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Saturday, March 31, 2018

Life Insurers Face Digital Age 2.0 | ThinkAdvisor

Photo: Jonathan Holloway
The author contends that the way for life insurers to jump ahead this year will be to use data better.

Photo: ThinkAdvisor

Are life insurance companies ready for the next phase of the digital age?

As we enter 2018, the life insurance industry is still in a downturn. According to the MIB Life Index, which tracks nearly 90% of life insurance application activity in US and Canada, 2017 ended down 1.8%. 2018 is currently down 4.4% YTD and is 3.5% lower than that of December 2017, according to Wink.

In addition to lower overall sales, the life insurance industry is beginning to feel some waves coming from insuretech startups. JLT Re has reported that, since 2012 over $7 billion of funding has been raised via 600 deals. About 9% of insuretech startups are looking to disrupt life insurance distribution. Distribution is ripe for disruption, given that consumers are growing increasingly comfortable with shopping online.

The coming change will revolve around how consumers are buying life insurance. For companies looking to maintain and possibly grow sales through this downturn, Insuretech companies are a welcomed ally.

How are people currently buying life insurance?

According to the 2016 Insurance Barometer Study by LIMRA, 51% of people would prefer to buy  life insurance in person. About one in five people prefer to apply for life insurance online, citing the ability to research, comparison shop and avoid pressure as their reasons.

Given the current hype around insuretech, some may be surprised by these numbers. To industry veterans, however, these numbers likely line up with what would be expected, given the current makeup of distribution. Over the next five years, as demand for online solutions grow, companies will become increasingly competent at removing the barriers that make online shoppers wary of buying life insurance without an agent.

The same LIMRA study reports that the top five major reasons people prefer to buy life insurance online are as follows:
  • Convenience.
  • Ability to Research.
  • Speed.
  • Ability to Compare.
  • Less Pressure.
One key observation is that consumers prefer person-to-person support when buying life insurance, so one can assume that online sales supplemented with human support will be key as the market transitions.

Source: ThinkAdvisor