By Bill Unrue | September 02, 2020 at 01:32 PM
An insurtech executive makes the case that pandemic-related
changes will lead to long-term growth.
Over the past year, many sectors in the economy have been
significantly impacted by COVID-19. Some will recover, some will adapt, and
some will not return. For the U.S. life and annuity sector, the COVID-19
pandemic is rapidly forcing transformative change.
Having faced flat to declining sales for over a decade, the
pandemic is now accelerating sector adaptation at an unprecedented rate.
Electronic application submissions are up 20% year-over-year, and e-policy
deliveries by 52% year-over-year, according to recent insight from iPipeline.
At Ensight, we have seen a dramatic shift towards the virtual
sales experience with growth of 155% in just the last three months. This agile
response to COVID-19 bodes well for returning the sector to long-term growth
and wider financial protection in society.
When we take a step back, COVID-19 could very likely drive three
transformations — each bringing dramatic significance to the life insurance
sector:
·
Greater carrier
investment and focus on transformation of the sales experience
·
A broader, accelerated
shift to more holistic financial planning by financial advisors
·
Increased consumer
understanding of the importance of life insurance and subsequently higher
adoption
It is worth noting that after a few initial months of decline
during the pandemic quarantine, U.S. life insurance application activity is up
dramatically and jumped 14.1% year-over-year in July in what appears to be
expansive year-over-year growth, according the July 2020 MIB
Life Index. The year 2020 may therefore represent the
long-awaited inflection point for the U.S. life industry.
Crossing The Chasm
In 1991, Geoffrey Moore wrote ‘Crossing The Chasm’ which quickly
became the bible for entrepreneurial technology marketing. It focused on how to
drive the introduction of new innovative products from early adoption to
finding product market fit — and ultimately wider adoption.
To truly ‘cross the chasm’ and reignite significant sector
growth, broader understanding and belief in the value and application of
insurance products, life and annuity carriers should sharpen their focus on
three critical areas: The sales experience, technology platform plays, and,
e-wholesaling.
Digitalization of the Sales (Lifecycle)
Experience
Even with e-app growth, the permanent life insurance
point-of-sale experience continues to be rooted in paper. Whether it is
printed, glossy PDF product brochures heavy on the compliance language or a
40-page illustration, the point-of-sale experience has simply not adapted to
meet the modern, digital expectation threshold.
Financial professionals and advisors today sell through digital
experiences and platforms, such as eMoney, MoneyGuidePro and RightCapital. With
the fintech movement transforming everything within banking, investing and
mortgages, digitally savvy consumers now expect an intuitively visual and
seamless experience that clearly explains product and service benefits. In the
world of Amazon, digitalization is now table stakes for selling products
successfully.
Life and annuity carriers need to holistically transform the
entire sales experience lifecycle, not just the application pain point. This
means addressing everything from the digital presentation of the product by
financial professionals, to an interactive training and a consumer-oriented
inforce web experience. Gone are the days of sending policy statements via USPS
or through a large email attachment.
Additionally, financial professionals, of whom 36% plan to use
virtual tools for client engagements for the rest of the
year, should be enabled with an interactive, digital experience to virtually
explain products to clients. Clients should be able to “interactively play”
with products online to better understand how they might perform under
different market scenarios.
Technology Platform Plays and a New
Distribution Strategy
Silicon Valley Venture Capitalist Ben Horowitz said, “Software
is eating the world.” A corollary in financial product distribution could
certainly be “technology platforms are eating distribution.”
Life and annuity distribution have historically focused on
relationships and traditional distribution partner platforms (i.e. people plus
services). There is an unprecedented shift happening today — the introduction
of distribution technology platforms and the elevated importance of the
platform experience.
Insurance carriers need to open their distribution mindset and
strategy to prioritize this concept of “platform plays”. This means not only
re-evaluating whether they are delivering a modern, Intuit-like illustration
quoting user experience for different types of personas and users, but also
consider how they enable new, third-party technology platforms to drive premium
growth. Increasingly, the platform plays will drive premium growth.
E-Wholesaling and the Coming Arms Race
The future of the U.S. life insurance is e-wholesaling. It is
the next no-brainer approach for the life and annuity sector. Focusing sales
organizations on the shift to e-wholesaling can help firms survive and thrive
in the emerging, post-COVID-19 economy.
So, what is the blueprint to build an e-wholesaling focused
business?
Start with prioritizing the following areas:
·
Virtual and
interactive sales engagements.
·
Digital platform-based
training, education and sales enablement.
·
Real-time data insight
to drive proactive and targeted wholesaler follow-up.
Like telemedicine and the virtualization of higher education,
experimentation starting as a response to COVID-19, is only set to dramatically
and rapidly shift current expectations of producer servicing. The rise of the
millennial generation as the dominant financial professional and consumer
target audience will further buttress this speed of change.
To clarify, when I say e-wholesaling is the future, I am
advocating for a melding of human and technology: a cyborg model. It makes
sense for so many reasons. Higher productivity for internal and external
wholesalers, better agency and producer / advisor servicing, more engaging
product education, and stronger client relationships.
One insurance carrier, Pacific Life, and several brokerage
general agencies (BGAs) have already started down this road. Now more than
ever, this should be a priority for every insurance carrier and distributor.
Bill Unrue is the chief executive officer of Ensight, a
company that provides a virtual sales platform for the life and annuity market.
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