[Selling insurance has always been a laborious time-, paper- and process-intensive business that has been, per the industry’s nature, slow to innovate and employ cutting-edge technology. But that is starting to change, very rapidly.
While InsurTech might not grab headlines like other flashier FinTech sectors, based on Crunchbase data, 2019 saw the most venture capital dollars invested in insurtech companies over the past five years. About $7.3 billion was invested in insurtech over 548 deals. These insurtech startups are bringing innovation across all aspects of the insurance value chain, including applying digital capabilities to transform customer’s experiences with insurance throughout their buying journeys.
To get a better sense of the new business architecture being built by InsurTech pioneers, the Institute reached out to Patrick Kelly, CEO and co-founder of Signal Advisors – an innovative InsurTech platform that redesigned annuity and life sales, and the distribution process, around insurance professionals. Coming from Kelly’s expansive background as a financial advisor at both a captive insurance company and a smaller independent advisory firm, as well as, helping build eApplication and financial planning software companies, he has seen the insurance and financial advisory space from almost every angle.
From this broad perspective, the most obvious issue and need Kelly saw was the lack of investment and innovation in the annuity and, more broadly, the insurance space. We were excited to learn how he went about creating change and a whole new business model for insurance sales.]
Bill Hortz: What were your motivations and goals that drove you to start Signal Advisors?
Patrick Kelly: The first thing I would say, what was the most clear to me and my partners in working with the traditional insurance sales process, was that the world did not need another IMO or FMO (independent distributors of insurance products). Advisors like ourselves needed insurance sales support, but we needed something fundamentally different. We committed to ourselves to build and design things that no other IMO had done before. There were a few major reasons for this.
These marketing/sales organizations have a common structure focused on: 1. insurance sales professionals or Marketers that were positioned to teach other insurance agents or advisors how to sell insurance to grow their business, but were not agents or advisors themselves; 2. Lots of good sales ideas and information but not making it more practice and execution-oriented since we were all still struggling to implement; and 3. a tremendous amount of paper and process.
I thought this sales experience cycle needed to be broken – it is just information overload. The bottleneck of improvement is not information, it is in execution; it is in taking information that’s going to yield the best results towards implementation. That insight surfaced rather easily once I started challenging the thinking and the process we had to labor through.
Building off of that, I thought, let's bring in different perspectives and change the way IMOs are started and constructed. Enter my co-founders Jacob Cohen, president, and Kevin O’Hara, CTO. Jake understands how to scale high-growth businesses after spending the past 10 years building technology companies as a venture capital investor. Kevin is a veteran software architect and technologist, most recently leading software development at Bluewater Technologies Group and LevelEleven. Bringing together the unique backgrounds of our founding team, we were able to create not only a superior coaching model to replace the traditional sales/marketing support teams, but also a best-in-class service offering and industry-leading technology that is truly designed for and differentiated in insurance distribution.
Hortz: What were the steps you took to start solving what you saw as major insurance industry problems?
Kelly: We first recognized that if we were really going to reinvent the IMO, we needed to reinvent the whole business model behind the IMO. Since the financial advisors’ space is nuanced and highly personalized and fragmented, before executing anything, we reached out to a wide range of respected individuals in the industry about our hypotheses to see how closely they lined up with our end user’s reality. The feedback we got overwhelmingly confirmed our thinking and ultimately informed the innovation steps we chose to take.
The first pillar of differentiation we wanted to bring to market was no marketers! For those of you not familiar, marketers are inside sales professionals at an IMO that typically have not been advisors themselves or are not currently. They have two core jobs, for which they get paid handsomely: recruit new advisors and train current advisors that have already been recruited. The first problem was that advisors are coached by these inside salespeople when they really would like to be coached by top performing advisors. The second problem on this issue we discovered in our research was that 20-50% of an IMO’s expenses go towards marketer compensation.