Washington — By 2020, most life insurance and financial service professionals will belong to multigenerational professional insurance services firms. Wearable devices like smart watches will enable carriers to provide continuous underwriting and adjust premiums accordingly. Advisors and client prospects will also more easily locate each other through social media networks.

The source of this rosy picture: Campell Gerrish, a principal of Winged Keel Group and a past president of the Association for Advanced Life Underwriting. The lead speaker for the opening general session of the AALU’s 2015 annual meeting being held in Washington D.C. through Tuesday, Gerrish enumerated more than a dozen wish list items — some  arguably more realistic than others — that he believes will need to be realized if the industry is to grow and thrive.

The alternative, he warned, is loss of market share to new players (technology giants like Apple, Amazon and Google among them) that bring much-needed innovation to a market whose traditional companies have largely operated under the same business model for decades.

Such innovation — the theme of this year’s conference — has historically been the domain of new market entrants who aren’t invested in conventional processes and technologies and who don’t have as much to lose by introducing new methods.

“With no legacy systems to worry about, [and empowered by] the ability to enjoy lower overhead and take advantage of the democratization of information and technology, the newcomers can move quickly with a minimum of expense,” said Gerrish. “Thus new entrants are well equipped to attack almost any market — including yours.

One reason: New players today often can sidestep substantial capital investments to complete in the marketplace. As Gerrish noted, Uber, the world’s largest taxi company owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the world’s most valuable retailer, has no inventory. And AirBNB, the world’s largest accommodation provider, owns no real estate.

“There’s something happening here and we need to pay attention to what it all means for us and our industry,” said Gerrish. “We have to look to collaboration, both within and without the industry, with market strategists, technologists and medical scientists, gerontologists and many other disciplines that are now directly involved in the life insurance industry. We can’t just keep doing what we’ve done in the past.”

The stakes, he added, are immense. Consider: now retiring baby boomers are transferring to the next generation their accumulated wealth, assets estimated at more than $30 trillion. To capture and retain the lion’s share of this market — and more generally, of assets destined to fund consumers’ retirement and financial protection needs — then life insurers and producers will have to keep pace in adopting technologies that can ease and speed underwriting, policy sales and practice managements.

With this as background, Gerrish offered his vision of the life insurance industry in 2020. If realized, here’s how the market will look in 5 years’ time:

  • Uniform applications and secure e-signature will have eliminated old paper-based processes.

  • Carriers and advisors will have instant access to medical records through a National Personal Medical Archive.  Streamlined databases will enable clients to apply for and get policies approved in a fraction of the time today.

  • Multi-carrier permanent policy illustrations will be easily accessible. Monte Carlo illustrations will also avail producers of more intelligent policy forecasts.

  • Clients will assess the quality of insurance professionals based in part on the advisors’ ability to provide multigenerational insurance and financial services over a period of decades.

  • Most AALU members will no longer operate as independent producers, but rather as partners and associates of financial services firms structured like law, accounting and investment firms.

  • In tandem with the shift in focus to multigenerational services, compensation will be structured to better align with advisors’ new business model.

  • Level commission-based and AUM-based based fees will be fully disclosed. And by, generating a recurring revenue streams, commissions and fees will also enable advisors to more easily recruit and retain high-caliber professionals to sustain the business long-term.

  • The industry position, that life insurance is now taxed appropriately, will gain currency among lawmakers. The products’ key tax benefits — income tax-free death benefits and tax-deferred growth of cash values — will be removed from Congress’ list of “tax expenditures.”

  • The evolution of insurers’ underwriting, sales and service capabilities will enable better client experiences, at both the high and low end of the market, enhancing the industry’s value proposition and reputation.

  • Policyholders will still be able to borrow against life insurance cash values, just as consumers use margin loans and equity credit lines.

  • Women and minorities, who now comprise 5 percent of AALU’s membership, will increase to 30 percent. The average age of members will also have declined to 50 from 58.

  • As the industry broadens its base of advisors demographically, it will better positioned to serve markets domestically and internationally. About 20 percent of new sales come from product sales in Europe and Asia.

  • Continuing innovation becomes a signature, driving attribute of the industry, as evidenced through the implementation of personalized medicine, genomics and the science of gerontology to enable consumers live longer, healthier lives.

  • New insurance products — including inflation-indexed annuities and life insurance products with health dividend riders– will better reflect Americans’ lifestyles and life, health and wealth expectancies.

“To sum up, the future of the industry and our association looks amazing, said Gerrish.”By 2020, we will be attracting the best and brightest young talent from all over the world.

“The days of young professionals leaving for Wall Street has changed because they now see our profession as one offering unlimited upside potential, flexible work-life balance and the ability to work with some of the most interesting people in the world.”

See also:

Automation talk at NAILBA 33

Digital destiny: What your agency needs to do right now to become more competitive