The life insurance industry is due for an update when it comes to the way business is done. Doug French and James O’Neill of Ernst and Young call it “creative destruction,” “a tipping point,” or a “paradigm shift,” and a recent PwC white paper calls it “massive and potentially disruptive change.” Alongside this change, the life insurance industry is on the cusp of a lot of opportunity. Some companies have made a sophisticated effort to make positive changes while others — well, others still rely on paper applications via snail mail.
Many experts have ideas about where things are headed, but let’s examine one possible outcome. Business these days revolves around the customer experience. If you don’t have what the customer wants, the customer will go elsewhere. This will be true for the life insurance landscape, as it has been for other industries. Digital access to a wide range of products will enhance this process, particularly among the 35-and-under market. With simpler financial needs and a reliance on the online environment to conduct a great deal of their business, the potential is ripe for insurance companies and agents to capture this market.
The future customer
The future customer will reshape the entire life insurance system. More clients than ever are turning to Google before they make a purchase. The new customer doesn’t want to be sold anything. They don’t want to interact with agents; they just want the facts and the product. The future customer will be an online shopper and will want to avoid speaking to an agent at all costs if possible. Agents are helpful in the event of questions, but future consumers are going to rely on their own research skills to vet companies and products. Call centers, mobile, and web will all play a big role in the future of the life insurance industry.
In order for agents to take advantage of these changes, they will have to treat every client as a knowledgeable consumer. Maximizing online tools to attract customers will be key, providing an opportunity for clients to shop and learn on their own. In the end, the “digital agent” will come out ahead simply by recognizing these shifts and capitalizing on them.
The future product
A long-coming breakup is coming for financial services and life insurance. Most future customers would classify themselves as “too busy to die” in the modern pace of life, but they might also want protection just in case. As a result, it’s likely that life insurance will be simplified, downplaying the role of financial advisors altogether. Protection will be the driving force behind most products, as customers will not be interested in learning about cash value accumulation, tax advantages, or maturity dates. What customers will care about is knowing that in the event of a catastrophe, his or her family would receive a specific amount of money.
This is not to say that cash value plans will not be used at all, but they will become more of a niche specialty for financial planners with higher net worth clientele. A decreasing agent workforce and the implementation of digital channels for the sale of life insurance will continue to commoditize the life insurance industry. Products such as term life or GUL will continue to grow in popularity due to the fact they are easy to understand, afford and attain. Unfortunately, cash value plans with investment focus are not designed to be easily sold online or over the phone. They are simply too complex.
Agents will make the most of this chance to submit more business to the extent that they can simplify the product and process for the consumer. Eliminating industry lingo and focusing on how to meet the customer’s need for production is critical.
The future distributor
The future customer’s favorite word is compare. He might check out a book at Barnes and Noble, but then verify the price on Amazon before making a purchase. Rather than going dealer to dealer before a car purchase, he conducts advance research online and is prepared to ask for a price match. Life insurance, too, will likely follow this trend. The future customer wants all the costs on the table before making a decision. Although many companies are making a push to eliminate independent agencies, I make a call that they won’t want to go on without them. The future of life insurance shopping rests on the hands of agencies that can offer unbiased comparison of all products in the market. Specializing in this skill is just one way that independent agencies can stand poised to succeed in the new life insurance market rather than being passed by the competition.
The future agent
While some agents are still trying to get accustomed to selling life insurance over the phone, it may soon be that we are replaced by a good piece of intuitive software. More life insurance agents are using mobile meetings or online screen sharing to quote life insurance and discuss the various products with customers. In the fast-paced and packed schedules of today’s and tomorrow’s customers, this convenience will add competition for the agents out there. “Adapt or be left behind” is the lesson. Tomorrow’s consumer is less likely to fall for a hard close; he or she will be educated beyond that. The future agent will have to evolve into a customer service agent with a great deal of knowledge to help with the technology in place.
The future underwriter
The future may include a hybrid type of underwriter, perhaps a piece of technology accompanied by human review. More companies are making a push towards speedier underwriting and customers love the idea. Health care reform, which is relying heavily on electronic components, may assist in this process by pushing for one big network of up-to-date health records. In the further future we can look forward to technology creating a way for underwriting computers to instantly know where the individual’s health stands, where it’s going and rate him accordingly. Life insurance in 10 minutes? Perhaps it’s possible and preferable.
The biggest challenge will be in managing the powers that be, as has been the case for many years in the life insurance arena. Laws and regulations will have to work with agencies in order to allow for the efficient service that consumers will require. If we can achieve synchronization amongst all the players in life insurance — from governing bodies to independent agencies — then maybe we can make buying life insurance fast and simple for the first time in its existence.
Despite the many changes confronting today’s agent, the future is bright for those that can adapt to the environment. Agents will benefit from the ability to engage with more clients and close cases more quickly, ultimately allowing them to expand their book of business.