I’m obsessed with this idea that I work in a commodity business. That statement breezes through quite a lot of legitimate criticism, but I don’t care. I’m convinced.
And since I am in a commodity business, success at the margin requires developing a more efficient system for delivering that commodity. Exogenous price fluctuations are irrelevant.
Money tells us that sales are the second most important part of an insurance policy after claims. Brokers take a cut of between 10% and 20% of the premium.
Until the singularity comes along, our ability to extract the cost of salesmen from the system will be extremely limited, so that’s fixed.
Claims, the point of all this, are the biggest part, and cost about 60-70% of the premium, but they’re exogenous (commodity!), so forget them.
That leaves something between 10%-30% for corporate expenses, profits and other things under control.
Labour and capital. Salaries and systems and overhead. Capital + scale is no new idea. But applying capital to new areas is ripe for innovation.
Now, here’s my philosophy: new ideas do not exist. Certainly not in my head and almost certainly not in my business.
I take a cue from Fabrice Zinga. This guy made a fortune exporting the ebay model to non-US countries. I think that’s a bit of a naked wholesale swipe of a business model, but it worked.
I’m not quite so bold, but my plan is to spend as much time learning about innovation in OTHER businesses, particularly recent innovation, and figuring out if it will work in mine. I’d guess the implementation delay of a solid idea from Silicon Valley to insurance is about a year.
Edit: and google is telling me that this post has gotten a pile of traffic, no doubt because of the word “jobs” in the title. I bet that the only better traffic bait would be the name of a certain former Alaska governor.
People of the world: I regretted writing this stupid post!