Something for the 99%: Creating value today for life insurance customers through microinsurance

Life insurance is better than ever.

Some may be taken aback by that statement given current industry pressures, but I believe the facts are on my side:

• Fact: Thanks to increased use of electronic underwriting, life insurance is easier to buy. In a LIMRA survey of life insurers, 100% of respondents said reducing the time it takes to issue a policy was one of their goals in using automated underwriting. Consumers now expect the ease and convenience of an online purchasing experience; more than two thirds of life insurers in the study are using automated underwriting to meet these expectations.
  
  
• Fact: Consumers can afford more coverage. Life insurance costs have been declining in many markets. The causes are complex (e.g., mortality improvements, increased competition, automation), but the advantages for buyers are easy to see. In Japan, for example, life insurers are expected to cut premiums by 5-10% in 2018 based on the Institute of Actuaries of Japan’s proposed changes to its Standard Mortality Table.
  
  
• Fact: Life insurance pays. Industry statistics show that the vast majority of claims made on life insurance policies are approved. According to the Association of British Insurers, for example, the proportion of claims paid is approximately 97% in the U.K.

Beyond Peace of Mind

Amid these advantages, one fundamental challenge remains: Each year, the percentage of customers actually receiving a monetary benefit from owning life insurance is extremely low. In fact, annual claim rates are typically measured per mille (thousand) rather than as a percent. Fewer than 1% of all customers receive a tangible benefit from their policy each year. Of course, the principal value of life insurance comes from peace of mind and long-term protection for loved ones. Still, the fact remains that more than 99% of customers actually see nothing besides a bill. 

• See also:  Unlocking the Global Potential of Microinsurance

No wonder then that customer engagement levels are low. Fewer than 30% report being “strongly engaged” with life insurers according to research by KBM. Many providers find it difficult to differentiate themselves on any basis other than price.

For this reason, industry innovators are investing in solutions that provide the 99% of life insurance customers who do not claim with relevant, meaningful, and tangible benefits:

• Relevant: related to the core product that I am buying (not just a freebie or discount on some unrelated product)
• Meaningful: something that I value (Would I pay for this myself?)
• Tangible: a product or service that I can see and engage with (not just “peace of mind”)

Innovation in Action

At RGAX, we work with many different partners across the globe to create, catalyse, and accelerate access to industry solutions that life insurers can offer to new and existing customers. We are active in many different areas in which we see opportunities. Examples of services for the 99% include:

• Quealth: a mobile-centric digital health coach that scores your health, sets personal goals, and helps you be the healthiest you.
• Everplans: a secure suite of content and product services for online and estate planning, including tools for customers to organize their digital lives.
• Multiple projects in development, including an initiative to provide digestible, actionable wellness insights that help you shortcut your route to a healthy lifestyle.

Insurers have an opportunity to combine such value-added services with improvements in the purchasing process, including a frictionless, smartphone-friendly underwriting experience. In addition, microinsurance (smaller scale) propositions, intergenerational protection sales, and other product-centric innovations can help insurers both attract current non-consumers and better serve existing customers.

• See also:  Solving the Microinsurance Puzzle

In the age of mass communication, life insurers need to create propositions that are truly remarkable: so good that customers want to talk about them. Developing products and services that provide immediate benefits for the 99% is the best way to get the conversation started.

• For a deeper look at this topic, please see:  Digital Microinsurance: Extending Insurance and Enabling Market Development