Life Insurance

In The Game Of Life (Insurance) One Size Does Not Fit All

The new era of ‘bionic advisors’

by Farron Blanc

Mr. Blanc is vice president of brokerage distribution and strategy for Legal & General America. Visit https://www.lgamerica.com.

The United States life insurance market is unique. While other countries have three to five national champions that own 70% of the market share, the U.S. has hundreds of life insurance carriers sharing the risk. This makes the consumer advice that insurance producers provide especially important, given the current inflationary environment.

The Set Up

Today’s recession and inflationary environment is different than what the industry has weathered previously. We see growth falling but a rise in inflation and interest rates. Mix in a pandemic impacting both mortality and remote work in one fell swoop, and the industry has been primed to see a rapid wave of digital adoption. But life insurance in the U.S. is not one size fits all and depending on each policyholder and advisor, there may be something just right.

Too Small: TinkerToys

The digital revolution, spurred by COVID, has seen an influx of flashy insurtechs offering the promise of policies with a few taps of a button. But not everyone is able to get a policy as quick as they can download the latest app.

Similar to a fast-pass at the amusement park, these serve a great need but unlike those rides, there’s often not a “regular” lane for more complex cases to receive policies, rather a clear cut approval/decline.

Just Right: The Game of Life

However, there’s another option for carriers, advisors and policyholders. Something that given the economic state, we predict will become more and more prevalent in the future because it boasts options and customization for everyone in between. Whether the applicant is a millennial, female triathlete or Generation X with type 2 Diabetes, being able to adapt and modify for consumers continues to be a key tenet.

The cost for a carrier to efficiently write life insurance profitably is high. Companies need to analyze data effectively, while building bespoke products that work for distribution partners and directly to consumers. Now more than ever, carriers need additional data, especially as customers’ expectations for a “straight through” journey are increasing.

Carriers must fully invest in technology and data in multiple areas. The two pillars of the industry: underwriting and the experience for both advisors and policyholders, need to take top priority. By investing in technology around the underwriting process it allows for a wider pipeline to be opened for prospective insurance applicants – those who can be approved quickly with machine learning that have low risk and those who require a more hands-on approach and detailed review around lifestyle and medical histories.

Today’s recession and inflationary environment is different than what the industry has weathered previously. We see growth falling but a rise in inflation and interest rates...

Five years ago, my company leaned into the digital transformation both for the policyholder and advisor experience. In light of the pandemic, the industry has seen more and more carriers start taking that same plunge.

Flexible Sizing: Twister

Carriers need to remember that there is not a one-size fits all for applicants and advisors and that flexibility will be a cornerstone in coming years. And this is not only for application preferences — a reflexive digital application is wonderful for someone young and healthy, but the brainpower of an underwriter is still required for impaired risks.

Similarly, with a simple email, advisors can convince a 30-year-old tech-savvy professional in Chicago to complete an application. Those pings are much more likely to go unnoticed with a less tech-savvy, older user looking for more modest coverage. With the market so competitive, carriers and advisors alike need to be agile and nimble for converting applicants into policyholders, no matter where they fall in their technology journey.

These “bionic advisors,” aptly coined by Boston Consulting Group, bring an immensely valuable skillset. Is a pop-up ad or postcard going to convince someone to work through a slew of cancer questions when everyone in that person’s family was somehow impacted by cancer? That takes a special touch that not even the most advanced AI can accomplish. Digital processes and increased adoption in all aspects of our lives helps assuage some pain points, the key is that it takes away the mundane tasks below an advisor and underwriter’s true value, like triaging applications and requesting lab results from the same doctor’s office.

Winning the Game

By freeing both the underwriters’ and advisors’ time, both parties are able to generate larger commissions from more sales – letting digital processes support the quick cases and spending the time with those who require it, allowing for better revenue potential when the economy is uncertain. Investing in the proper technology when carriers already have established partnerships with advisors will be the differentiating factor as the industry braces for this economic upheaval. In that game, everyone wins.