Q: What do you see as the life insurance industry’s biggest challenges and opportunities today?
The life insurance industry is facing two big problems – one macroeconomic, the other demographic. The first is persistent low interest rates, which have dramatically limited investment returns, the core of making premiums profitable. Traditionally, insurers would invest premiums conservatively, get solid, predictable returns, and those returns would help make insurance premiums more affordable to policy holders. No more.
Millennials present the other challenge. They are changing the math of life insurance, holding only 1/7th the wealth that Boomers did at the same age and only 3% of today’s total wealth. Those are unhealthy numbers. These 25-40 year-olds are a crucial generation for life insurers to capture, but they don’t have the same financial resources to spend on policies.
Together the persistent low-interest-rate environment + the reduced buying power of an important buying demographic is going to force the life insurance industry to change. It must. New, cheaper-to-produce and easier-to-buy products that align with the expectations and income levels of a new generation are in order.
But I do see this as an opportunity – a massive one. If the life insurance industry can adapt to develop simpler, more cost-effective and affordable products that still deliver that level of protection so badly needed, we will succeed.
Q: Are those needed changes part of what attracted you to Breathe Life?
Yes. The life insurance industry needs to move more quickly and nimbly to align itself not only with the pocketbooks of a new generation but also with their digital preferences. Breathe Life is leading the charge on this front, bringing simplicity, speed, and cost savings to life insurance distribution.
In the past, the process of buying a life insurance policy was cumbersome. Calls, in-person meetings, tons of paperwork and medical analysis. Most people today don’t have the time and energy for this. And that’s a problem, because now in the U.S. alone more than 41 million people need life insurance. Life insurance products make a difference in people’s lives when it matters most. So it’s absolutely incumbent on insurers to streamline the distribution process to make it easier for consumers to get the coverage they need and easier for advisors to add value every step of the way.
The Breathe Life platform elegantly meets these challenges. But there’s more to the company than just great software (as a service). I joined the Breathe Life Board because I really like the Breathe Life team. They are highly motivated, very knowledgeable, and care deeply about the mission of the company, which is to improve financial security for regular people, so they can be financially prepared when bad things happen.
Breathe Life brings a mission-driven, people-first dimension to InsurTech, something I know, as a former CIO, goes a long way in building trust and winning business.
Q: Speaking from your experience as a CIO, what does it take for a technology vendor to stand out from the competition and actually get selected as a life insurance carrier’s partner?
Number one is really the functionality of the software or service itself. It has to address a pressing business need. Streamlining distribution checks that box. Breathe Life is innovating in an area that is absolutely essential to today’s carriers.
Second, products must be modular. CIOs need to know that the technology they build their business around must be able to extend to accommodate future needs and functionality without disruption.
Third, new technology must integrate easily with the existing infrastructure. Today’s API-driven platforms are well suited to meet this challenge. For me, the idea of integration also extends into the arena of “use.” The new platform or applications must be easy to use, integrating with the existing environment vs. introducing a major learning curve.
Fourth is cost. Here I encourage carriers to look beyond the upfront “price tag” and be sure that whatever they are buying is going to be supported, maintained, and upgraded over time at a reasonable cost.
A lot goes into making a technology purchase decision. Carriers need to consider the four criteria above, but they also really need to trust the vendor and team delivering the solution. Your business absolutely depends on them – make sure you are putting your faith in good people who will have your back when you need them.
In that regard, a great technology partner is a lot like a great life insurer.
Q: Is technology living up to its promise in the life insurance industry? Is it working?
Yes, I am very optimistic about technology’s impact on life insurance. I do think it is having a transformative effect and see a couple of key things contributing to that positive change.
First is cost. Technology costs have decreased so much since I began in the industry. This doesn’t just ease the cost of technology adoption for life insurance carriers, it spills over into reducing overall infrastructure costs, which in turn can lower policy costs for consumers.
The second is the availability of new data that can be used to make better underwriting decisions and create better solutions to help people in their life journey. Of course, insurers still need to make sure risk pools are large enough to mutualize risk and that they comply with all the required laws, but having better data allows insurance companies to create highly customized products, tailor-made for specific consumers and consumer demographics. Now, runners are getting targeted with offers acknowledging their good health. In other types of insurance, we see good drivers being rewarded with lower premiums.
Data is good. Technology is driving the development of more personalized insurance products and experiences that consumers really like and that also reduce cost for both buyers and sellers.
The third is convenience. Technology can make the experience of buying insurance easy and painless. It also can help us take the right step when the moment is right – with just a little nudge. For example, experience shows that when people have children they are generally ready to buy life insurance. Yet that is also a time when people are at their busiest, super distracted, and getting little sleep.
What if buying life insurance at such a time could be as easy as buying a product on Amazon?