The connected economy will refashion the middleman’s role across verticals, and life insurance is no exception.
TransUnion noted in a research report that about 4 in 10 consumers go online or use an app when shopping for life insurance. That’s a marked shift away from the traditional conduits of emailing and calling agents to get quotes, and scheduling medical tests with providers to get cleared for underwriting.
The greenfield opportunity for insurers to use digital means — platforms among them — to engage with customers is a significant one, given that the TransUnion report estimates that more than one third of consumers do not have life insurance. The Insurance Information Institute has estimated that life insurance premiums were a $159 billion business in 2021.
Doing More Online, Each Day
The stage is set for the continued pivot to doing more online, to breaking down the pillars between transactional and non-transactional activities. As PYMNTS data found last month in the latest edition of “How the World Does Digital” report, 65% of all consumers in the 11 countries we study engaged in one or more of the 37 digital activities we track at least once a day — a 0.9% increase from Q2. And 73% did so at least weekly.
Drill down a bit, and within healthcare, we’re seeing a movement toward using unified digital platforms that provides consumers with detailed information about their health insurance benefits, let them manage interactions with providers and health insurers, and offer better control of their actual transactions with the providers.
As found by PYMNTS and Lynx in joint research, 90% of individuals want a one-stop shop, so to speak, to manage it all. That desire would, of course, extend to life insurance, where the model has traditionally been a high-touch one, as described above, but which, by leveraging data and personalization, can become significantly streamlined.
D2C Life Insurance Models
In one example, Haven Life, which operates as a digital direct-to-consumer (D2C) life insurance agency backed and wholly owned by Massachusetts Mutual Life Insurance, uses algorithms and artificial intelligence (AI) to estimate risk, help underwrite policies and ultimately extend offerings to applicants (and, depending on the policy, without medical exams). Elsewhere, Ladder, which is partnered with Allianz, uses AI to offer instant decisioning and fully underwritten term policies online.
For consumers, there’s the advantage of using the online platform models that have, increasingly, become a staple of daily life during the pandemic. They expect to have a minimum of friction in the mix, and they also expect a measure of transparency when receiving quotes (along with, perhaps, multiple offers for a side-by-side comparison).
Conventional wisdom may hold that the digital channels will render insurance agents obsolete. But, as we’ve seen in traditional banking, there’s a still a place for the human touch. In financial services, reducing the manual processes tied to reviewing loan applications, etc., has set the stage for a more personalized approach when a deeper discussion is warranted between customer and provider.
Life insurance is complex, and evolves as consumers’ families grow, or life insurance factors significantly in estate planning. Consumers thus have to evaluate their coverage every few years. Claims/settlements can also be a complex road to travel. That human touch, we contend, leads to a trusted advisory relationship that cannot be easily replicated by a machine. The D2C, digital shift may refashion the role of the intermediary in life insurance, but likely won’t eliminate it.