- Where Insurance & Technology Meet

Disruption: 50 Years On

Disruption is very much in vogue as a target  for new technology.  But disruption is not a recent development.  As a fully invested boomer, I have been thinking about the 50th anniversary of 1967 – a year of fundamental disruption.  Two events stand out in my mind, the latter relating directly to insurance and the importance of InsurTech.

Summer of Love

The common memory of this time is of gentle folks who eschewed traditional employment and social activities.  These ‘hippies’ preferred to wear flowers, dance in parks, and indulge in ‘soft’ drugs.

The reality was that the Vietnam War (or, as the Vietnamese called it, the ‘American War’) was growing in size and intensity.  The draft was in force in the US and young men could be forgiven if they referred to themselves as ‘cannon fodder.’

San Francisco was ground zero, and approximately 100,0o0 hippies found their way to the city.   They were not welcomed by the majority of citizens.  Police and politicians tried to encourage people to to come and, if they had arrived, to turn around and go home.

That strategy failed. Music was everywhere.  And drugs too.  But the overarching theme was hope that the positive vibes would spread and create a new era,

At the end of the summer, visitors left: workers went back to work, students went back to school,

In Buena Vista Park, there  was a ‘funeral’, commemorating the Death of the Hippie.  Wikipedia quoted Mary Kasper – the funeral organizer – who explained the intended message:

“We wanted to signal that this was the end of it, to stay where you are, bring the revolution to where you live and don’t come here because it’s over and done with.”

This was a project and it concluded.  While peace and love hasn’t overrun the world yet, the Summer of Love set a benchmark.

Agent/Broker- Carrier Interface 

In 1967, The National Association of Insurance Agents (the predecessor of the Independent Insurance Agents and Brokers of America or IIABA) commissioned Stanford Research Institute (SRI) to study the use of technology.  Leadership agents were concerned about their future, given:

  • Increasing market share of direct writing companies,
  • Mass merchandising experiments by carriers,  and
  • Increasing control by large carriers.

The SRI report, Planning for the Future of the National Association of Insurance Agents provided “guidelines for association actions that would help assure a continuing future for its members as an integral part of the P&C insurance industry.”

And Time Passed… 

Unlike the Summer of Love, there was no completion date.  The initial actions taken as a result of the study were addressed over the next 10 years, and included:

  • Standardize paper forms and electronic standards (ACORD)
  • More reports recommending more committees which would develop a plan for electronic connection.

In 1983 (16 years after the first SRI report) a not-for-profit organization – Insurance Value Added Network Services (IVANS) – was opened for business.

Time passed. ACORD was well on its way to producing standards for electronic communication.   IVANS was connecting insurers to agents for non-standard transactions (an interim step).

The problem – in spite of all best efforts – was the lack of any meaningful standards based implementation after 23 years.

Credibility was plateauing and enthusiasm had wained.  The agent associations turned to Perot Systems.

After reviewing the history and the spend (between $570 and $850 million per year), Perot developed 4 options and recommended the development of yet anther entity, an Agency Information Systems Facility to be run by the Agents.

And where did we go from there?

As with every other iteration, the Perot report and recommendation went to all of the stakeholders – agents, insurers, suppliers, associations (ACORD, IVANS).

The end result was that there was no final result.

Both ACORD and CSIO – the Canadian counterpart – have become very pragmatic.  While still maintaining standards, both organizations are delivering specific products andsmaller projects to their members.

So, what did we disrupt today, Dorothy?

Virtually all of the activities by agents, brokers, insurers, suppliers were meant to be disruptive.  However, two interrelated issues persisted:  Scope and Accountability.

We are seeing exciting progress with InsurTech, primarily because at least one, if not both issues are covered.  But as we move into larger, perhaps industry level initiatives (for example standardizing IoT), we are going to be exposed.

Meanwhile … It is still summer, 50 years on.  So, as the Firesign Theatre would say, “Don’t crush that dwarf, hand me the pliers.”