Life On-Line Purchase

This is a story of industries in techno-denial. First there was the record industry, then it was travel agencies. More recently it's been traditional taxi services. Times change, and with them technology and societal expectations change, too. No industry should consider itself immune.


My industry, life insurance, isn't known for challenging norms. In many ways, our strength is the opposite: solid, reliable, conservative funding of life insurance policies that will be there to protect families in the long run.


Typically, life insurance is considered part of a financial plan beginning in one's mid-30s: growing families and more assets, such as homes, mean there's more to protect.


The typical "Millennial" has never purchased life insurance, but when they do, they will be in for a rude awakening. North America's largest providers are still stuck in an industrial-age, old-paradigm world: paper forms, swabs and needles from nurses, and paperwork from your doctor. It can sometimes take more than a month to find out if you even qualify with an insurer.

The current process has all the hallmarks of other industries that have been severely disrupted: centrally controlled by a head office, highly regulated, lacking transparency, subject to byzantine rules, and a lot of process friction from start to finish. There is nothing close to "online," "real time" or "customizable" about it.


So, where's the innovation? Why are the larger insurance providers still not underwriting online?
Commercial insurers have become too vested in a sales process with large broker/agent networks. Yes, these brokers and agents provide quality advice to individuals seeking life insurance. It is important to be able to talk to a real, live person sometimes, but the brokers and agents also have a vested interest in keeping it mysterious -- guiding you through the rules and procedures is how they make their living.


The underwriting process is also a challenge for bigger corporations. When traditional underwriting is allowed to steer the ship, what you can get is a more refined and increasingly complex set of rules. That's better for the quarter-by-quarter analysis of the bottom line, but it's questionable whether it's better for the customer.


As Accenture states, "The difference between the front-runners and those which are struggling to keep up is, in many cases, the engine that drives them. Old, outdated legacy platforms are costly to maintain and prevent insurers from competing effectively against those with modern, flexible systems."


This is where smaller, more agile companies can lead the way, providing online underwriting of life insurance in real time.


And I can tell you that consumers want it. There still exists the myth that life insurance needs to be sold and not bought. But the facts indicate otherwise -- according to Google Trends, there are approximately 100,000 relevant searches related to "life insurance" every year in Canada.


You can imagine that this number is a conservative one when you consider all of the relevant long-tail searches for life insurance products that could be happening simultaneously. Agents and brokers are no longer the first source for information: 86 per cent of consumers would research life insurance online.


Traditional underwriting has a policy issue time of 42-47 days depending on the number of agents involved. At Teachers Life, an online application that is fully underwritten in an average of 12 minutes -- that's more than 5,000 times faster than traditional underwriting. For the first time in Canada, you can apply in the privacy of your own home, from your smartphone or tablet.


When a Millennial -- or anyone else for that matter -- applies for life insurance, they should find it to be exactly as they imagined it would be: fast, online, private and with no medical tests.


With agility to respond, smaller insurers can organize their operations around technology, not underwriting, to simplify the process. It's accessible online, transparent and it happens in real time, eliminating unnecessary delays caused by too much human intervention in underwriting.


Our customers told us they wanted insurance to be easier. We have been moving in this direction since 2007 and never see our job as finished. And as a fraternal not-for-profit insurer, we plan to be here for another 75 years.


So, to answer the question, life insurance innovation is definitely a new reality. Our customers -- our members -- are the engine that drives us. And in the end it will always be customers who drive disruptive innovation.


Technology is just the tool.