Moore's Law's Impact on Insurance Agencies

The tremendous computing power that will be available to virtually everyone on the planet in the next 5 to 10 years has profound implications for how we, as small insurance agents, conduct business.  These aren't all the things that will happen but they are some of them:

- Virtual Reality and Augmented Reality.  Augmented Reality is increasing becoming common place where reality is combined with computers and enhanced. Virtual reality, where people interact, in real time in a computer generated world will become common place.  This means that agents will be able to build communities of customers all over the country, and perhaps the world, easily.  Customer's demands for 24/7 service and availability will be the de facto standard but online robotics will make taking care of people easy.  Agents that adapt to this reality and are first to market will win big.  Computer developers will begin to offer tools for this in the next few years.

One corollary which I have been talking about for the last couple of years is that 8 to 5 Monday through Friday business models are dead.  Anyone sticking to that is a dead man walking and just hasn't fallen over yet.

- Big Data will be easy to access for small business.  Right now the small agent can't use sophisticated data analytics to slice and dice data to find the right customers for his or her agency.  In fact huge insurance companies have fairly limited capabilities in this regard.  But within 5 years you will have the tools to understand prospects in a way never before believable.  This capability will be incredibly cheap.  Agent's will have the ability to market across the country, or even the world, to increasingly more narrowly defined target markets.

- Human resource costs and other fixed costs will plummet and become variable expenses.  You will increasingly be able to hire employees only when needed and house them anywhere.  Services you now pay for on a fixed basis will become variable.  For example ten years ago the costs for starting up a software tech company averaged $10 million dollars.  Today it costs just $5,000.  These transformative cost changes will be available to every business.  Survivors will adopt them as rapidly as possible.  Insurance agents will have to because the 100 year old compensation model is getting ready to radically change.

- Compensation of agents is going to fall through the floor.  Eight per cent commission on auto insurance is just the beginning.   Deaths by auto have fallen to just about insignificant but will drop to virtually zero, and so will property damage, as cars become self driving.  Have you been to a new car showroom lately?  The beginnings of this are already being sold.  Driverless cars, and the insurance decreases that come with it are around the corner.  Also, as insurance companies master multi channel distribution agent's commissions will fall to the cost level of other means of selling.  Commissions will be a fraction of what they are today.  So, costs agents have in their business model must change too.

More next time...

I wrote the other day about courage and its role in starting and operating a business.  I mentioned that what comes first is vision and that vision is what sustains courage.

Another thing we were discussing at Strategic Coach, which I think is worth passing along, is the roles of commitment and capability in the life of the entrepreneur.

If your business began with a vision of a bigger and better future it took courage to commit to moving forward.  When you started did you wonder how you would meet all the challenges you couldn't foresee but knew lay in front of you?  But you went ahead anyway.  That took guts.

It also took commitment.  Commitment means to "decide" and the Latin root of the word is interesting.  The root is "cide" and the same root is in homicide, fratricide, suicide etc.  See, to "decide" (commit) means to kill all other alternatives according to Lee Brawer.  This has a byproduct for another day: focus.

Anyway, if you make a commitment to a vision where you know you don't have the current capability to achieve the vision you are forced, of necessity to grow.  So, growth in capability requires a commitment to a vision greater than where you are today.

As you move along in the life of your business I encourage you to continually set new and higher goals for yourself.  This commitment to a bigger vision will require, and create, courage.  Just as importantly it will help you develop capabilities you never dreamed you would have.