Insurance company - from manufacturer to service provider
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Insurance company - from manufacturer to service provider

Try this, go to an insurance c-level executive and ask “what is your primary line of business?”.


Think about the terminology insurance companies are using when they talk about risk, policies and customers. Insurance companies think of themselves as manufacturers, risk carriers. The broker is the intermediary, managed by a wholesaler and the customer is the policy holder. This terminology sets a mindset. The mindset is that the insurance company is a factory. The factory produces  units of “policy” per month or quarter. Policies are shipped to the Wholesaler in bulk and sold by the retailer. Insurance? Tomatoes? Cosmetics? Who can tell the difference…


Obviously, some companies move to a customer centric models. Unfortunately, even at these companies, they do not perceive themselves as service providers. Having a service provider mindset is a revolution, not a yet-another evolutional re-organization.

In the world of retail Amazon changed the rules. There is one player who controls the entire value chain. Amazon is the factory (link), the wholesaler, retailer, producer and delivery mechanism for the product. This is not just an incremental change, this is a revolution. Why? Because now the factory knows who buys the product, what they buy, why they buy, when it is easier to sell and which customers are satisfied. This gives Amazon more power and influence than Walmart, Target, and Bloomingdale’s combined.


The revolution is not a change in technology from one stack to another; it is not even becoming a direct company. It is the change in mindset. Amazon taught us that a book store, that controls the value chain, can understand and analyze the end-customer. Amazon like a SaaS company, focus on customer success, easy on-boarding, self-service, captured value and perceived value for the customer. Think how easy it is to start using Amazon delivery, Alexa, Prime, think about the level of engagement and satisfaction compared to any other retail network. Now, think what could happen if insurance company was no longer a factory that manufactures policies, but is a service provider to a client who needs risk management. Instead of premium, think subscription to a risk management solution.


Insurance companies that focus on providing services would be interested in deep cohort analysis to know what type of customers like the product, what type of customers love the product, and who is the raving fan of the product. Insurance is like any other service. You pay as long as it provides value (or because you forgot to cancel).


Insurance companies that focus on providing services would be eager to change the product to make sure it meets the customers needs in real time. They focus on alignment of incentives and interests to make sure the organization is compensated based on customer happiness. They reduce friction in the on-boarding process, and turn the product from a push product to a pull product because people need insurance. They just really don’t like to buy the service that is currently offered. It is not-good-enough product market fit.


The market fit is not good enough since the insurance company focuses on the wholesaler and distributor, often at the expense of the policyholder, the end customer. As long as the wholesaler is happy, who cares about the customer? It is obviously a broad simplification, but, ask an insurance company who they want to keep happy and wait for the answer. It is not Jane and John doe, it is their top producer, it is their wholesaler and producer networks.




Amazon obviously optimized the assembly line (like AU optimizes the on boarding for insurers), Costco and Walmart did the same. But, they did something different, they focused on customer’s happiness, retention, satisfaction. Amazon do not have better products, in many cases they even sell the same products, but they have a service focused on the customer and not on the intermediary. This makes a difference.

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