Insurance Insights From The Boston Consulting Group and Morgan Stanley

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It’s no secret that InsurTech is one of the hottest topics of the moment. It seems that everyone is talking about it, writing about it and tweeting about it.

Recently, The Boston Consulting Group (BCG) and Morgan Stanley partnered up to write a report on insurance innovation for small businesses. The report, entitled North America Insight: Digital Disruption in Small Business Insurance, dives into the major drivers of insurance innovation.

This impressive report covers a lot of ground and explains much of what we’re trying to accomplish here at CoverWallet HQ. Of course, we couldn’t keep it all for ourselves, so we thought we’d highlight some of the most interesting and important findings. Here it goes:

Millennials and Gen Xers are Making Their Move:  

The report doesn’t shy away from the facts and the fact is Millenials and Gen Xers will own more businesses than their predecessors by the year 2020. What’s more is the Millennial / Gen X group is used to being able to make a purchase online, which means innovation in insurance will be necessary to the health of the industry. The report says:


The report also highlights the somewhat flighty nature of this group, who often go from full-time to freelancing and back again over a short span of time. This means that these groups often need a more flexible form of insurance, a gap digital insurance may more easily fill.

How Startups Can Fill in the Blanks for Small Business Insurance:

Selling insurance is just as time-consuming for agents as it is for the businesses who are looking to buy. Smaller businesses are at a particular disadvantage when it comes to understanding, buying and managing insurance as brokers are more likely to spend time on their more fruitful accounts.

The report explains that startups are more likely to lead the disruption than carriers. Different areas are present for different players including distribution, aggregation, adjacent players and technology enablers.

Distribution will be a major focus and one of the most important areas for improvement, as will customer acquisition and retention.

Traditional Carriers and Brokers are Ramping up their Digital Efforts:

Traditional carriers and brokers are beginning to understand the need for innovation. Whether it be through partnerships with startups (like us), or through ramping up their own digital efforts in-house, we’ll see many carriers and brokers embrace the digital world more openly than they have in the past.

As such, they will have to focus on two key areas: making products less complex and improving customer service for their small business customers, especially on the claims side of the house.


The report  goes on to examine three potential scenarios that we may see by 2020: a conservative scenario where the digital world continues to be a constraint, an aggressive scenario that assures leading carriers have acquired or built their own digital distribution systems, and the most likely scenario where InsurTech companies are adopted by and partnered-up with larger carriers.

In the end, the report says that going digital will be a slow and painful process for carriers, but it will save money and time for all parties. You can access the report in its entirety here.

We have a great feeling about the next few years and are excited to see how it all plays out. Have some thoughts on where the industry is going? Great, we love a good conversation. Leave your ideas in the comments below and we’ll get back to ya.