Ask more than 50 industry leaders for their thoughts on the life insurance market, and you’re bound to get a wide range of answers. But if there’s one thing on which many of them agree, it’s that change is coming. We’re not talking small product tweaks here; we’re talking industry-shaking revolution. In an age when technology is advancing rapidly and consumers demand immediate, customized attention, this is necessary. It’s also pretty exciting.
A LIMRA study conducted last fall asked a diverse mix of life insurance executives, distributors, reinsurers and other financial leaders this question: Do you believe an outside source like Google or Amazon will be a disruptive force in the life insurance market in the next five years? Fifty-seven percent said yes. Moreover, a 2013 LIMRA study revealed that 21 percent of middle market consumers would be willing to buy life insurance online from a non-traditional source such as Google or Amazon.
All of this points to the fact that insurance may very well be on the verge of becoming a whole lot sexier. Andreessen Horowitz recently included insurance on a list of the 16 tech trends it’s most excited about for 2015. The scope of opportunity is huge, and companies outside the industry are starting to notice. But that doesn’t mean these newcomers will corner the market. It may very well be the stalwarts of the industry who capitalize on all this potential and deliver the products consumers need, in the way they need them.
Why is the market ripe for disruption now? Here are five reasons.
1. Consumers need life insurance, but aren’t buying enough of it.
Here’s a success story: At the end of 2014, consumers had more confidence in life insurers than they had at the start of the year. A LIMRA study published in November noted that three-quarters of consumers said they had at least some confidence in life insurers, an increase of 6 percentage points from early 2014.
Does higher confidence mean more sales? Not necessarily. In the first three quarters of 2014, individual life insurance premium fell one percent and policy count dropped three percent. People need life insurance, but they don’t always buy it. This is due to a number of obstacles — procrastination, affordability, prioritizing other expenses — but on some level, it is also because the sales process is not as streamlined as it could be. Therein lies the challenge, and the opportunity.
2. People are starved for time.
Americans are the busiest people in the world, working longer hours and taking less time off than any other industrialized nation. Moreover, we are distracted, constantly juggling not only work and home life but dozens of messages from marketers bidding for our time. Scott Kallenbach, Research Director at LIMRA names this overwhelming busyness as one of the major factors precipitating change in the life industry. The old model of sitting down face-to-face at the kitchen table simply won’t work for today’s consumers, Kallenbach says. Giving up an hour or more of time in the evening or on a weekend is simply too great a sacrifice for today’s consumers to make. As a result, insurers and advisors must make buying life insurance simple, quick and intuitive.