ダイレクト・トゥ・コンシューマーは生命保険市場を破壊するか？

Three important dates in the history of life insurance:

1756: The first life insurance company in the United States, Presbyterian Ministers Fund, was founded. PMF sold life insurance policies to Protestant evangelical ministers and their families. The “Widows” and “Pious Uses” funds allowed ministers (or their churches) to pay annual premiums towards annuities that would be granted to the ministers if they were sick or to their families if they died.

1875 (ish): Insurance companies began using agents to sell their products. These “captive” agents typically went to people’s homes or workplaces to collect premiums on a weekly or monthly basis.After World War II, independent agents began to displace the captive agent, but the two still make up the majority of the market for sales.

2020: Direct to consumer sales become a real part of the sales strategy for life insurers in the United States. Maybe this last date is not as important as the first two, but Covid-19 forced the hand of many insurers to meet consumers where they want to be.

Today about 50% of the life insurance market is sold by independent agents, 38% by captives, and about 7% direct to consumer (the balance is through worksite, other institutions). While the DTC share sounds very small, that’s actually double what it was in 2011! As the use of technology has increased, people have shown an increased interest in online purchasing options.

DTC means that the insurer sells and fulfills a life insurance policy without the customer using an intermediary like an agent, broker, or call center. This is an area of interest for Celent, because Covid-19 has left a legacy of customers expecting a seamless online experience for any kind of purchase or service. For the life insurer, that’s a challenge because there is a lot of data needed to complete an application and integration with legacy technologies may or may not allow for a seamless experience.

It’s not as simple as thinking “Let’s sell direct!” because a bad experience could actually harm a brand rather than help it grow. To get to DTC, or even a sales model that still includes agents but is highly digital, insurers must consider at a minimum:

• Integration simplicity. This means APIs must quickly connect products to other digital channels and platforms.
• Application and underwriting automation. This requires rules based applications and time-effective underwriting that relies on deeper data insights and process automation.
• Time and money. Building a digital proposition requires an investment in infrastructure that might not exist today.A full understanding of how long it will take to recover this investment is key!
• Collaboration. Building a digital platform brings together many functions including underwriting, IT, marketing, compliance and actuarial.Everyone must be on board and have a common understanding of the end goal.
• Risk assessment. A careful eye on results from underwriting/mortality expectations to policyholder behavior to expense analyses is needed. And iterations will be necessary.

This is a really intriguing market because we see a lot of new start-ups and insurtechs that can help an insurer implement a digital sales platform that offers DTC or hybrid sales models that still incorporates the agent. These insurtechs cover either part of most of the new business origination process. The digitalization and automation of sales is key to the future of the life insurance market. We will be looking into this topic indepthly in 2022 and look forward to discussing it with you.