The Question III
The Question is a new series on the Montoux blog - in each post, we pose a potentially controversial question to prominent members of the life insurance industry, to gather their unique perspectives. Read the previous edition of The Question here.
Today we ask:
How do you think the landscape of life insurance channels will change over the next 5-10 years?
This is a hard question as there are many externalities that impact the industry’s ability to manufacture and distribute life insurance. Regulatory pressures, economic uncertainty, global instability, technological advances, and the client’s personal preference are and will continue to heavily influence the future. Over the recent years many old-guard stock insurance carriers have really questioned if it is economically feasible to stay in the business and at the same time tech startups are leaning in because these same carriers are cash rich.
Focusing on how to provide life insurance protection, I see the following trend which can be summarized as an enhance client experience.
- Many will operate in middle market solutions– more homogenized products and solutions that capitalize on the client’s life events and the ability to provide just in time planning for their life journeys. The key will be fast, seem-less, personalize experiences for low-cost, low risk products that can serve many generalized benefits. The experience will dictate the product/solutions. Currently, this is happening in the workplace where a client can have access to many generalized low-cost products. This market will continue to be a low engagement market but technological innovations will help the engagement challenge by allowing new DIY capabilities.
- Another subset of the middle market as well as many in the affluent market will require much more sophisticated planning and service – a more specialized holistic client journey that will be high engagement and demand expertise. These distributors will be seen more so as financial coaches or Sherpas than the stereotypical life insurance agent. The insurance products for this market will be specialized with customizable value propositions and the underwriting will more intimate and deeper than today. The mantra in this marketplace is “service and value” versus “fast and cheap”.
- Andrew Gordon, VP and Actuary, Life Insurance Product and Risk, Guardian Life
Direct, multichannel, and technologically assisted advisers should all be featuring more in the short term.
Slightly further out the industry could face a major side-swipe from the new ability for people to own and allow access to their financial, medical and even genomic data. If these are on blockchain, with the ability for a person to provide access to an insurer for the purpose of providing an insurance offer, the nature of insurance distribution could change dramatically – which would impact incumbents and allow for a brand new set of market entrants.
- Conor Sligo, Consultant, Sligo Consulting
The development of robot advice capability will underpin the evolution of life insurance channels in the next 5-10 years. In the five year period, the face to face advice channels will adopt algorithm driven question structures to improve sales success, meet compliance obligations and reduce entry barriers to advice roles to meet the market needs for a younger more digitally literate workforce. In the 10 year timeframe, this evolution will support the development of the ultimate robo-advisers that will be the preferred experience for the majority of younger customers. This change to the life insurance industry will be no different to that occurring in other professional service industries.
- Sam Knowles, Director, Montoux
If you would like to share your own perspective on this question - or be part of a future post - please contact us.