What’s Next for Life Insurance?

If you are thinking that what’s next for the life insurance industry has something to do with the experience surrounding buying and owning life insurance products, think again. Yes, the life insurance industry has a big opportunity to improve the customer experience. Companies are improving the complex and inauthentic language used in communications, improving engagement levels with consumers, reducing friction in the underwriting process and creating the ability to transact in an omni-channel way. We are even seeing new peer-to-peer models cropping up for other insurance lines, and it is just a matter of time before life insurance becomes a focus within them. And, yes, the life insurance industry now at least has a handle on what needs to be done to improve the experience. Companies are putting significant effort into catching up to other categories. Some of the progress is coming from within the established carriers, and even more of it is coming from disruptors that are improving the model rapidly, giving established carriers new capability to buy instead of building. So the industry is just a short time away from meeting the demands of today’s consumer. Bravo! But the industry needs to get beyond improving today's experience and focus on what's next. And what is that? Are you ready? Well, here it is: Death just isn’t what it used to be. Social, scientific and technological advances have dramatically reduced the probability of death for those under the age of 55. This is the group of people whose untimely death would cause the greatest financial burden on families and businesses and is the group we depict as needing life insurance most. Granted, many life insurance policies sold are issued on older people to implement tax strategies. However, the original intent of the insurance industry was to protect families and businesses from becoming destitute as a result of the loss of a breadwinner or key person. What happens if that probability is significantly reduced? Do we continue to try and find more “death pool” needs. Or, do we find new needs that our unique skills and competencies can solve? What’s next, in my opinion, lies in the latter. We can define our business more broadly. Are we in the business of "insuring" lives or “assuring” them? In other words, are we assuring that someone will live longer by avoiding or recovering from the things that are likely to cause death, such as drug use, cancer and suicide? What does this question mean for what's next in the insurance industry? First, let’s examine avoidance. Could life insurers use technology and probability to help individuals and communities further reduce the likelihood of accidents? We need to go beyond driving and household safety tips and into true early warning systems or algorithms that can enable consumers to be proactive. Could we better predict the likelihood of suicides or accidental drug overdoses? Could we help people understand the role of new, emerging risks such as “hackccidents”? (This is my term for an accident that is a result of human intervention into a computer system that may be controlling a car, a train, a plane or some other technology.) Secondly, let’s examine recovery. Suppose someone has an incident, and death is now imminent. Could the life insurance industry guarantee access to the latest technology? Could it design investment futures (similar to investments in gold or pork belly futures) in the ability to get an organ transplant or expensive medicine or to be frozen until a cure arrives? This may all sound far-fetched, but how far-fetched did the innovations of today sound just 10 years ago? Hmmm. This article first appeared in National Underwriter Life & Health Magazine