Infrastructure

01:45 PM
Connect Directly
Facebook
Google+
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Tech Makes Room for Life Insurance for the Middle Market

MetLife, Securian and other life insurers are leveraging big data and distribution innovation to broaden their customer base.

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.

Manish Bhatt, MetLife
Manish Bhatt, MetLife

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."

[Accenture: 4 Keys to Life Insurance Growth in 2014]

"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."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

Previous
1 of 2
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Nathan Golia
50%
50%
Nathan Golia,
User Rank: Author
4/4/2014 | 12:18:14 PM
re: Tech Makes Room for Life Insurance for the Middle Market
Thanks for responding, Bud. With regard to point 1, can you explain a little why we might see challenges to internet-sold life insurance? As far as I know, this hasn't been a problem with P&C. I am sure that the compliance and legal departments at life insurers will do their due diligence in crossing the Ts and dotting the lower-case Js.

As for point 2, that's where effective cross-selling and leveraging the relationship comes in. Selling a term policy to a 25-year-old means that insurer is starting a relationship for the future. Why not reach out later and say, you're 30 now, maybe you want to talk to an agent about a more complex policy? It's all about getting those customers involved with life insurance in the first place, which is the challenge these initiatives are trying to meet.
Bud4447
50%
50%
Bud4447,
User Rank: Apprentice
4/4/2014 | 3:27:38 AM
re: Tech Makes Room for Life Insurance for the Middle Market
Two thoughts:
1. Life insurance contracts are legal documents. When legal firms begin creating and selling trusts online, then maybe there will be a way to appropriately apply for life insurance in the same manner. Personally, I think internet applications for life insurance and the contract they produce may be legally challenged in some future circumstances. Using technology for unsuitable situations (square peg, round hole) almost always results in many unintended consequences.

2. If the young, techno-driven, middle class does embrace a technical path to becoming insured, I think the path of least resistance will take over. That is, the lesser the complexity of the life insurance policy, the more likely it will be chosen to purchase. That may result in an applicant only considering term when a combination of term and permanent may be a much more appropriate life-long risk mitigation strategy.

There are also questions of fiduciary responsibility but I won't even begin to address that topic.
Register for Insurance & Technology Newsletters
White Papers
Current Issue
Slideshows
Video