Disrupting an industry that has been doing things the same way for a generation takes time. Take it from one major insurance disruptor – compare.com.

The online insurance comparison marketplace launched in the U.S. in 2013 and now operates in all states except Alaska with more than 70 carriers on its platform. Its entrance into the market was a wake-up call to an industry that had been mostly ignoring consumers who want to conduct insurance transactions online.
After four years, compare.com is still finding its way. It has yet to make a profit, although it’s losing less – $21.2 million (16.2 GBP) in 2016 compared to $28 million (21.5 GBP) in 2015, according to the 2016 annual results of its majority owner, U.K.-based Admiral Group. But it has grown its business and garnered increased interest from carriers — it is now working with more than half the top 25 personal lines carriers.
“It’s like any disrupter. It’s slow to start with, and then you build momentum. You’re always looking for that hockey stick moment. We don’t know if we’re in the hockey stick moment or not, but we’re certainly very excited about 2017 and the results we’ve gotten, the number of carriers that are on board…it’s been a good ride,” said CEO Andrew Rose.

Rose said the principle of the company is simple – consumers want choice. He believes the tide is finally turning on how they shop for insurance.

“If you come back to that as the fundamental premise, do you want to walk into your grocery store and be offered one option for soup? Do you want one option for fruit? No, you want lots of options. Do you want a simple way to shop for it? That’s what compare.com does,” he said.

Admiral Group said it is committed to growing the compare.com model, calling it a “developing business” in its 2016 annual report and noting that the business is “seeking to rewrite the rules of insurance customer engagement.”

Admiral has five insurance and four price comparison operations in five countries, with the Confused.com auto insurance site of the U.K. being its most successful. Its operations in Spain and France have also been profitable. The combined profit from all of Admiral’s price comparison businesses in 2016, excluding minority interest shares, was $3.54 million (2.7 million BP). Confused.com’s profit increased 29 percent last year. The company’s numerous price comparison platforms put out 21.5 million quotes in 2016, up from 19.5 million in 2015.

“Our combined price comparison operations made a small profit, supported by encouraging progress by Confused as it seeks to establish a differentiated market positioning as ‘No. 1 for car savings’,” Admiral said in its 2016 annual report.

Success doesn’t come overnight for startups in insurance, according to Rose.

“You have to be accepting of the fact that this is going to take a while…That’s because the industry, it moves more slowly. They haven’t been forced to change. They’re going to change at the pace that is acceptable for them,” he said.

That openness to change has begun, however. Rose said he has noticed a significant shift in the attitude of carriers towards the compare.com platform compared to when the site first started back in 2012 and 2013.

He said carriers want to see results before they will get on board.

“It’s difficult for lots of insurance companies to make a big plunge with a startup when it’s still a concept. You have to be brave in many cases. Go out there and prove it with a couple of carriers. Put your money where your mouth is as a startup, and prove that it works,” he said.

Rose said the fact that compare.com is still standing, has increased its volume, and has been persistent in forming partnerships with carriers that weren’t interested years earlier prove its viability.

“The fact that we keep knocking on some of these doors, we’ve got more and more of the carriers, and our list of carriers relying on our panel went from a group that you could count on one hand to a group that could fill a room, has changed the dynamic,” he said.

Rose said that carriers have been motivated by seeing their competitors on the site as well, and compare now offers auto, home, condo and renters coverage on the one platform so “we have a product that’s more palatable to some of the carriers that want all of those products together in one policy.”

Start-up Challenges in the Insurance World

Rose said it can be frustrating to be a startup in the insurance space, a topic he addressed recently on a panel with the CEO’s of other insurtech and industry disruptors – Slice Lab, Snapsheet, and Life360 – at an InsuranceX technology conference near Silicon Valley.

The group talked to a room full of technology startups on how startups can better position themselves to work with insurance companies and get inside the insurance industry’s walls.

Rose told the audience that there is a huge opportunity for insurance market disruption, but that doesn’t mean it’s easy to break through.

“[Insurance companies] have not changed in decades – insurance for them hasn’t changed in decades,” he told attendees. “When you come in with ideas that fundamentally challenge how they do business it gets you out of bed in the morning, but it’s also one of the big challenges.”

The success that comes from tackling those challenges with the industry may look different than what has been historically defined as success. Insurtech and autonomous vehicles will “fundamentally change insurance,” Rose said, but carriers that evolve and find ways to meet the new needs of consumers will be the ones that survive.

Rose said he has seen firsthand how insurtech and the industry can work together.

“I hear a variety of folks saying, ‘insurance companies are going to go away.’ No, they’re not. I fundamentally disagree with that,” he said. “You’re going to see insurtech fundamentally change insurers, but the insurers are still going to be there.”

The agents will still be there too, he said. While he expects the role of the agent is changing and the number of agents will be reduced, more complex risks will need an agent to be involved.

“The more transactional an item is, the more likely you’re going to end up having an agent not involved…The agents that are adding very little value in the process in whatever capacity that may be are going to see themselves challenged to continue to be part of the insurance equation. Those that offer value will stick around,” he said.

Compare.com itself offers customers the ability to connect with an agent to discuss or complete their transaction. Rose said they designed the business model to accommodate whatever the insurance company wanted to do around distribution, but consumers and carriers are dictating what they want the agent to do, “that’s what’s been changing over time.”

The analogy that people use comparing insurance agents to travel agents, whose numbers have dramatically declined, he said is not relevant to the insurance industry.

“Travel’s a simple purchase. You know exactly what you’re going to get,” he said. “Insurance is a promise, it’s a product. It is the only product that I’m aware of that both the buyer and seller hope it never gets used. Because of that, you don’t want to mess it up. It’s something that needs to be there in the case of something really bad is going on. The more complex it gets, the more you’ll see an agent involved. [But] how the agent is involved could be very different.”

The way people interact with agents is changing.

“The face-to-face interactions are diminishing. That’s why I wouldn’t invest in a brick-and-mortar mainstream location right now,” Rose said.

Still, Rose says the fundamental foundations of insurance aren’t changing– even if the dynamics around insurance interactions are.

He added the insurance companies needs to look at the insurtechs that come their way and evaluate which ones make sense for them.

“That’s where the insurance companies need to be thoughtful about what they invest their time in. What’s going to have the biggest impact?” he said.

Insurers can’t implement every piece of technology they see because it’s not economically feasible but, he said, they should be open to having the conversations with insurtech companies and startups that offer a new way of doing things.

“There are too many insurance companies that say, ‘I’ll wait ’til I understand exactly what’s going on before I’ll make any moves.’ Many of them made that decision around direct. Many of them made that decision around telematics a long time ago,” he said. “Sitting on the sidelines of this thing, and assuming that 10 years from now, five years from now, 20 years from now, everything’s going to be the same, you will likely be out of business, having been purchased by somebody because your business results deteriorated faster than your competitors.”