The Advisory Career

Industry Innovation: Where It Is And Where It Ain’t

For the first time in a very long time, it’s starting to feel real

by Chris Behling

Mr.  Behling is Head of US Life & Health Strategy for SwissRe, overseeing partnerships intended to help insurance clients penetrate new markets and demographics with the goal of closing the $10 trillion coverage gap in the US. Visit

As head of strategy for Swiss Re’s Life & Health business, I’ve had the opportunity to see many companies – from large insurers to start-ups – who are attempting to innovate in the life insurance space.  Through this experience I am heartened and encouraged by the amount of innovation that is happening and being contemplated. And while the insurance industry has talked of disruption and innovation since I entered the space 20 years ago, this time it feels real, urgent and inescapable.

While there are lots of innovative things happening out there, the areas of innovation are clumpy. There is lots of innovation in some areas with almost no innovation in others.  This is most likely a result of focusing on the low hanging fruit and tackling the things that seem the most obvious or easiest to achieve.  While this is a great place to start, opportunities still exist to innovate in areas that may be less obvious or that seem more difficult to tackle.  In fact, innovation in some of these areas may be the most important and lead to the biggest payoff.

System developers talk about three layers:  The front-end, middleware and back-end.  It is easy to map this concept to life insurance.  The front-end is how and where we engage the customer.  The middleware is the new business and underwriting process.  The back-end is policy administration.  The prevailing opinion among consultants and other experts is that true optimization of any system requires customer-centric innovation in all three layers.

Below I will survey where innovation is well underway and where innovation is lagging in each of these layers . . . The front-end, middleware and back-end of the life insurance process.

Front End

Focus on the front-end of the process has been heavily weighted toward direct-to-consumer concepts. While it is widely agreed that current distribution models are outdated and not well-suited to close the coverage gap or reach new demographics and markets, it is not yet clear that D2C is a stand-alone answer.  There is a school of thought that says there is a sufficiently large population that want life insurance, but are turned-off by the process.  This school is focused on making the process easier and capturing those consumers who already understand their need but want an easier way to purchase.  While this school of thinking my create a handful of companies, each picking-off enough low hanging fruit to become successful, this line of thinking will not reverse the macro-trends or help close the coverage gap.

In order to reverse the macro-trends and close the protection gap, we need to engage consumers in new ways AND provide them new ways to purchase.  It will not be enough to just reach those that want insurance but don’t want the process.  Success for the industry will require us to reach consumers who currently aren’t looking for protection solutions.  This means connecting and engaging with consumers in new ways, in new ecosystems and connecting protection solutions to other, more top-of-mind consumer wants and needs.

In addition, distribution models that fit somewhere in-between our current, highly intermediated, completely face-to-face model and a pure D2C model will be necessary.  “Omni-channel” distribution is a buzz word we all throw around, however true omni-channel platforms are few and far between.  In addition, those that do exist tend to pull the consumer out of the ecosystem in which they were engaged and push them back into a more traditional life insurance sales approach.

Finally, traditional distribution allowances remain a challenge (either for the consumer or the carrier).  D2C models have not reduced distribution costs, but instead shifted them from agent commission to marketing expenses.  This impacts the consumer in the form of higher premium AND the carrier if poor persistency in D2C channels doesn’t allow for recouping high, up-front distribution expense.  To solve this problem, new products must be developed that tie to pressing consumer goals and needs AND that can be delivered in a more streamlined and efficient fashion.

  • Where innovation is: New D2C models to provide protection to those that want it
  • Where innovation ain’t: New engagement models outside of the protection eco-system to penetrate new markets and demographics


The new business and underwriting processes are the middleware of life insurance. This is the area where the most innovation has been taking place for the longest period of time.  But as I’ve written extensively in the past, the innovation in this area has been focused on the question “how do we create a better producer experience” instead of the more appropriate question “how do we create a better customer experience?”  As a result, the focus has been on speeding the process and requiring less invasive information to be collected.  While these may be appropriate goals, they tend to be the priorities of the producer, not necessarily the customer.

It is producers who are focused on speeding the process and ease of doing business.  Consumers are focused on value.  We have myriad examples of non-insurance offerings where customers are happy to provide information (even invasive information) in return for valued insights, learnings or product offerings.   The problem with the insurance new business and underwriting process is the asymmetry of value.  Historically the consumers provide all the information and the insurance company receives all the value of that information.  This is the main reason that consumers are loathe to going through the process.

If we can create a symmetry of value in the information collected, like give the customer back something of value for the information they provide, then the process becomes less of an obstacle.  In addition, if we shift our innovation in new business and underwriting away from what the producer wants to what the customer wants, we will be able to engage more customers, which helps customers and producers alike.

  • Where innovation is: Data science to speed and streamline the underwriting process
  • Where innovation ain’t: Leveraging collected data to provide value to the consumer

Back End

Maybe it’s because it isn’t as visible from the outside, or it’s less flashy than other parts of the process, but the back-end of the insurance process is potentially the most in need of innovation.  Carriers often sit on admin systems that were built 30+ years ago.  The size and complexity of their legacy books make it a Herculean effort to transition the inforce block to new systems.  Carriers who have tried have experienced major disruption to their business, which can take years to repair. To avoid this, other carries have put new front-ends on their legacy systems, in an attempt to make them more producer or customer friendly.  While this has some positive impact on the business currently being written, it generally does not allow carriers to be more flexible in developing new products quickly.

The most pragmatic approach may be to wall off the legacy book and develop a new admin platform to support new product offerings.  This approach is being pursued by several carriers and new entrants.  At the same time, many of the largest IT vendors and BPO companies have offerings in this space.  The concern with this is that we end-up replacing one cumbersome and complicated admin platform with another.

What we aren’t seeing much of is innovation from start-ups or new entrants looking to totally rethink the policy administration paradigm.  I personally believe that we, as an industry, have over-complicated policy administration as a result of the feature-fest that has taken place to win the fleeting attention of agents and brokers.  What may be needed is a total rethinking of our approach to policy administration.  The starting point for which should be what customers want versus what producers have come to demand or how carriers have traditionally done it.

  • Where innovation is: Limited activity to replace administration systems, but the jury is out as to whether this is innovative
  • Where innovation ain’t: Almost everywhere else


I am very excited about the amount of true innovation happening in the life insurance space.  I am also heartened by how seriously many carriers are taking innovation and seem sincerely committed to it.  I am convinced that in some areas, the horse has left the barn and that the innovation underway will have a real impact.  In particular, innovation in the areas of D2C and accelerated underwriting that leverages big data and predictive analytics is well down the road and will surely succeed.  But in other areas, innovation lags.  Specifically, innovation around new ways to engage consumers, true omni-channel distribution platforms and a rethinking of policy administration could benefit from more attention, funding and innovative smarts.

This is not to say that carriers and start-ups aren’t working in these areas.  In fact, those that are working in these less crowded areas may have a first-mover advantage that will pay-off down the road.  But as we know, it generally takes multiple entrants with multiple approaches to achieve disruptive technologies.  And while the insureTech space is crowded in many areas, there is still white space for new innovation.

It is still early days, but I am optimistic that the innovation that is currently underway and will surely follow will lead to our industry extending its reach and help create resiliency for more individuals and families.  But we have a ways to go to truly make a dent in the coverage gap and penetrate new markets and demographics in a significant way.  In order to reverse the macro trends we face, we must create customer-centric innovation across all three layers of our process (front-end, middleware, and back-end).  Only when all three layers are integrated and transformed will we ultimately find success in our shared goal and noble purpose. ◊