is just one piece of the pie, as the arrival of tech-based economies has further redefined risk for the modern age.

In 2019, the idea of a self-driving car extends beyond sci-fi films and Jetsons cartoons. Workplace automation and tech-based tools like applicant-tracking software, bot-driven help desk systems, automated communication systems and data analytics are making businesses more agile and futureproof.

With each and every advancement and new business model, the status quo is disrupted. As a result, the way agencies approach insuring property, organizations and employees needs to change. For proof, you need only look at the examples we just listed:

• Autonomous vehicles may improve driver safety to a degree, but they’re vulnerable to a plethora of cyber attacks—a risk that continues to dominate headlines and infiltrate numerous lines of coverage. And it’s not just cars. All Internet of Things devices are susceptible to attacks, and agents must remain flexible as new cyber and data exposures threaten policyholders year over year. According to a global survey by Accenture, security breaches increased by 67 percent between 2014 and 2019.

• As workplaces strive to offer more remote work options and integrate more technology into their operations, new cyber exposures will appear across multiple lines of insurance. In the benefits space, employers now need to worry about protecting not only their company’s proprietary data but also employees’ confidential data. Moreover, providers and carriers must prioritize safeguarding electronic protected health information to avoid a catastrophic data breach.

• In the commercial insurance market, carriers created standalone cyber polices as a way to set clear distinctions from other types of coverage. However, a large part of the market is now focusing on adding cyber coverage to property, general liability and crime policies in order to address potential gaps. Differences in these types of policies can be confusing to your clients, and they will need your expertise more than ever to help them understand their risks and safeguard their business.

These are just a handful of changes facing carriers, agents and the clients they serve. Simply put, traditional risk calculation models—and the agents who use them—must evolve to keep pace.

Thankfully, in the same way technology has altered the risk landscape, it has afforded insurers more growth opportunities. Telemetrics, machine learning and data analytics have provided greater insight into the risks that affect every industry and line of coverage. Data is so granular, in fact, that it can influence underwriting, rating, pricing, forms, marketing and claims handling. Predictive analytics allow insurers to more accurately forecast future losses, which allows them to recommend tailored risk-management advice and solidify themselves as a thought leader in the industries they serve.

These technological changes and the opportunities they provide are a part of what I like to call the Sales Revolution. The Sales Revolution is all about leveraging new ideas and technology to sell and service your prospects and clients more effectively and efficiently. It’s about marrying great people with innovative technology—backed by an understanding of the disruptive forces affecting your business, the competition you’re up against, the ways you can differentiate, the risks you face on your journey to success, and the actions you must take to survive and thrive the disruptions.

In the Sales Revolution, those that view technology as a threat will not be able to keep up with the industry’s changes. Those that view technology as an opportunity will be able to modernize and grow their business while navigating the industry’s profound changes and challenging the competition.

Those that choose to “unfreeze” and embrace change and technology to its full potential are the ones that are going to come out on top. The Sales Revolution is here to stay. Agencies can choose to ignore it, anchoring themselves to industry ideals of the past. Or, they can embrace change and stay in play.

Which will you choose?