Reinvent Distributing Life Insurance

Faced with such dramatic shifts in their market, many insurers have fallen into the classic trap of trying to figure out how to sell their existing products, rather than creating new sales engagement models that focus on customers’ real needs.

In order to remain, or in some cases once again become, a relevant investment vehicle, life insurers need to shift to a needs-based, solution-selling approach. Client protection, investment, and retirement needs vary across life stages and demographics.

Changing customer behaviors driven by digital technology have altered the way consumers want to buy. Some prefer a “do it yourself” approach while others rely on adviser-based support models.

Most clients start their shopping process online, but still count on an adviser for the actual purchase decision. Insurers need to gain deeper customer insight to design new offerings and engagement models.

The business of providing guarantees against mortality, morbidity, and longevity risk is so complicated that the process is unlikely to be replaced entirely by a smartphone app – at least not anytime soon. But, to remain relevant and to reverse declining sales trends, life insurers should modernize their products, services, and marketing efforts in four key ways:

1. Understanding the customer. Insurers should be trying a lot harder to discover what customers of today really want. Rather than letting the assumptions attached to their existing products limit how they explore and define customer needs, insurers can gain in-depth insight into what motivates customer decisions through a variety of sources, including social media, analytics, mobile and call center data, and feedback from digital marketing efforts.

2. Developing customer-oriented offerings. New products should be based on real customer needs and made available at a range of price points through a variety of channels. To do this, life insurers need to be able to bring products to market quickly and more efficiently. Digital distribution channels, including mobile and online applications, can provide new sources of revenue by helping insurers sell relatively inexpensive products to new customers. Until now, it has not made economic sense to distribute such products through the traditional life insurance agent channel.

3. Providing a better customer experience. Life insurers need to start thinking less in terms of life insurance as an “event” purchase – bought once and kept in perpetuity – and more as a relationship. By collecting and organizing data from a variety of sources including phone calls, online interactions, and social media conversations, life insurers can personalize what they bring to the customer. Some companies are using analytics to streamline the sales process and develop new products. Vantis Life (formerly Savings Bank Life Insurance or SBLI) uses a simple application incorporating predictive analytics to support its “EZ Life” products — basic term life insurance with policies in the $100,000 to $250,000 range.  Predictive analytics anticipate mortality and longevity rates and help Vantis Life underwrite the policies without the medical examination and tests usually associated with life policies.   

4. Increasing efficiency. Many life policies are still paper-based, relying on manual processes for administering policies and paying out settlements. By automating workflow and decision support, insurers can cut costs while giving customers the immediate responses, tailored products, and personalized service they want.

These four approaches complement one another, and they are mutually reinforcing. Better analytics, for example, make it easier to identify narrow customer segments and carefully tailor products for them. Targeting smaller groups of customers with more specific products results in more finely grained data, and that supports better analytics.