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Making Life Insurance Personal

Personalization is a significant opportunity for life insurance carriers looking to revolutionize their relationships with customers. In this article, Montoux takes a closer look at some key themes, with examples carriers can aspire to.

Customer relationship

Customers have long been thought to begrudgingly purchase life insurance protection, either as a rite of passage or something an agent or other perceived authority has advised them to do. The nurturing of a customer relationship is not something that has been required of the carrier, as it has traditionally sat with agents working to earn their commission. This lack of an engaged relationship has led to a culture of disconnect, distrust and even resentment toward the carrier companies, and without an agent’s care can lead to lapses in premium payments and ultimately lack of coverage.

It is in customer relationship building that personalization is not merely an aspiration, but becoming a necessity. As younger generations are delaying or completely bypassing more traditional milestones of marriage, home ownership and starting families, the opportunities for agents’ messaging to resonate with them is lessening. The average age of a life insurance agent in the U.S. is 59 years old, and, as these aging agents focus their efforts on high-value policies among their peers, traditional carriers are at risk of losing touch with the new needs and perspectives of young generations if they don’t make significant changes now.

Modern consumers — and even more so, those of future generations — are moving away from traditional sales models and purchasing behavior in every other industry, with insurance following in this inevitable shift. Consumers are going online to not only research and attempt to understand policies but complete applications and make payments.

Even more significantly, the internet plays a key role in educating the modern consumer on the need for life insurance in the first place, as even the traditional triggers of life insurance purchase such as home ownership and financial advisers move to the digital space. It is essential to ensure younger generations realize the value of purchasing a life insurance policy in the first place, as Denise Garth outlines in this article.

Consumers of today are bombarded with constant opportunities to part with their money, with a 2015 study estimating the average attention span has dropped from 12 to eight seconds since 2000, to less than that of a goldfish.

Agents will continue to have a significant role to play for the foreseeable future as the Boomer generation enjoys long lifespans, and value the human connection. Tech-savvy agents will take advantage of digital distribution channels for acquiring new customers, and continue their roles indefinitely.

But the ultimate transformation for life insurance could be turning it from a grudge purchase customers don’t perceive any immediate benefit from, to something that can improve their own lives and wellbeing in addition to ensuring their loved ones are financially secure in the event of their own death, or they receive a substantial payout from permanent policy in later life. And this potential shift lies in the carriers’ hands.

See also: Thought Experiment on Life Insurance  

Personalizing power

An example of a grudge purchase becoming one of enjoyment in a different industry is shown by Flick Electric. Flick is an electricity company based in New Zealand that was established in 2014. It has built a steady following of loyal customers who are so enthusiastic about their relationship with the company that they often become ambassadors, referring friends and family to join.

Flick has achieved this relationship by not only bringing a different payment model, which reflects the market rate of electricity and passes these ebbs and flows onto the end customer’s bill, but has also very tactically framed their marketing and social media presence to attract the key millennial and Gen-Z markets as they become new bill payers of households – and also well-prepared for Generation Alpha and beyond.

While the purchase of electricity is obviously a more essential expense for people than life insurance, the customer relationship Flick has managed to build is a great example of what insurers can strive for in making customers perceive value in each and every premium payment they make.

Life and death should feel personal

Insurers can look to optimize their digital spending with highly targeted social media campaigns, as part of their wider marketing strategy. With social media now an integral part of 81% of U.S. Americans’ lives, insurers that work to very specifically target campaigns in response to personal milestones shared online could reap the rewards of more conversions by ensuring their marketing efforts are in exactly the right place, at the right time. Envisage the way in which a millennial couple sharing their excitement over their new firstborn child’s birth on Twitter could be automatically approached with a very specific offer of life insurance, which outlines the benefits of such a policy for the future of that baby.

Fabric demonstrates the kind of messaging that could resonate with this hypothetical pair of new parents. Fabric’s own social media content emphasizes “parenting made easy, starting with life insurance,” conveying an easy, low-effort, high-reward investment, which appeals to new parents wanting to secure the financial future of their family. This kind of personal and emotional connection to a life insurance purchase is key for new generations of digital natives who are bombarded with constant offers online and limitless places to spend their money — especially as, in this example, when starting a family. Breaking through the noise to demonstrate the immediate value of peace of mind is key for life insurers to earn that place in a young family’s budget.

Products

Life insurance products currently leave plenty of scope both for further personalization, and for wider improvements on messaging that will actually resonate with customers. Complex, wordy policies with grim mentions of “death benefits” that attempt to cover every eventuality can leave customers confused, frustrated and often either under- or over-insured.

Sherpa is an example of using a different model to ensure the cover offered to customers is extremely personalized. While traditionally insurers create products, and brokers work to find the best customers to buy these products, Sherpa charges a value-based annual fee to customers, and in turn meets all their specific insurance needs.

Distribution

It’s important that insurers work to accommodate customers by allowing them to use the communication channel they are most comfortable with, rather than trying to funnel them into the carrier’s preference. A report published by McKinsey indicates that more than 80% of shoppers encounter a digital channel at least once during their purchasing journey. Especially on social media, replying to a customer’s inquiry through that channel with advice to call a phone number could lose an opportunity completely, whereas being able to answer questions directly and then move to another online channel such as the carrier’s website is more likely to retain interest.

Behind the scenes, carriers need to ensure their staff are provided with the tools to communicate information and monitor customer engagement across channels to ensure every interaction a customer has with an insurance company as a whole is as seamless as possible, no matter which individual staff member at the insurance company might be behind the interaction. These digital communications with customers, along with the collection and analysis of data, allow insurers to build rich profiles of customer needs and preferences – and prevent the repeated ask for basic customer information, which should be acquired once only.

Data and analytics

Analyzing existing customer data is key to understanding patterns of premium lapses, and determining ways to help prevent them from happening with future customers. Using this data to ultimately identify the earliest signs and indicators of customer payment lapses means an insurer could preempt these, and ensure that reminders and offers of solutions keep the customer meeting premium payments, and are delivered effectively. Reminding a customer of the benefits and significance of the insurance policy at key points of doubt or uncertainty over the policies’ value relative to other payment requirements in their lives is a huge advantage for insurers.

See also: This Is Not Your Father’s Life Insurance  

Experience data and connected wellness

Finding ways to gain access to and use customers’ experience data is key in achieving true personalization of life insurance, with IoT and device data greatly improving the company’s data set, and ultimately benefiting individual customers with personalized messaging and rewards.

Improving the customer perception of carriers to build trust and good faith in insurance companies is crucial in obtaining this personal data, as customers will need to overcome fears of anti-selection in openly sharing, as well as their concerns around privacy. Being able to analyze this information provided by new customers can allow individual quotes to become even more accurate and eliminate the issues of non-disclosure or misinformation provided by customers — which can ultimately lead to their policy not being paid out. This device data can also be used in a continuing basis to explore patterns of behavior, health and death to more accurately model risk.

Insurers are already beginning to use data to help nudge customer behavior – the AIA Vitality app updates the insurer on activity levels by syncing from fitness wearables and rewards customers’ health improvements with lower premiums. According to Accenture, 77% of consumers would be willing to exchange behavior data for lower premiums, quicker claims settlements or coverage recommendations. Interestingly, this aspect of personalization may not be just for targeting the young, as Accenture also reports senior citizens are adopting wearable devices five times faster than the general population.

Predictions From 6 Insurtech Leaders

Insurtech, a hotbed of deal and growth activity over the last two years, is gaining traction and credibility. The leaders of top insurtech startups in the U.S. — focused on renters insurance, auto insurance, life insurance, small business insurance, mortgage lender insurance and on-demand insurance — share their thoughts about 2017 and predictions for 2018.

Participants (alphabetical order by company)

  • Fabric, cofounder and CEO Adam Erlebacher
  • Jetty, cofounder and CEO Mike Rudoy, cofounder and President Luke Cohler
  • Metromile, CEO Dan Preston
  • Next Insurance, CEO Guy Goldstein
  • Slice, CEO Tim Attia
  • Spruce, cofounder and CEO Patrick Burns

Q. What will be different about insurtech in 2018, compared with 2017?

Theme 2017: opportunity

“The unveiling year,” Slice CEO Tim Attia

“A grace period,” Next CEO Guy Goldstein

“An explosion of investment into insurtech across existing and new insurance lines,” Metromile CEO Dan Preston

“Lessons learned from being live in market,” Jetty cofounder and President Luke Cohler.

Theme 2018: maturation

Fabric cofounder and CEO Adam Erlebacher, “Where startups begin to gain traction and work toward meaningful scale”

Jetty cofounder and CEO Mike Rudoy, “A year of maturation where consumers’ trust in insurtechs deepens, cementing marketplace standing”

Next CEO Guy Goldstein, “Mistakes will have far bigger implications”

Slice CEO Tim Attia, “2018 will be all about proving that we can scale and build real businesses”

Metromile CEO Dan Preston, “Emerging winners will likely announce second or third rounds of capital”

Q. What was your company’s greatest 2017 achievement, and what is your greatest 2018 goal?

Fabric cofounder and CEO Adam Erlebacher, “Fabric launched in 43 states in one year”

Jetty cofounder and President Luke Cohler, “In 2017, our greatest achievement was validating our thesis and finding product market fit with renters and property managers. Our largest goal for 2018 is simple: expansion”

Metromile CEO Dan Preston, “Metromile’s biggest achievement in 2017 was the launch of AVA, our entirely automated claims process that uses AI to validate and automate claims. In 2018, we are excited to expand AVA to nearly all claims we handle”

Next CEO Guy Goldstein, “In 2017, we established our company foundation and core pillars, sold 10,000-plus policies and cracked the code on SMB insurance. Our goal for 2018 is to expand reach and accelerate our growth”

Slice CEO Tim Attia, “Our 2017 achievements included a Series A funding and Progressive partnership, but the largest was our homeshare product launch in nearly all 50 states. In 2018, we’ll expand our existing product, launch other on-demand products, go global and release our cloud-based offering”

Spruce cofounder and CEO Patrick Burns, “In one year, we went from serving homeowners and mortgage lenders in one state to 48 states. Our biggest goal for 2018 is to serve more customers, leveraging scale to drive down costs”

See also: Insurtech in 2018: Beyond Blockchain  

Q. What was your company’s greatest challenge in 2017; what do you anticipate as its greatest challenge in 2018?

Theme: 2017 challenges, validation

Slice CEO Tim Attia, “When re-imagining insurance, you truly have to re-imagine it. You have to forget everything you know and are used to and recreate the experience”

Jetty cofounder and CEO Mike Rudoy, “In 2017, we had to validate and fine tune our model and customer experience”

Metromile CEO Dan Preston, “Our big shift from MGA (agency) to full insurance company. It required the entire company (and more) to get it done.”

Theme: 2018 challenges, scale

Jetty cofounder and President Luke Cohler, “The challenges we face in 2018 will be associated with scale. New volumes of customers will require improving technical infrastructure, customer support functions and product experience”

Metromile CEO Dan Preston, “The biggest challenge will be managing growth while launching in new markets (as every market is very different!)”

Next CEO Guy Goldstein, “In 2018, our major challenge will be growing our offering from 20 classes of business to hundreds, while still maintaining excellent customer service”

Slice CEO Tim Attia, “2018 will be about scaling the company and executing, in ways that fit with what customers want”

Spruce cofounder & CEO Patrick Burns, “In 2018, we anticipate our biggest challenge will be hiring the highest-quality engineers and sales people as we continue to scale”

Q. What was a surprise to you in 2017?

Theme: Positive surprise at the intensity of consumer and partner buy-in to new insurtech options

Jetty cofounder and CEO Mike Rudoy, “We were genuinely surprised at the rapidity and size of buy-in from all types of consumers eager for better solutions and experiences that fit their lifestyle. This isn’t unique to Jetty but across the insurtech landscape”

Metromile CEO Dan Preston, “A big surprise came from the 2017 InsureTech Connect conference in Las Vegas, which had more than 4,000 people, orders of magnitude bigger than the entire world of people who knew what ‘insurtech’ was when we started Metromile in 2011”

Next CEO Guy Goldstein, “We were very surprised to learn that companies were underwriting business insurance policies manually, based on individual underwriter experience. SMB insurance is a $100 billion industry, and not using data to evaluate risk was bewildering”

Slice CEO Tim Attia, “We were surprised that our customers enjoy interacting with us regularly and being able to tie coverage directly to a successful and safe stay”

Spruce cofounder and CEO Patrick Burns, “We’ve been pleasantly surprised with the receptiveness of mortgage lenders to working with a new company”

Q. How will incumbents interact with insurtech companies in 2018?

Theme: shift to action

Metromile CEO Dan Preston, “I would expect the number of partnerships to grow significantly”

Slice CEO Tim Attia, “I think incumbents have no choice but to embrace insurtech companies”

Jetty CEO Mike Rudoy, “As insurtech players continue to capture market share, incumbents will be forced to identify response strategies”

Next CEO Guy Goldstein, “The incumbents understand that change is coming and is required”

Spruce cofounder and CEO Patrick Burns, “The industry is in the beginning stages of a multi-year shakeup as end-to-end digital sales and servicing become the norm”

Theme: expectation of beneficial partnering

Metromile CEO Dan Preston, “Competition fostering strong collaboration. Especially when expertise and assets are concentrated in different ways: incumbents with scale and capital, startups with new products, technical expertise and lack of legacy systems/thinking”

Fabric cofounder and CEO Adam Erlebacher, “Many [incumbents] are engaging directly with startups. On a basic level, most carriers lack the digital infrastructure needed to execute a direct digital strategy”

Next CEO Guy Goldstein, “Generally, [incumbents] seem very open and keen to work with new insurtech companies. Acquisition strategies are probably their best bet to integrate new technology”

Slice CEO Tim Attia, “Insurtechs are faster and more nimble than the incumbents; [who] should be excited to engage and leverage new offerings”

Q. What do you admire about other insurtechs?

Jetty cofounder and CEO Mike Rudoy, “Munich Re is hardly a startup, but their willingness to partner and help quickly grow great insurtech companies is impressive”

Slice CEO Tim Attia, “I admire how well insurtech companies complement one another. We have a similar goal: to enrich the customer experience and engagement”

See also: 2018: A Look Back, Then Forward!

Q. What’s the one book you read in 2017 that you can’t stop thinking about or recommending?

Jetty cofounder and President, Luke Cohler: “Deep Work: Rules for Focused Success in a Distracted World” by Cal Newport. “A great guide that explains how we can regain our ability to focus without distraction on cognitively demanding tasks, despite the common distractions of our work environment”

Metromile CEO Dan Preston: “The Wright Brothers” by David McCullough

Next CEO Guy Goldstein: “Red Notice” by Bill Browder. “About a builder of an investment business in Russia. It left me feeling impressed and inspired by his drive to push through and find solutions to any challenges facing him”

Slice CEO Tim Attia: “Misbehaving: The Making of Behavioral Economics” by Richard H. Thaler, who cowrote “Nudge” and won the Nobel Prize in Economics in 2017

Spruce cofounder and CEO Patrick Burns: “The True Believer” by Eric Hoffer. “It was written in the 1950s, but it’s immensely relevant today. Every startup CEO (and every politician) should read it”