The current broker model is broken. I'm in the P&C industry as a broker, and I have a hard time reconciling a few things in any way that no change to the current broker model occurs.
10-15% commission not= New viral product design + new models seeking higher efficiency + new digital methods
I just cant figure a way to make that equation add up without the a reduction on the commissions side. To boot, most of the actual tasks that we do as agents are tasks that are very easy to build a bot to automate. We already have a prototype bot that goes and logs in and quotes out the risk, and we have telecom software which we can hook up to the bot for an almost self serve quoting experience.
The role of the broker could go a number of ways.
There is the idea that the population shrinks and concentrates and brokers just get fewer and bigger. This sells well to brokers but I think most over look that the industry will likely be shrinking (surly auto) so they may end up running faster to stay in the same place.
There is the idea that carriers will go direct and want to own the customer relationship. Certainly there is data flow advantages to owning the cust relationship. This is a valid idea to an extent, but I think execution could get tricky and just going to digital distribution is not a seem like enough to unseat the personal relationships that exist with some brokers (not all, many are very transnational).
We could see, (this depends a lot on how P2P is implemented) and expansion in the definition of what a "broker" is, and if a service offering is designed right some customers may actually preform the role of primary contact for other customers. Or what you normally observe in any service that is designed to have virality. However, licensing laws will need to be carefully observed.
I will be looking closely at what Lemonade does in this regard. My guess is they will go fully direct, or a hybrid model with some offerings only being available direct digital, and then a hand off to a broker for other offerings.
Also very interested in how they handle the Adjusting function. I am almost 100% sure that the service will require more customer engagement in the adjusting process. The "peer pressure" must enter the offering in a number of ways.