By Geoff Martin, President + Co-Founder, vipHomeLink
As we return from another National Association of Mutual Insurance Companies (NAMIC) Annual Conference, this one in the D.C. area, I’d like to share my thoughts about the gathering, including what was notably missing from the lineup…
But first: The team continues to do an incredible job leading NAMIC and its members – overseeing a packed agenda and navigating through some major industry challenges. This year, the conference speakers, venue, sessions, and content were all fantastic. I also noticed increased diversity among attendees, a higher percentage of women in senior roles, and I believe, a younger overall average age. All of these signs point to an improving industry demographic and much greater opportunity for fresh ideas, innovation and progress.
Shock & awe: The 4-legged monster in the room was fully acknowledged, discussed and debated. Inflation, regulation, reinsurance and climate are each significant industry challenges in their own right, let alone collectively! There were, as always, plenty of references to the history of insurance and the impressive longevity of the mutual industry, including surviving world wars, depressions, 9/11, financial crises, countless hurricanes, etc etc. Let’s not forget — past performance is no guarantee of future results…as every retail investor knows.
While this is all true…. The insurance industry has never seen a technology revolution the magnitude and scope of which is underway right now.
Insolvencies: Last year, fearing for the sustainability of smaller mutual carriers, I recall asking some mutual execs and other friends at the NAMIC conferences, “Why don’t we ever see much consolidation in this mutual space?”
I was told, “Mergers among mutuals are too difficult”, “The mutual structure doesn’t lend itself to consolidation”. Someone also claimed, “Mutuals never go away”. Yet this year, mutuals are becoming insolvent almost by the week, particularly across the wind/hail belts of the midwestern states (Wisconsin, Iowa), and of course in Florida.
In response, I was pleased to see two conference sessions this year: Mutual affiliations, and mutual holding company (MHC) structures. As a former M&A banker, these sessions were fascinating to me. I’m now relieved to see a clearer path toward increased consolidation – even if largely catalyzed by duress. I think this is critical to preserving the stability of this industry for years to come.
Size matters. Capital is consolidating. Agencies are consolidating. The risks (e.g. climate) are growing. Mutuals must seek to achieve scale to remain sustainable, with lower cost structures, scale efficiencies, and increased access to capital will be needed for small/midsize mutuals to survive and flourish. Importantly, a “basic level” of technological capability is also critical, and technology is relatively expensive. The average spend level of 4% of GWP (revenue) for smaller carriers is clearly insufficient. Larger carriers are increasingly setting themselves apart with “member benefits”, new products, simpler digital experiences, risk mitigation & prevention tools, diversification, and other scale efficiencies.
Now for my big beef….
Where’s the Tech?? This industry must become proficient at discussing, integrating and leveraging technology as a core competence. The banks have done it, as have most customer-facing industries. Aside from the vendors at the Conference, the only speaker reference I heard to technology was discussing “tech debt”! This is concerning.
Digital transformation, as part of this massive technology revolution underway, will not slow down and will not be fleeting. I’m not trying to use scare tactics here, but I am sounding an alarm bell, and shining a spotlight on a critical area that was notably absent at this NAMIC conference.
Next year I would like to see sessions for management teams and directors that discuss technologies across all facets of the business, particularly customer-facing and loss-control solutions. Share with members what’s working well, present case studies and innovative solutions, share integration challenges, and much more. The time for light exploration and dabbling has expired. A full embrace and incorporation of technology across the business must be underway by next year’s conference.
My perspectives are those of an experienced and passionate tech entrepreneur tirelessly working to advance our core principle of “Predict & Prevent”, and improve the success of mutuals and carriers across the country. Our affordable technology platform at vipHomeLink does 3 things well for mutual companies: it makes policyholders and their families safer, it improves engagement with members and lifts retention rates, and it prevents homeowner losses from occurring. We are aligned with mutuals, and we are proud of what we do every day.