Sure｜2024 State of Digital Insurance Report

Introduction

About the survey

In a digital world, consumers are looking for new, more flexible ways to buy and manage insurance. According to a recent poll, 65% of consumers aged 30-49 purchase insurance online, while 54% of consumers aged 18-29 are doing the same. These aren’t just consumers looking to buy traditional insurance options, either. From buying a home, to buying a car, to the safekeeping of family members, insurance is being distributed and purchased in ways that previously didn’t exist. For consumers, buying options have reached new expanses with digital autonomy in just a matter of clicks.

For carriers and consumer brands, however, the process of creating and managing a stable, efficient digital insurance program is a long and sometimes painful road. This is especially true for brands whose area of expertise is outside of insurance. We know this because we’ve spent over a decade building and managing digital and embedded insurance programs for some of the world’s most trusted brands. Unsurprisingly, these organizations aren’t in the business of insurance, so helping them meet their customers in their time of need requires niche expertise.

As more consumers are eager to spend in the digital world, we’ve found that many companies are still finding it difficult to get digital insurance programs off the ground. In a world where the embedded insurance industry is expected to exceed $70 billion by 2030, why are brands and carriers having a challenging time navigating digital insurance and reaching more customers?

This question – and many others – is how we came to the idea of the “State of Digital Insurance Report.” In order to better serve our partners, we want to fully understand where carriers and brands are in their digital insurance journey. Our goal was to unpack one of the most critical elements of any digital insurance program and understand how satisfied insurance industry insiders are with rate service organizations (RSOs), a core part of the insurance ecosystem. We asked about pain points and priorities, cost and compatibility, and engagement and effort.

We strategically worked with a market research firm that specializes in digital insurance and is used by over a billion professionals. In doing so, over 200 insurance industry decision-makers partook in this survey. The best part? The survey is anonymous and vendor agnostic, which means that respondents could be as honest as they wanted – and they were. Let’s dig into the results.

Top takeaways

respondents know rate service organizations (RSOs)

100%

of respondents consider themselves to be very knowledgeable or moderately knowledgeable about RSOs.

digital insurance can cost you

75%

of respondents say their company spends at least $1 million annually to build, launch, and maintain insurance programs.

not so rso easy

71%

of respondents say the RSO they use or are researching requires a massive amount of effort to get their insurance program off the ground, maintain, and launch digitally.

satisfaction not guaranteed

50%

of respondents are not satisfied with their RSO or ones they are evaluating.

part 1

Diving into demographics

Digital insurance, specifically the role of rate service organizations (RSOs), is a very niche topic – even for the most expert-level insurance gurus. To get an accurate picture of the digital insurance industry, respondents were selected based on their understanding of RSOs. Further, participants were qualified based on their decision making capabilities and level of expertise. This was done in order to curate results that correctly represent those working with RSOs to launch insurance programs.

the takeaway

Niche knowledge unlocked

100% of survey respondents are based in the United States and are full-time employees at the manager level or above. 98% consider themselves very knowledgeable or moderately knowledgeable on the subject of digital insurance.

When asked to describe company industry, a majority say they work in insurance, while financial services and banking, along with IT services and consulting are also represented. A majority (76%) represent either B2C direct sales or B2B service models with an average annual revenue of $100 million or more. 91% of these respondents say they have launched or are planning to launch an embedded insurance program.

part 2

Unearthing rate service organization experts

100% of survey respondents consider themselves moderately knowledgeable or very knowledgeable in their understanding of rate service organizations (RSOs). RSOs are organizations that help those interested in launching insurance programs in rate, rule, and form filings, as well as other services, such as loss analytics. We asked these experts about their experience, spend, and which RSO they’re currently using or researching.

There are currently a handful of companies that provide data and filings in the insurance industry today, so businesses are forced to partner accordingly. 37% are using or evaluating Insurance Services Office (ISO), the majority leader in the small RSO community. As one respondent put it, “there are not many other options.” 98% of respondents are using, evaluating, or planning to use RSOs, which include these organizations:

the takeaway

Ample budget, limited options

Rate service organizations (RSOs) are one of the most important steps in building and maintaining an insurance program. From insurance carriers and MGAs, to automobile manufacturers, fintechs, and proptechs, working with an RSO requires multiple steps to get an insurance program to the finish line and become digital. This can include building filings, sourcing data, and choosing a software system, along with various manual administrative tasks.

At no small cost to businesses either.

75% say that their company’s average spend to build, launch, and maintain insurance programs is at least $1 million annually. Of those, 31% spend $10 million or more annually.

Drilling down into ISO specifically, 24% report spending at least $1 million annually and 31% report spending $10 million or more.

part 3

Tapping into effort: Working with rate service organizations

There are so many variables in building digital insurance programs that capabilities for modern systems can get overlooked in planning. Growing a digital insurance program from the ground up often takes dozens of different vendors in order to go from an insurance product idea to digitally selling insurance to consumers. We asked respondents about their rate service organization (RSO) capabilities and their level of effort to get integrated.

the takeaway

Inadequate innovation, massive effort

A whopping 71% of respondents say that their RSOs take a “massive amount of effort” to get insurance programs off the ground as well as maintain and launch them digitally. And, 65% of ISO users also consider it a massive undertaking to get up and running, as well as maintain and launch insurance programs digitally.

While rate service organizations (RSOs) offer standard capabilities and integrations, the level of effort needed has led to an overarching lack of innovation, and as a result, massive pain points for users. Further, because legacy RSOs have not kept pace with the times, the investment of time, cost, and effort to not just build a new insurance program, but launch it digitally, is prohibitive. “None of [the RSOs] have a good balance of cost and being quick and modern with any rate making or form writing. Also, none have mentioned any AI integration,” says one user.

Over one quarter of respondents say their RSO is not capable of delivering speed-to-market product changes and ongoing product maintenance and compliance. According to one respondent, “[RSOs] need to modernize their technology to allow for quicker adoption and faster time to market.”

When spending millions of dollars annually on services to launch an insurance program, users putting forth a massive manual effort seems both unnecessary and outlandish.

So, why is it that people are spending so much money and still having to do so much of the lift? For one, just getting the plans for your program is only the first step in a long and arduous journey. Those plans then need to go to a software vendor who then has to hire consultants to integrate the logic line-by-line. This process then has to be applied across 50 states.

What’s more, every few years, RSOs trot out a new, more costly solution that doesn’t actually solve the problems they themselves created for the industry. They offer rating-as-a-service, or a new file format – something "new" that is, in fact, just the same old solution they've offered for decades dressed up in a new outfit.

It’s odd that in 2024, when this process has been done so many times, nobody has bothered to improve or automate it. But that’s the risk you take because after purchase, it’s up to you to successfully launch. That’s your business risk. That’s your dollars at risk. That’s your time being wasted.

part 4

Sifting through rate service organization satisfaction

When you’re spending millions of dollars annually on rate service organizations (RSOs), one would assume satisfaction is guaranteed. Not necessarily so. We asked respondents what features they prioritize, how satisfied they are with those features, and ultimately, their overall satisfaction with their RSO. With 71% of survey respondents reporting that the RSO they use or are evaluating require a massive amount of effort, it's not all that surprising that satisfaction levels are shockingly low. Then again, if you are spending millions of dollars a year, one would expect satisfaction levels to be higher.

the takeaway

High cost, low reward

Respondents were asked their level of satisfaction for cost, integration capabilities, speed to market, program flexibility, modern capabilities, maintenance, bundle requirements, and customizations for insurance products.

Only 12% of RSO users say they're very satisfied, while 50% say they're not satisfied. More specifically, 46% of ISO users are not satisfied with their experience.

Half of those using RSOs are underwhelmed by existing options on the market. Let’s break down why that is.

Enormous effort

When using an RSO to build a new insurance program and launch it digitally, nearly half of all respondents cite level of effort as their top priority. And yet, 50% say that is what they are least satisfied with amongst the incumbents that dominate the insurance landscape. Specifically, the labor required for integrations, maintenance, modifications, and speed to market require a considerable amount of effort, especially considering the hefty price tag involved.

For instance, integration capabilities is what users have the most dissatisfaction with. 24% of all respondents and 29% of ISO users say integration is their top priority. Yet, 38% are not satisfied with existing capabilities on the market. And, 20% of respondents are least satisfied with integration capabilities above all else. The number one thing ISO users are least satisfied with? You guessed it – 30% say integration.

As one respondent says, “RSOs have an opportunity to provide better, real-time data integration, and customization to suit specific needs. Many RSOs only have options within their canned policies or products, not allowing for customization. This results in aspects important to the customer, like not being covered or paying for coverage that is not necessary.”

what users are saying

“Data integration continues to be a challenge.”

“I don't love it because the LOE [level of effort] to get it up and running and integrated with our systems is high.”

“Not flexible and not easily integrated.”

Not so flexible

Following effort, in order of prioritization, is program flexibility. A mere 15% of respondents consider themselves very satisfied with the flexibility offered with their existing RSO or any of the incumbents that they’ve researched. Moreover, 31% say flexibility is what they are least satisfied with above all else, including the ability to customize and bundle.

While it may be concerning that there is not more satisfaction associated with these features, it’s not surprising. As one user shares, “It offered basic service and provided the needed knowledge for our new product launch, but it lacks the customization and integrability we like to see.” With only a small number of companies controlling data for insurance programs, that can limit flexibility and customization. If there isn’t competition in the market, companies in control can create a pace that directly impacts how well organizations build and digitally launch new insurance programs, like speed to market and bundle requirements.

what users are saying

“[We] feel we are missing out on more advanced capabilities.”

“The lack of customization and responsiveness to our needs is frustrating.”

“Speed to market has been slower than expected and current trends have been a challenge to get support.”

Cost concerns

The cost of building digital insurance programs is not just a drop in the bucket. 75% of users are spending at least $1 million or more annually. What is concerning is that just about half (48%) of these users consider themselves not satisfied with the price tag associated with their RSO or ones they are evaluating. Only 10% of RSO users are very satisfied with the cost of working with their RSO. While cost is of the highest priority, nearly a quarter of respondents are least satisfied with cost above all else.

One user put it squarely, “As a standard lines provider, we have very ‘cookie-cutter’ language and the ISO forms and information provides a good standard place for this. However, it comes at a very high cost with not a lot of reward, as we do not significantly change/alter our products over time.”

what users are saying

“Cost to integrate is huge.”

“Overall TCO [total cost of ownership] is not quite what we envisioned. The process continues to be clunky, administratively burdensome and inefficient.”

“While expensive, it could be an overall benefit to the organization.”

rso overview

Massive room for improvement

With only 12% of respondents very satisfied, there is plenty of room for improvement. The status quo is such that it's time consuming, an insane amount of effort, and extremely costly to bring new insurance products to market and launch them digitally. The traditional model is time consuming and integration is, well, only somewhat satisfying to say the least. Despite these challenges, the industry has suffered through it as the cost of doing business because of unfettered control by legacy incumbents and, ultimately, a lack of options.

According to one survey taker, “We have not yet identified an RSO that provides the cost, value, and flexibility we are seeking.”

RSO users need practical features that they can execute well, along with modern capabilities to keep pace with the rest of the digital world. To launch something like a car insurance program for an automaker, or a business insurance program for a software company, can take upwards of 30 different vendors to make that work. Which is why, naturally, over 70% of users feel that their RSOs require a massive amount of effort. As one user shared, “It's a product that needs a lot of hand holding.”

There are a limited number of RSOs to work with, but there is one singular cornerstone in the market that controls the plumbing and pricing of the insurance industry. This dominant player has built the architectural plans for insurance products that organizations can license, but they still need software and contractors to set it up as a fully digital insurance program. All of these strategic, and somewhat confusing, business structures complicate an already challenging workflow.

Reaching customers in their moment of need is the ultimate goal of building digital insurance programs. However, with the status quo, getting there can take years and the number of variables along the way is enough to make any organization dissatisfied with their investment of time and money. This is especially true when there is one incumbent driving the market. As one respondent put it succinctly, “We have determined there is nothing much better out there.”

When 50% of an industry says they are unsatisfied with the status quo, you know the moment of change has arrived. To dig out of the fastened RSO hole, there needs to be a new path towards digital insurance programs. What the insurance industry needs is modern pre-configured insurance products that are already integrated with the distribution technology to launch digital insurance programs. The problem is nobody has bothered to build this new solution. Until now.

Sure partnered with NewtonX, the leading B2B market research company, to survey over 200 insurance professionals in the United States, all decision-makers with knowledge of digital insurance products. More than 80% of participants held director-level positions or above, with titles such as CEO, Chief Auditor, Head of Claims, Risk Analyst, and Pricing Actuary. The report delivers an accurate picture of digital insurance trends and purchasing behaviors with insights directly from verified insurance leaders. NewtonX utilized its fintech research expertise and proprietary AI-driven algorithm, the NewtonX Graph, to custom recruit these insurance experts from its open network of over 1.1 billion professionals.

Introducing Sure’s 2024 State of Digital Insurance Report

Read the report

Digging into the digital insurance landscape

What's inside

About the survey

Top takeaways

100%

of respondents consider themselves to be very knowledgeable or moderately knowledgeable about RSOs.

75%

of respondents say their company spends at least $1 million annually to build, launch, and maintain insurance programs.

71%

of respondents say the RSO they use or are researching requires a massive amount of effort to get their insurance program off the ground, maintain, and launch digitally.

50%

of respondents are not satisfied with their RSO or ones they are evaluating.

Diving into demographics

Niche knowledge unlocked

Unearthing rate service organization experts

Ample budget, limited options

Tapping into effort: Working with rate service organizations

Inadequate innovation, massive effort

Sifting through rate service organization satisfaction

High cost, low reward

Massive room for improvement

Download now, read later.

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Introducing Sure’s 2024 State of Digital Insurance Report

Read the report

Digging into the digital insurance landscape

What's inside

About the survey

Top takeaways

100%

of respondents consider themselves to be very knowledgeable or moderately knowledgeable about RSOs.

75%

of respondents say their company spends at least $1 million annually to build, launch, and maintain insurance programs.

71%

of respondents say the RSO they use or are researching requires a massive amount of effort to get their insurance program off the ground, maintain, and launch digitally.

50%

of respondents are not satisfied with their RSO or ones they are evaluating.

Diving into demographics

Niche knowledge unlocked

Unearthing rate service organization experts

Ample budget, limited options

Tapping into effort: Working with rate service organizations

Inadequate innovation, massive effort

Sifting through rate service organization satisfaction

High cost, low reward

Massive room for improvement

Download now, read later.

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