A Fresh Coat of Paint Won't Fix Insurance.

When we announced Quilt last summer, I wrote a piece called Insurance Is Broken that outlined the three biggest problems with the way insurance currently works. In short, they are…

Most insurance is sold over the phone. But who still talks on the phone?
Insurance is way too complicated, and way too confusing. That’s why agents are needed to walk people through the complex choices and jargon.
Customer experience isn’t a priority, which is why pretty much no one loves insurance.
<strong><em>Quilts Blair Baldwin<em><strong>

We’re not the only ones to notice. In the last few years, there’s been an explosion of new companies trying to “disrupt” or “innovate” the insurance industry, with $1.7 billion in venture capital raised by insurtech startups last year alone.

Most of them are focused on the first and third points – i.e. improving the customer experience with a slick UX and a mobile-first approach. We agree about insurance desperately needing a better user experience, but the real problem goes much deeper. The underlying insurance products also need to be changed, and that’s a tricky, expensive, and time-consuming endeavor that requires the work of regulators, lawyers, compliance people, and a host of others in the ecosystem.

Early in April, I went directly from the speaking at the OnRamp Insurance Conference in Chicago, billed as the “leading conference for insurance innovation,” to the National Association of Insurance Commissioners national meeting in Denver. As you’d expect, the OnRamp crowd talks a lot about innovation, but it’s the regulators who enable it. The thing that struck me most about the back-to-back OnRamp/NAIC conference lineup was how few people were at both events. It speaks volumes about the disconnect between the desire to innovate and what it actually takes to make it happen.

Agency Checklists, MA Insurance News, Mass. Insurance News — <strong><em>Blair Baldwin at the 2017 OnRamp Conference Photo courtesy of <a href=httpswwwonrampinsuranceconferencecom>OnRamp Insurance Conference<a><em><strong>

Quilt’s approach to innovation starts with research into our target audience – people in their 20s and 30s buying their first insurance products. We surveyed thousands of people to better understand the risks they face, what they want to protect, and how much they expect it to cost. But deep insight and a conceptual ‘product’ isn’t enough – you need to draft new form filings, conduct actuarial studies, and prove to the regulators in every state you do business that your innovative new product is sound and viable. The process isn’t glamorous, and it’s not fast, but it is necessary if your goal is to do more than make insurance look pretty. Instead of putting lipstick on a pig, you have to roll up your sleeves and make some sausage.

We’re not the only startup going down this path. In fact, it’s the same approach that some of the startups we admire most are taking, such as Trov, Lemonade, and Slice. We believe there will be multiple winners in the race to modernize the industry, and a much larger number who fizzle out along the way. It’s too early to say which startups will win the battle for insurance innovation, but my bet is on those willing to address regulators and make the case for change.