Consider- a business that with a 5% increase in 2020 will add $100 Bn to its annual revenues, a business that has a customer growth potential of billions of customers, a business that in spite of billions of dollars of technology investment in the past few years remains a product that is most effectively sold person to person, and a business that in developed countries has average policy face values of more than $100,000 yet has the most effect on its growing market with policies that are sold with face values of hundreds of dollars. Yes, we are talking about life insurance. This week Daily Fintech discusses life insurance with four industry experts (and background from another) representing life insurance business on three continents.
Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.
Please allow me to introduce the four industry experts:
- Bobbie Shrivastav, co-founder and Chief Product Officer, Benekiva, U.S.
- Aparajit Bhattacharya, co-founder and Managing Director, Insure First, India
- Frank Genheimer, Managing Director/Founder, New Insurance Business GmbH, Switzerland
- Jake Tamarkin, CEO, Everyday Life Insurance, US
And my background resource who has significant life insurance experience in multiple global markets, and the life reinsurance market.
Rather than trip over my relative paucity of knowledge of the global life insurance world I asked the experts a series of questions, knowing full well their responses would be far more informed than what I could research but would be more than would reasonably fit into an InsurTech blog. Their respective answers have been entered verbatim as much as space allows.
For their involvement I am grateful, and it is certain the reader will benefit.
What is a ‘fashionable’ life sector innovation or discussion that might be over-hyped, or might not be the ‘world beater’ that it is being shown as?
FG- Thinking too much in target groups. Frank’s thought- think in modular needs (independent from age) and in a way to make the need more ‘visible’. DF Not cookie cutter, understand the customers’ needs. How novel!
FG and background- Fitness trackers, AI, new savings opportunities are just not right yet. Wellness has shown the most promise but not yet delivered the results. Personal IoT- who pays for the devices, who owns the data, and why would customers not simply acquire their own wellness devices?
AB In India carrier/complementary company partnerships that bring term life cover for a period of one year, essentially a group policy that primarily benefits the platform owner. Plenty of policy churn.
Insurance as an industry is experiencing change or pressure to change. What aspect of the life product do you see remaining the same in spite of the tides of change?
JT- There are an increasing number of insurtechs and incumbents investing in innovation, but almost all of the focus has been on process efficiency. The cost to distribute life insurance has increased 17 % in the same time period where sales commissions for mutual fund products declined 75%. I see this as a warning that the life product value proposition is getting less meaningful to customers. DF Interesting point- life policies in force in the US have declined by ten million policies in that last five years.
AB- Annuity and savings products will remain the same due to having little scope for innovation due to their structure. DF I wonder if Frank has an opinion on this based on his proposed new venture?
What might be the most under-served life market/sector?
BS- Gen Z/Millennials- they have less grasp and understanding of the products. DF Well that sounds like an education and sales opportunity if the right marketing approach is applied!
JT- In the US it’s middle income families, whose use of life insurance has been steadily decreasing for fifty years or more. This study from the Chicago Fed found that in 1989 two thirds of households in the middle income quintile held at least one term life policy; now fewer than one half do.
AB- Most of Africa, SEA, and South Asia are lacking penetration, mostly due to lack of data to properly price products.
What is the greatest challenge for the life/pension sector?
FG- The transformation from ‘old’ to new’ itself. DF Well that’s a broad concept- wonder how it could be fine tuned.
BS- Legacy systems! DF And associated tech liabilities.
DF- On background digital sales methods have not significantly change the premise that insurance remains a ‘sold, not bought’ product. Life sales have a substantial emotional aspect; individual needs need meaningful identification to have a product resonate with a customer.
Is there a life cover line that is missing from the market?
BS- Not a line, but a person- the beneficiary. I would do everything around the beneficiary, from sales to claims. DF- A life policy purchaser does not benefit from its face value aspect, the beneficiary does. Why not make the beneficiary more of a focus?
AB- A lot of work needs to be done for the woman customer, especially for India, Africa, South Asia and SEA. DF- Seems similar efforts would be useful in Europe, North America, and South America.
What project/partnership/actions are you or your firm working on that you would want to the insurance world to know of?
BS- Benekiva is integrating with two of the leading admin systems, with the goal of allowing carriers to partner with best in claims solutions without the overburden of integration logistics.
JT- Everyday Life recently launched the first offering of Predictive Protection, a feature that empowers customers to design individual coverage and allows adjustments to cover automatically over time.
AB- We continue to focus on bridging the gap between traditional insurance and micro insurance, with efforts in integrating data and analytics to open the mid segment of customers who are currently underserved due to missing medical and financial underwriting norms.
FG- We are on episode 8 of the journey to introduce Futuro Vorsorge, a new savings product to be introduced in Germany but is designed for application across Europe. DF Frank has masterfully composed and presented a series of videos recounting the formation and implementation of a new insurance product offering. Episode 1 is here .
Who, or what firm do you look to as a leader in its/her/his approach to the industry and its customers? Is there a why for that mention?
AB- ICICI Prudential for their aggressive digital strategies, and Maxlife for their customer and employee centric approach. DF- Maxlife stands above most Indian carriers for their empathetic and supportive culture.
BS- Menlo Innovation. While not an insurer per se, the company inspires Benekiva to apply Menlo’s mission to “end human suffering in the world as it relates to technology” in the firm’s efforts to mitigate the effects of gaps between carriers, policy holders, and beneficiaries through claims transformation.
JT- MassMutual. The company is leveraging intrapreneurial efforts like Haven Life and LifeScore Labs to challenge traditional innovation boundaries.
What is the most fundamental change you have seen/experienced in the life/pension market since your first days in the industry?
BS- While my start in the life in insurance relatively recently, I am witnessing the industry becoming less fixated on fashionable but ambiguous concepts like ‘digital transformation.’
AB- Adoption of APIs and willingness to digitize front end and middle flows. Back end is still a mess, though. DF- Opportunity abounds- still- in process improvement. Have to work on that whole inertia thing.
Well I’ve read the full scope of the experts’ input multiple times and I learn something new each time. And then I remember- there are dozens of similarly skilled persons within the insurance from whom we can learn. As for you life insurance pros- there is huge potential for growth within the life industry, and there’s no need for magic- so say the experts. Customers are waiting!
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