It seems as though every other article I read, webinar advertised, and sessions I see listed on conference agendas is about technology. You would think the industry had been asleep for decades and suddenly woke up in the year 2015 to an unfamiliar world of technology.
Technology is being accused of everything from simple profit erosion to the industry equivalent of Armageddon. Wherever you are along that spectrum, I have some news for you: it’s not about the technology, it’s much, MUCH bigger.
The technology and technology companies (yes, I mean Zenefits) have been hailed as innovative. And, in many ways, if it were as simple as innovation, your job would be relatively easy: simply copy the “innovator.” But it isn’t that simple. You see, there has been no real innovation. Versions of the technology we are seeing have been around for decades, and the play of “I’ll give it to you for free if you make me your broker” is the oldest play in the playbook.
No, it’s about something much scarier than innovation; it’s about a complete disruption of the industry. And, the cause of the disruption is about something bigger than technology. In fact, the technology disruption wouldn’t even be possible if it weren’t for the ACA. And, believe it or not, the disruption is even bigger than the ACA. The ACA has simply pulled back the curtain and exposed the vulnerabilities of an industry caught napping. It has set the disruption dominoes in motion, dominoes large enough to take out the very foundation of the industry.
Of course, if you’re aware of the threats the disruption dominoes pose, you still have time to move that part of your business out of their way.
- There has been a DISRUPTION to the very rhythm of doing business in this industry. It used to be, prior to ACA, that there was a consistent rhythm to doing business. Sure, there were gentle ebbs and flows, but the activities of selling new business and renewing existing business was somewhat reasonably distributed throughout the year.
Of course, now we see agencies completely focused on renewing business in the fourth quarter. Unfortunately, they also spend too much of third quarter in preparation and too much of first quarter in recovery. The result is that the selling season is now dangerously short, and it is much more difficult to restart the selling momentum than it was to maintain it in a pre-ACA world.
- There has been a DISRUPTION to revenue streams. Way too many agencies depend on the carriers’ commissions and bonuses as their sole source of revenue. With MLR, the revenue stream is slowing to a trickle.
- There has been a DISRUPTION to the distribution of product. Between Exchanges and carriers being more selective about who they allow to sell on their behalf, many have been cut off from the sole revenue generating deliverable they have to offer clients.
- Now face the obvious: when your revenue stream has been disrupted and your product has been disrupted, DISRUPTION to your entire business model becomes inevitable. In order to avoid the wrath of the dominoes, most agencies need to completely reinvent the business model under which they will operate moving forward.
Now, back to a review of that technology disruption. The disruption brought by Zenefits wouldn’t even be possible if it weren’t for the ACA. And versions of the technology solution they are offering have been around for decades with little to no employer demand. It is only with the complexities of compliance/reporting brought by ACA that demand has surfaced.
Whether you resentfully respect them or hate them (or both), you have to give Zenefits credit. They are effectively exploiting a new pain point being felt by almost every employer out there. They are providing painfully clear evidence that employers WILL buy more from you than insurance product. As you’re well aware, they are leading with a technology product and using the insurance as nothing more than a method of financing the transaction.
However, as disruptive as they have been using a technology solution in the insurance industry, that pales in comparison to the real disruption they have introduced. Their real disruption is an aggressive marketing and sales machine the likes of which may have never before been seen by this industry.
The lesson for an industry that has been so rudely awoken by a bucket of ice water to the face is simple. Tear apart your old “we sell product” model and build it back with a “we provide advice and deliver results” model.
Oh, and you better become an aggressive marketing and sales machine yourself. We have woken up in a world that will devour the timid. This ain’t your father’s “we provide great service” industry any more.
Photo by Lee Cannon.