Today's Viewpoint: A MarshBerry Publication

THE EVOLUTION OF INSURANCE DISTRIBUTORS: DIRECT-TO-CONSUMER CARRIERS

Carriers have expanded their direct-to-consumer platforms through technology investments and mergers & acquisitions (M&A) to improve profitability and diversify their distribution over the past decade. These tech-enabled platforms are empowering carriers to reach insureds directly, across multiple channels, allowing them to handle higher volume by automating parts of the insurance buying process. Increasing adoption and continued improvements of technology solutions are expected to accelerate this trend.

Over the last 10 years, the Compound Annual Growth Rate (CAGR) of direct-to-consumer personal lines Direct Written Premiums (DPW) at carriers Progressive Direct1 and Geico were 10%, while the overall personal lines market grew at a CAGR of 4%. This demonstrates a shift in the mix with the direct channel increasing as an overall percentage of total personal lines premiums. In 2021, Progressive Direct and GEICO accounted for 14% of the total personal lines market up from 9% in 2011.

For Progressive2, the focus on their direct-to-consumer strategy also seemed to have had a positive impact on their enterprise value. Between 12/31/2011 and 5/11/2022, Progressive’s share price increased from $13.35 to $108.27 representing a CAGR of 22.4%, outperforming the S&P that grew at a CAGR of 11.2% over the same period.

Below are other more recent developments which suggest that the trend is likely going to accelerate from here:

February 2022 – Trōv acquired by The Travelers Companies, Inc. (Travelers)

  • Travelers, one of the largest U.S. Property & Casualty insurers, acquired Trōv’s technology platform.  
  • Trōv was founded in 2012 and raised $100 million in funding3.
  • Trov’s embedded technology systems will be positioned within Traveler’s personal lines segment.
  • The platform acquisition enables Travelers to diversify its acquisition channels through Trōv’s embedded insurance solutions and improve existing service capabilities by adopting a more customer-centric model.

February 2021 – Chubb Limited (Chubb) Launches Blink

  • Launched as the “company’s first-ever endorsed brand of insurance for millennials,” Blink offers cyber insurance with various other coverages such as Renters, Life, Travel and Pets, among others in the process of being added to the platform.

December 2019 – Allstate Announces Transformative Growth Plan

  • Allstate announced a multi-year growth plan with the goal to accelerate growth in its personal property-liability business. As part of this plan, Allstate is expanding customer access, improving customer value propositions, and increasing investment in growth and technology.

As carriers see continued success with their personal lines direct-to-consumer strategies, this trend is expected to gain momentum in the small commercial insurance market as well. In fact, there are already early signs of it:

  • Berkshire Hathaway introduced BiBERK.
  • Progressive expanded product capabilities through Progressive Commercial.
  • Hiscox Insurance’s primary U.S. Commercial distribution strategy is selling direct to the insured.

The next five years are expected to bring significant changes to the insurance industry. As an owner of an insurance broker, now is the time to double-down and invest in your business to remain competitive in an increasingly dynamic marketplace. If you have questions about Today’s ViewPoint, or would like to learn more about the implications of InsurTech in the insurance industry, email or call Tobias Milchereit, Vice President, at 212.972.4883, or email or call Brian Refici, Vice President, at 440.769.0321.


1Represents Progressive’s Direct-to-Consumer Platform.

2Excludes Geico as results are consolidated at Berkshire Hathaway (NYSE: BRK.A)

3PitchBook

MarshBerry is excited to announce it advised more than 95 companies and completed 130 M&A transactions in 2021, closing another record year for the firm. MarshBerry continues to remain the number one sell side advisor for the 23rd year in a row and retains the top spot in the industry for total number of clients advised.

Investment banking services offered through MarshBerry Capital, LLC, Member FINRA Member SIPC and an affiliate of Marsh, Berry & Company, LLC. 28601 Chagrin Boulevard, Suite 400, Woodmere, Ohio 44122 (440.354.3230)

MarshBerry continues to be the #1 sell side advisor in the industry (as ranked by S&P Global). If you're considering selling your firm, we are the best choice to help you through the complicated process. If you don't hire MarshBerry, hire a reputable advisor that can help you navigate one of the most important business decisions you will ever make. You will be much better off having an advisor in your corner that knows the industry than trying to do this on your own.