Crossing the Chasm: Reigniting Growth in theUS Life Insurance Sector

Catastrophes can often be catalysts for how societymanages risk. For instance, World War II transformed theU.S. into a highly industrialized economy and put us in aposition of global economic leadership. As a result of theCOVID-19 pandemic, the U.S. life & annuity insuranceindustry is at such an inflection point.

Life insurance has endured flat to declining sales for over adecade. Put simply, sales have by and large not kept up withthe growth of the population, and younger generations arenot seeing insurance as a product that belongs in theirfinancial portfolio.

But as the world shut down seemingly overnight, interest inlife insurance has come roaring back, and COVID-19 isnow accelerating sector adaptation. Electronic application(eApp) submissions are up by 20% year over year, and e-policy deliveries by 52% YOY, according to recent insightfrom iPipeline.

At Ensight, we have seen a dramatic shift toward the virtualsales experience, with growth of 155% in just the last threemonths. This agile sector response to COVID-19 bodes wellfor returning the sector to long-term growth and widerfinancial protection in society.

However, this resurgence will be short-lived if the lifeinsurance industry doesn’t use this moment of opportunity.Younger generations will not tolerate antiquatedillustrations or the absolute need for an in-person sale.When we take a step back, COVID-19 is very likely to drivethe following three transformations within the life insurancesector:

Greater focus on the transformation of the salesexperienceA broader, accelerated shift to more holistic financialplanning by advisersIncreased consumer understanding of the importance oflife insurance

These are potentially simultaneous tectonic shifts. And thepotential long-term positive implications for life insurancesales are significant. 2020 may therefore represent the long-awaited inflection point for the U.S. life insurance industry.So, what are insurance carriers doing well today? Moreimportantly, what additional gaps must be closed to ensurelong-term growth?

The Current FrontierTackling the Application Pain Point

Over the past decade, the principal transformation agendahas been on addressing the pain point and cost inefficiencyof the life insurance application process. Insurance carriershave largely focused on shifting to electronic applications(eApps), as well as implementing new accelerated/simplifiedunderwriting programs.

By Matt Essick| Chief Marketing Officer, Ensight Release Date: July 7, 2020

Agile response toCOVID-19 bodes wellfor returning the lifeinsurance sector tolong-term growthand wider financialprotection in society.

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Life and annuity carriers need to transform the entire saleslifecycle – not just the application pain point. This meansaddressing everything from digital presentation of theproduct by financial professionals, to interactive trainingand to a consumer-oriented in-force web experience. Policystatements sent via snail mail are out of date.

And financial professionals, for whom 50% of clientengagements are now virtual, should be enabled with aninteractive, digital experience to explain products to clients.Clients should be able to interactively play with productsonline to better understand how they might perform, forinstance under different market scenarios. This is now parfor the course.

Change Distribution Mindset |Prioritize Technology “Platform Plays”

Silicon Valley venture capitalist Marc Andreessen said,“Software is eating the world.” A corollary in financialproduct distribution could certainly be: “Technologyplatforms are eating distribution.”

Life and annuity distribution has traditionally been focusedon relationships and traditional distribution partnerplatforms (i.e. people plus services). There is an unprecedented shift happening today – the introductionof distribution technology platforms and the elevatedimportance of the platform experience.

Insurance carriers will need to open their distributionmindset and strategy to prioritize “platform plays.” Thismeans not only reevaluating whether they are delivering amodern, Intuit-like illustration experience for different typesof personas, but also consider how they are enabling newtechnology platforms to drive premium growth.

Increasingly it will be the “platform plays” that will drivepremium growth. And without addressing the challenge of“product accessibility,” the life and annuities market willnever truly “cross the chasm” and return to long-term,sustainable growth.

Fintech is evolving our world and creating experiences thata growing portion of our potential client base have come toexpect. While insurance has gained some renewed interestduring the pandemic, we are now at the inflection point thatwill determine how well we can adapt and grow over thenext decade.

This shift is critical. However, insurance carriers need toremember that eApps and accelerated underwritingprograms will drive little long-term competitive advantage,because everyone will have them.

The next chasm to cross for the sector is productaccessibility. Without it, we will not return to a vibrant lifesector in the next decade.

Crossing the ChasmAddressing Product Accessibility

In 1991, Geoffrey Moore wrote “Crossing the Chasm,” whichquickly became the bible for entrepreneurial technologymarketing. “Crossing the Chasm” focused on how to drivethe introduction of innovative products from early adoption,to finding product market fit and ultimately to wideradoption.

To truly cross the chasm and reignite significant sectorgrowth through broader understanding and belief in thevalue and application of insurance products, life and annuitycarriers should prepare to address digitalization of sales anddistribution.

Complete Digitalization of the Point of Sale

Even with eApp growth, the permanent life insurance pointof sale experience continues to be rooted in paper. Whetherit is PDF brochures heavy on the compliance language orthe 40-page illustration, the point of sale has simply notadapted to the 2020 expectation threshold.

Consumers today – with the fintech movementtransforming everything from banking and investing tomortgages – expect a digital, intuitively visual and easy-to-understand experience. These are the prerequisites forselling your products successfully – especially in the world ofAmazon.

To truly cross the chasmand reignite significantsector growth throughbroader understandingand belief in the value andapplication of insuranceproducts, life and annuitycarriers should prepare toaddress digitalization ofsales and distribution.

ENSIGHT | 

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© 2020 Ensight

Crossing the Chasm:Reigniting Growth in the US Life Insurance Sector

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 skern@ensightcloud.com

SIMPLIFY, MODERNIZE AND ACCELERATEVirtual Meetings and Digital Sales Strategies 

About Ensight:Ensight is the market-leading sales acceleration platform for the L&A industry.Through its advanced, digital quoting, benchmarking, and  illustration  system andinteractive, real-time presentations,  Ensight is rapidly transforming the  rate bywhich way carriers, advisors and producers drive sales in today's virtual environment.