Most life insurance companies agree that the greatest opportunity for growth in the industry comes from the middle market. Middle-class consumers traditionally expect life insurance to be too expensive for their budgets or the application process too time-consuming. Insurers must rise to that challenge with innovative solutions, says Manish Bhatt, SVP and chief digital officer for MetLife (and a 2013 Insurance & Technology Elite 8 honoree).
"I think theres a ton of talk about the middle market in the life insurance industry, but when all is said and done, more is said than done," Bhatt asserts. "What people are saying and what they're doing is different. I don't see other companies coming out with new products or innovative distribution approaches."
Under Bhatt's leadership, MetLife has prioritized customer-centric innovations to reach the largely untapped middle market. The company has experimented with distribution at Wal-Mart stores, and this February launched a simplified issue term product through its direct business that Bhatt says aims to provide options to middle-income customers.
Simplified Issue Term is a phone application (that provides up to $100,000 in coverage for eligible policyholders. While health questions are part of the application process, no exam is required; instead, MetLife is using third-party data sources to round out customer-supplied information and depends on an advanced algorithm to establish a price. Eventually, the product will be available online as well, Bhatt says.
"What we want to do is keep the complexity of the products more or less in the back end," Bhatt says. "It's getting the answer to the questions and then we tap some third party sources like the Medical Information Bureau or DMV and bring those together to make decisions."
By providing a great customer experience with these easy-to-access products, MetLife gains a customer database that might come back later, Bhatt says. That means that as insurance needs change among customers, the company already has an "in."
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"We're putting out this product that many big companies would say is 'beneath them' -- they think we should expect customers to go through the underwriting process, because 20% of them will save money if they give blood and urine," he says. "It ignores the 50% to 60% of the population that if they go through the process will just get the same results. And it ignores those customers that don't have the time or patience to wait six weeks.
"Most products tend to last for a long while anyway," he continues. "After as little as five or 10 years it's not really as predictive. You're really focused on the first five years or so with a lot of that information, then you're going off the general population. The goal for us is getting them in the right place to start with."
The fact is, consumers are looking to digital channels first for all their product decisions, and while life insurance agents have a clear role in working on certain types of products, getting first-time customers requires being where they are, says Securian Financial Group direct response manager Elizabeth Johnson. Like MetLife, that company also has built a platform for simplified issue products.
"We see the trend of doing financial transactions online and know while that might not be our current target market from an age perspective with our current products, as younger customers age and mature into our target market, their expectations have been shaped by their online experiences," she says. "Securian Access [the platform for these products] is really focused on the middle market that wouldn't be pursuing life insurance from an advisor."