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.