Distribution Matters features conversations with Breathe Life customers, partners, and the industry at large on life insurance distribution challenges and opportunities.
This first article features Eric Palmer, Chief Marketing Officer of Brokers Alliance
For more than 40 years, Brokers Alliance has been upending the status quo in the insurance industry. The company provides a variety of modern insurance services to help independent agents and financial service professionals build and grow their businesses. Breathe Life recently caught up with Eric Palmer, CMO of Brokers Alliance, and here’s what he had to say:
Q: What are some of the biggest changes you’ve seen in insurance and distribution since the start of the pandemic?
A: We’ve seen a ton of change over this past year. but the top two things that come to mind are 1) a new sense of urgency that forced insurance companies to change much more quickly than they might have, and 2) the focus on our own mortality and the resulting interest in life insurance products. Distribution is where these two trends converge.
Prior to the pandemic, insurance companies didn’t feel too much pressure to modernize operations because the status quo, while not ideal, was good enough – until it wasn’t. Suddenly, the cost of modernization became the cost of doing business during a pandemic. Likewise, for consumers, life insurance was pretty easy to put off until the daily death toll began to spike and make headlines. People actually wanted to buy life insurance as we considered our own mortality and financial security for our families.
I should also note that our understanding of the impacts of this past year will likely continue to evolve as time passes – the dust hasn’t settled yet.
For example, I don’t think we can assume that consumers won’t meet face to face with advisors anymore – I think this interaction will depend on what’s being sold and consumer expectations. If I’m buying a $3 million managed portfolio and a $10 million life insurance policy, I’ll probably want to meet with my advisor. If I’m buying a $500,000 term life insurance, I’m probably content to do that online. Also, if I’m a digital-native, super tech-savvy consumer, I’m going to be more comfortable with online purchases in general.
Likewise, I think we can assume that investments in underwriting and digital experiences are here to stay. I guarantee that no insurance agent is going to take a 45-page paper application when they know they can complete an application with a client online or by phone in two minutes. In fact, this is likely the silver lining of the pandemic’s impact on insurance distribution.
Q: What kinds of changes do you expect to see in the life insurance industry over this next year?
A: Given the current low interest-rate environment, increased consumer interest in life insurance products, and potential inflation, I suspect we’ll start to see a lot more creativity in product development.
Carriers’ traditional focus on price is starting to give way to more focus on value. In response, the industry needs to get creative and provide more living benefits in these contracts, things like unemployment and disability riders or enhanced digital engagement with their policy’s performance.
The perception of value is also subjective – many people will pay a little more for ease and convenience. For these folks, the ability to complete a life insurance purchase online, fully underwritten and done in ten minutes is worth paying a little bit more.
The industry will have to consider these factors – living benefits, perceived value, and ease of engagement – as they develop new products and services for new customers in the current economic climate. The result is likely to be some very creative products, and I’d encourage insurance carriers to lean into this opportunity to build value for customers.
Q: If you could change one thing about the industry – wave the proverbial magic wand – what would you change forever?
A: It’s been clear to me for some time that we can’t go back to manual, paper-based underwriting. The cost and time associated with medical and financial underwriting is prohibitive, especially in the current pricing environment. We should not be asking customers to wait weeks – or months – while we wait to receive and ultimately review medical records. The work to make these records electronic has been underway for years, as have accompanying privacy regulations – so let’s make these records available with a few clicks instead.
And medical records are just one of many data points used in underwriting that are available electronically and that are already supported by digital scoring through LexisNexis and others. Prescription records tell us what we need to know about a prospect’s medical conditions without wading through thousands of pages of records, and without sending a paramedical examiner to your house.
At the same time, technology to support underwriting is maturing, and there are a number of smart solutions that have been proven in the field. In my mind, it’s really a no-brainer to be using all this existing data and smart underwriting tools to reduce overhead and increase efficiency.