Why we don’t want to grow up.
You may have already noticed, but we’re a pretty small operation . Some of the big insurance companies probably have more people working in their mail room than we have in our entire operation – and you know what? We’re good with that. We’ve worked at some of the big insurance companies, and while it’s nice to have those large financial resources behind you – there’s also some real obstacles if you want to actually improve your business.
At a large company, the executive team is generally very removed from day-to-day operations. So, they are reliant on the “chain of command” to get customer feedback, and learn how things are actually going “out in the field”. It’s hard to glean many operational insights from spreadsheets of financials, and “executive summaries” written by middle management. When making a change, there’s also a lot of inertia to overcome, and if you’re already financially successful there is a tendency to not want to “rock the boat”. “Steering committees” are required in order to get cross company buy-in, and just the employee “change management” aspect of a project can seem overwhelming.
There’s some additional challenges specific to large insurance companies:
- When you’ve built up a large book of business over many years (i.e. many insurance policyholders), and those policyholders tend to renew year after year without a peep, there’s a tendency to want to “let sleeping dogs lie”.
- As long as the portfolio is performing reasonably well (i.e. claims aren’t costing more than the premiums coming in the door), why change things? The risk of hurting your retention rate (i.e. percentage of customers that renew), probably outweighs the benefits of any possible increase in sales.
- Even if you decide that the change is worthwhile, the thought of communicating that change can seem very daunting when you know it’s going to impact tens (or hundreds) of thousands of customers. This aspect can be especially challenging for Insurance companies whose products are sold through an independent broker. Technically, the customer relationship is “owned” by the broker, so the insurance company (i.e. the company actually providing the product to the customer) may have difficulty even engaging in a conversation with the customer.
We believe this is why most insurance products seem so out of touch with the demands of today’s consumers. If it seems like these products (and the way that they are delivered) was designed in the 70’s, because they were!
Let’s contrast the above to Square One:
- In our case, we started from, well square one. We were able to design our home insurance product without worrying about any of those pesky legacy issues. Our policy management system was designed from scratch, so that we could take advantage of the latest and greatest technology and the web, to allow customers to interact with us in the way that they want – and allow a level of product customization that in the past wasn’t feasible.
- We’re also very comfortable with electronic communications, and have the email address of all our customers, so it’s easy for us to stay in touch with our customers (who also tends to be pretty technically savvy).
- Finally, we don’t sell our products through insurance brokers, but rather through our own amazing team of salaried agents. That means that if we’re making a change or offering a new coverage we don’t have the challenge of trying to communicate that out to 1,000 different brokerages across Canada (who also sell many other companies products, so probably don’t have your undivided attention). Instead we can just walk down the hall, and gather the team together to discuss.
As an executive team, we really keep our ears to the ground. We’re intimately involved in every aspect of the company’s operations, and no detail is too small for us to sweat. If our call center gets busy, we’ll take the overflow calls. If you initiate a late night online chat, odds are you’ll get Daniel our CEO, who is always happy to add some variety to his long workday by talking to a customer. We take customer feedback very seriously. You can be sure that every comment (good or bad) is reviewed by the executive team, to confirm we’re on track or to identify things we could be doing better.
Even though our business is growing by leaps and bounds and word of mouth has been awesome, we intend to keep our “start-up” mindset by staying lean. The majority of our quoting activity is done online (recently as high as 75%!). That means our staffing levels haven’t needed to grow linearly with our business. The lower staffing growth allows us to be very picky and methodical in our new hire and training processes, to ensure that all of our agents are really top notch. And because our agents don’t have to spend time doing mundane stuff like administration (most of our business processes are totally automated), our agents are focused on high value activities (like assisting customers that have tough insurance questions that can’t be answered on our website). This allows us to pay our agents better than industry average, which again helps us attract the best of the best. We truly believe that amazing things can be accomplished by a small team of superstars.
It can be tempting to chase growth. For example, it would be easy for us to launch a splashy national marketing campaign, and branch into a bunch of different insurance products to boost our growth – but that’s just not what we’re about. We are very deliberate about who we are, and what our strengths are. We vow to never launch a product unless:
- It’s better than what’s already out there in the market; and
- It can be supported with the level of customer service we currently provide.
We’ll never be all things to all people, because frankly we think that’s a recipe for mediocrity and customer disappointment.