The third prediction in my blog series about Financial Services 2015 priorities is one that I am extremely passionate about. After spending 10 years working in the life insurance industry, I have in-depth knowledge of the customer buying experience for life insurance, and I can safely say this experience has not fundamentally changed for decades. If you have never purchased life insurance, let me describe the most common buying journey;
Step 1. Research and comparison shopping which results in confusion.
Step 2. Try to buy online and find out that an agent needs to contact you which leads to frustration.
Step 3. Complete a lengthy paper-based application process which is time consuming.
Step 4. Provide highly private health information and bodily fluids to a stranger which seems like an invasion of privacy.
Step 4. Wait about a month for a decision on whether you were approved resulting in anxiety about your health.
Step 5. Receive long, legalese policy in the mail which goes in a drawer and is never looked at again.
Thankfully, I believe life insurance companies will be focused on improving this customer buying experience in a number of ways in 2015.
The first way insurers are attacking this challenge is by building out direct-to-consumer sales models, and by “digitizing” the buying process. Traditional underwritten life insurance is often referred to as a “sold” not “bought” product, but the problem with this model is that it relies exclusively on agents to educate and sell consumers on the need/value of a product. Unfortunately, this model is becoming less and less effective.
Consumers have access to large amounts of educational and product information, and want to control the buying experience. Consumers may start the buying process online, then move to a mobile device, and ultimately call an agent to purchase a product. This cross-device, cross-channel model is extremely difficult for insurers to manage because it completely breaks the model for how products were traditionally sold. Interestingly, the vast majority of consumers will still buy life insurance from an agent, but it is hard to determine if that is being driven by the lack of alternative buying channels or consumers desire to buy face-to-face.
Compounding the challenge for insurance companies is the aging population of agents. Agents are retiring and life insurers are struggling to recruit and retain younger agents. These struggles are rooted in the same challenges insurers have with consumers. Being a “paper based” industry in a digital world is just as unappealing for agents, as it is consumers.
Insurance companies are quickly starting to realize that if they don’t address these issues that the future will be bleak. In 2015, I predict there will be continued investment in direct-to-consumer sales models, and there will be increased focus on digitizing the agent and consumer sales process. Insures are quickly realizing that investments in solutions designed to improve the consumer experience also improve the agent experience, and vice versa. So over the next year, companies will continue to spend money on improving their websites with relevant content and educational tools. Not all sites will offer a fully, online purchase process, but they will offer increased connectivity with agents through phone, chat, and agent locator tools. Significant marketing dollars will be invested to drive consumers to these properties, so it is critical that the properties are effective at qualifying and generating leads.
In addition to investments in improving the overall digital experience for consumers, I predict companies will also focus on improving the digital experience for agents. A number of large insurance companies have significant projects underway to revolutionize the selling experience for agents. These projects are focused on delivering sales content, product content, product applications, and commission information in a simple digital way that can be accessed across devices by agents.
I also see the trend of “virtual sales rooms,” where an agent and consumer can interact with each other, and with the insurance company to complete the sales process and digitally store important documents, to proliferate.
Finally, I predict that all the major insurance companies will have projects underway to leverage big data to provide underwriting decisions quicker and without the need of bodily fluids. This model has become the “Holy Grail” for the sale of fully-underwritten life insurance. The companies that reach this goal first will have a significant market advantage, because deploying a data-driven model to replace traditional underwriting should reduce sales cycle times from 45 days to minutes. This has huge implications for both consumers and agents. Consumers will know how much they are paying for a product without having to go through lengthy and invasive medical reviews, and agents will be able to quickly close sales and get their commission checks sooner. Ultimately, this is a win-win for consumers and agents and is fueling an arm’s race in the insurance industry.
In order for life insurance companies to remain relevant for today’s consumers and agents, they will have to improve their ability to deliver customer experiences that are connected across sales channels and provide relevant information that address both agent’s and consumer’s needs.
For my fourth prediction, I will talk about the importance Millennials represent to financial service companies.
You may also be interested in Tahzoo’s other predictions for 2015.
2015: The Year of? Hint, It’s Not Mobile, Social or Big Data (http://blog.tahzoo.com/2015-the-year-of-hint-its-not-mobile-social-or-big-data/)
Three Predictions For 2015 (http://blog.tahzoo.com/three-predictions-for-2015/)