October 09, 2013

Insurers have a problem: The product they're selling is complicated and requires discipline in the underwriting process so that risk is adequately priced for both parties to the transaction. Insurance agents traditionally have handled admirably the vetting process associated with customer acquisition, but as consumers have grown more accustomed to buying online using sites such as Amazon and iTunes, and have access to ubiquitous, well-stocked big-box stores such as Target and Wal-Mart, they have developed an expectation for buying any product — even insurance — in a quick, efficient manner.

"We have complex products, complex organizations, our buyers have sophisticated needs, what we sell is not necessarily exciting and entertaining, and we really need some high levels of expertise," Mark Breading, a partner at consulting firm Strategy Meets Action, said at the company's recent Innovate for Advantage event in Boston, kicking off a panel on customer experience. "We need to think about the distribution channel as well as the policyholders."

For life insurance carriers, the fallout from this shift has been especially difficult. No one is required by law or contract to buy life insurance as they are to buy auto or home insurance, and the process to be underwritten becomes increasingly consumer-unfriendly compared with each streamlined buying process in another industry.

"Life insurance is usually sold in a way that someone has to go through some medical underwriting at a home office, then depending on your age and the amount at risk, you might need to go through a physical exam," says Mike Plazony, senior VP for Erie Insurance, a multiline carrier that sells both P&C and life insurance. And that process only gets started after agents who sell the required P&C policies that bring customers in the door remember to ask about life insurance, he adds.

Erie wanted to dip into its expansive P&C book for potential new life insurance clients. But there were two customer experiences to manage in the process: policyholders who are wary of the invasive process, and agents who are used to writing a more transactional product in auto and home insurance. The solution was a new product, Erie LifeSense, which provides an entry-level term life policy of up to $90,000 that can be quoted and bound in a short time.

"We understand that our customers are busy, that the life insurance process can take quite a bit of time, and people don't want a large amount of coverage that requires them to go through full underwriting," says Rebecca Nurse, director of strategic initiatives for Erie Family Life. "It's going to be about 15 minutes for the person who's in relatively good health. Everything is click to sign, so there's no paperwork printed or passed back and forth, nor any blood or medical exams required. We also use auto-bank withdrawal for the premiums. It's very transactional, which the agents find really attractive."

Erie leveraged several existing technology partnerships to power the new product. Reinsurance partner RGA lent its underwriting engine to Erie, while iPipeline, which Erie was already using for agent processing, added its e-signature capabilities. An underwriting decision can be made after calling up only a motor vehicle report and prescription record.

Build A Connection

In addition to giving Erie some cash flow, LifeSense also helped demonstrate to customers the value of the life insurance product, as well as the agent channel. Plazony says that customers of LifeSense are likely to respond to upsell messaging and remain customers of Erie and its agents.

"It's really designed to get the conversation started," he explains. "Life insurance is more of an emotional connection with the customer than P&C, which you buy because you have to. It helps to deepen the relationship and helps keep them as a customer."

Learn From Direct Writers

In some P&C lines, finding solutions that help agents establish their value as a partner to the insured, while at the same time meeting their needs for speedy service, is a concern as well. PURE Insurance, which writes coverage for high-net-worth individuals with special insurance needs, faced a dilemma where its target customer was every bit as speed-conscious as the average midmarket P&C consumer. The company remained committed to its agent-based distribution and underwriting, and instead took other lessons from direct writers to change its customer experience.

"We have taken a lot of lessons from the direct writers. They've made quoting, which is considered by most people a hard process, very easy," says CIO Stu Tainsky. "But we're also inspired by companies that work with intermediaries. Our sales force is our agents, and we have to make sure it's as easy as possible for them to work within our systems and provide excellent service to their clients."