I get a lot of questions about why we're so bullish about the life insurance space. I see a growing need for digital health and health engagement within the life insurance industry. Here's why:
Several years ago we were in the process of merging another's startup's codebase that we acquired into the PHR Plus solution, they went by StrapHQ. One fine day a life insurance carrier reached out to us via the StrapHQ website, OnePath life insurance wanted to use our platform to engage their policyholders in health, reward them for good behaviors, and learn from their customers' activity levels by allowing the end-user to opt-in to data sharing. Perfect, this was right up our alley! But we hadn't taken a serious look at the life insurance industry as a vertical for PHR Plus yet.
We completed the pilot program throughout 2017/2018 with OnePath, and they were thrilled with the results! (you'll have to download our case study using the link below to see those results) We thought we were onto something, but it wasn't a market yet. Lo and behold a couple more life insurance carriers reached out to us through our website interested in an engagement solution for their policyholders. Okay, here's a trend... Then last year we went through the Plug and Play Insuretech accelerator, and we were able to workshop ideas with numerous carriers, reinsurance companies, and industry leaders. Not only was the industry moving in our favor, but it's also ripe for disruption. Here are a few things we've learned, let us know if you feel the same way.
1. Customer Engagement is Awful in the Life Insurance Industry
No Brand Loyalty-
One unnamed insurance carrier (we respect NDAs) informed us of a blind survey they did with their policyholders asking very basic questions and they uncovered this..
- 50% of the survey participants couldn't even identify WHO their life insurance carrier was!! WHAT?!
The customer usually has a relationship with the advisor that sold them the policy, which is good, but the carrier needs to spend resources to ALSO create a relationship with that customer. Don't alienate or get rid of the advisors, work with them to mutually keep that client engaged.
We've found that life insurance carriers have a hard time getting customers to stick with their term policy for the entire term (10, 20 or 30 years), or they don't renew their policy after it terms out.
- Carriers have at least 80% turnover in their blocks of business. Only ~ 10 - 20% of customers stick with the same carrier when buying a new policy!
- Most actuaries factor in a 10-15% lapse rate in the first year of a policy.
That means carriers are constantly spending money on marketing to acquire new customers, but they're not providing the right resources to KEEP THEIR EXISTING CUSTOMERS! Ever wonder why you see their commercials all day long?
No Customer Engagement -
The engagement model hasn't changed in life insurance for almost 100 years. Customer goes through underwriting (which is usually a horrible customer experience, but that's another topic), they get their rate, and just pay the invoices hoping their beneficiaries don't ever need to use the policy.
- What if the carrier gave valuable tools to the policyholder to IMPROVE THEIR LIVES? Not just be a death benefit to the beneficiary.. novel idea?
Well, John Hancock has been working on this for a number of years, and it's starting to pay off in dividends. And other carriers are waking up! Haven Life is a startup carrier that has a holistic approach to customer engagement, and it appears to be paying off for them as well.
2. Life Insurance Carriers Need to Help their Policyholders Live Longer Lives
The life expectancy of Americans is actually on the decline, for the second year in a row. That spells disaster for life insurance carriers that are insuring millions of lives. Our friends at SCOR have a phrase we like to use:
Health is the New Wealth.
Health has become the contemporary asset worth protecting. To generate sustainable growth, (life) insurers must prioritize health – and look beyond the niche of the ‘healthy wealthy...
SCOR provides reinsurance to carriers, protecting over 23,000,000 lives in the U.S. We think they know a thing or two about risk and protection. When the longevity of their policyholders increases by a small percentage, they make millions more in premium payments. The issue of longevity affects the carriers and reinsurance companies, but what are the carriers actually doing about this?
3. IoT Health Device Data and Electronic Medical Record Data are EXTREMELY Valuable to Carriers. But Policyholders Need Incentives to Participate in Data Sharing.
When a life insurance policyholder has to go through full medical underwriting it can take two months for the carrier to collect all of the necessary information. They need to try to get medical records from practices, collate the records into their underwriting system, collect blood draws, and read your vitals. It's a royal pain in the @$$ for everyone involved.
What if the carrier could get access to electronic medical record data with a few clicks of a mouse? What if they could just ship a wearable, scale, and BP monitor to the consumer and all of the data syncs to their system in the cloud? What if A.I. algorithms were measuring changes in this data in real-time and providing insights to the policyholder and the carrier? What if there was a platform that allowed the consumer to take action on their health and give them incentives for living a healthy lifestyle? THAT'S the future of life insurance, and that's what PHR Plus has and is building upon.
But we hear pushback on this topic. People say, "Is that the role of the life insurance carrier? It seems like the health insurance carrier should be providing that." Well... people change health insurance companies every couple of years. They either change employers, or the employer changes health plans. Life insurance carriers have a vested interest in an individual's life for 10, 20, 30 years or more.
And consumers are starting to expect more from their life insurance carrier. Bain & Company did a lot of research on this topic back in 2017:
Life insurance customers would like the same sorts of services as health insurance customers: expert guidance during treatment; checkups, preventative tests and diagnostics; digital access to records; and help finding medical providers. In addition, they want support for senior citizens.
IN FACT, they found that when carriers provide these types of services their Net Promoter Scores (NPS) increase by 20 points! Some estimates say that a 12 point increase in NPS can double long-term revenue for established businesses.
With small monetary incentives and prizes, we've found that consumers are willing to share their health data. In fact, they see the value they're happy to share their data. Just read this testimonial:
"Good to see you're looking after my health. This works both ways.... I'm less likely to die, and you keep the premiums. You should keep the program going indefinitely, (but just don't increase premiums!!)"
Are You Interested in Engaging with your Policyholders & Getting Access to New Data?
Flash forward to 2019, we've had successful pilot programs that have generated fantastic results, we're partnered with the right players in the space to provide a truly unique offering, and we're working out details with over a dozen carriers on how to implement PHR Plus with their policyholders. We know PHR Plus can help you with your policyholder engagement and we'd love to talk to you about how to help you engage your policyholders in their health and in your brand.
If you're working in the life insurance industry, want to learn some interesting data about health tech, findings from our health engagement study, and consumer use of health tracking devices then-