Disruption in Life Insurance - who have we missed?


#1

I am only looking at pure play Life Insurance. Lots of ventures have Life Insurance as one part of their offering. They are not our focus today.

The ones that I see that have raised substantial funding fairly recently are:

Sureify Labs $3.1m Dec 2016
Ladder $14m October 2016
Sure. $2.6m May 20
Fabric. $2.5m March 2017

This is a tough space. This post gives you some background why Life Insurance is a hard market to crack:

Who have we missed? What do you know about this space? Are there any great ventures still below the radar funding wise? What are the best examples of incumbents innovating in Life Insurance? Please go to Fintech Genome to share your knowledge.

Added via Fintech Genome community:

The German insurtech startup Getsurance has raised $2.8m and has recently launched the first digital life insurance product in Europe.


#2

Stayed tuned :sunglasses:


#3

@EricForgy this is a good radio station to tune into :smiling_imp:


#4

Hi Bernard. I think the place to look is at insure techs that are trying to
help incumbents modernize. Seems to be more active be pure plays in Life
category.

Hope all is well.

Amy


#5

Hi @amy.radin good to hear from you. Hope all is well with you. Your expertise in this area is invaluable. I can see a lot of innovation among incumbents in Auto (eg Progressive) and in Reinsurance (eg MunichRe and SwissRe) but innovation among incumbents in Life has not hit my radar screen yet.

For those who don’t know Amy Radin, she is an expert in the digitization of Life Insurance, based in New York. Its a big, complex terrain and Amy has the map.

Can you point us in the right direction?


#6

Yes. Absolutely :smile:

I was an early Genomer and have been lurking around since June last year. Back then, we were building a new core system for insurance capital management, but then an opportunity to do something much bigger arose and we’ve been in stealth mode since :sunglasses:

Things are coming together and I am super excited. I hope to be able to talk more about it soon :pray:

I don’t remember sharing this before, but here is a little teaser podcast I did back in November:

https://soundcloud.com/gmcsoftware/former-rocket-scientist-turned-fintech-entrepreneur-eric-forgy-on-digital-transformation


#7

nice to e-meet you. I have a crazy passion for disruption in insurance, so
hopefully we’ll stay connected!

646-734-3722
amy.radin@gmail.com
Connect with me on LinkedIn http://www.linkedin.com/in/amyradin
Website & Blog Posts http://www.amyradin.com


#8

The German insurtech startup Getsurance has raised $2.8m and has recently launched the first digital life insurance product in Europe.


#9

Thanks @Insurtechie welcome to Fintech Genome, have added that to initial post.


#10

Hi, Start-up @Quilt just added life insurance to its portfolio and is rolling it out in many US states. You can even try it for 30 days and return the life insurance if you change your mind :slight_smile:


#11

The big life insurance companies are not doing much. One of the more interesting innovators from within the industry is Haven Life, but they have been around for a few years. I really haven’t seen anything of interest since, and have checked around with some colleagues who also have a lot of visibility and they agreed.

Even in the startup world, the energy continues to be on P&C (companies like MetroMile and their brethren), multi line (Lemonade, where jury will be out for a while, but they give themselves many pats on the back in their own PR and social media), and back end automation for incumbents (companies focused on helping incumbents avoid fluid collection, automating the application process, automating compliance to enable scaling of social media usage by agents, et al). These may sound like incremental improvements, but if you are a big carrier with a lot of policies, basic automation can be a big deal, not just for cost saves but for impact on customer experience and, if you measure it, NPS.

There continues to be recognition that there is a lot of room for innovation in life insurance.

So what is stopping the incumbents? Any or all of factors such as:

  1. last few years mortality curves have changed (to the disfavor of carrier estimates) so they are having to go back and understand the mortality of current policyholders – a priority.

  2. life insurance purchasing overall flat/down, and getting to the root of the trend and impacting the drivers that can be impacted is going to be very complicated and take time. Who will have the fortitude, skills and appetite to take this on?

  3. millennials need new product propositions – think about a two-income household – it’s very different than in the lifetime of my parents, when with one wage earner the need for that earner to have a policy was great. Now if both heads of household work, for many this may be less of a priority – it’s expensive, there are student loans to pay, etc.

  4. general need for new products – market need may be more for living benefits (like LTC) but carriers do not know how to design or price – and most have been burned on LTC, which is priced out of reach for the vast majority of the market.

To me all of this spells opportunity, but in an industry as conservative as life insurance – where balance sheet commitments are being made that won’t play out for potentially decades – there is little incentive to rock the boat, and more attention to be paid to addressing near term opportunities – mortality, distribution, automation of the back end…further out, living benefits. That’s how I see the strategic priorities over a time horizon of at least several years. I would watch the older, more established millennials and understand how their needs are shaped as there is a large cohort above 40 with assets, and see if opportunities emerge among that population.


#12

Awesome info (as usual). Thanks :slight_smile:

I recently updated my LinkedIn profile: https://www.linkedin.com/in/ericforgy/

We’re slowly coming out of stealth mode, but I’m still limited about details. We really are building a “new kind of (re)insurance company” and I hope you all like it. We’ll hopefully obtain our license early next year :pray:


#13

@amy.radin thanks for a thoughtful response that nails it IMHO. For those who don’t know Amy Radin, she knows how Life Insurance actually works AND she is digitally savvy. That is an unusual combination.

Amy, a question for you. If agent networks are the boat anchor on growth (because they cannot be too aggressive selling direct of fear of alienating their agents), is there an equivalent to Geico in Life Insurance (i.e a large regulated incumbent that only sells direct)?


#14

@EricForgy Look forward to seeing it when it is unveiled. Thinking about Reinsurance, check out this post/interview:


#15

Thanks @BernardLunn. Nice article :+1:

I agree. Not many people understand the 4-layers, but we are a 4-layer company :slight_smile:


#16

There is a group of life incumbents who have always sold direct – Gerber Life, Colonial Penn, et al. Their direct efforts have focused historically on direct response television advertising to inbound 800#s. They sell low-face term marketing the monthly cost, so a lower-middle income market. Also AIG Direct is attacking this market, and I assume that based on the face levels they emphasize ($500k or so seems to be the max they speak to in the advertising) they are also aiming at mid market and below.

These companies have not moved aggressively to move their businesses online, and are probably missing opportunity as a result. AIG has had ongoing management change and putting a lot of effort into non-US marketings, and cost cutting. Gerber Life is a below-the-radar business owned by Nestle, and toes the line within the Gerber brand – the core product as you probably know is baby food. MetLife put a ton of resource about 5 years ago into trying to open up a digital channel for term life, and also to selling term life in Walmart – those efforts did not bear fruit. The company completely turned over its marketing and digital teams, and is putting energy into rebranding and splitting the company apart to avoid being a global SIFI.

Term Life – or any simple product – is a logical place to anchor a digitally-centered sales effort. Why don’t the big carriers do it?
– Worry about angering the agents – even though the term audience is a different audience, or if the same as buyers of whole life, seeking to solve a problem that whole life won’t solve
– Not excited about term – whole life generates much higher premium dollars per policy, and the carriers continue to put effort into fighting over the shrinking pie of people who want high face, whole life policies
– Probably don’t have efficient enough infrastructures to sell term efficiently. The inefficiency of application processing and underwriting may be palatable for big premium policies, but is unacceptable for term
– Lack the skill sets and capabilities required to build a franchise through digital channels – marketing, data analytics, technology, UX, business model design, etc.

Well designed term, well marketed, is a great place to start a relationship with a millennial couple who have started a family, maybe purchased a home, have assets to protect, and even in a two income household would value some protection for their family. How about a policy that will pay off your student loan debt, as one example of something that would be appealing to the millennial household?


#17

Thanks Bernard, Amy and Eric - this is a really interesting discussion, great content. Thanks!

What I hear from life insurance carriers is that life insurance is ‘sold’, not ‘bought’. I think this mind-sets inhibits true innovation in the life insurance space.

Another thought I have is that perhaps pure-play life insurance is not a viable model. Millennials want all insurance policies aggregated and this usually starts with more basic insurance (home, car etc.) Those companies have probably a higher chance of selling life insurance and term as an upsell, rather than a millennial buying directly from a pure life insurance company.

I also hear that the underwriting process in the US is extremely long, however in other countries that are more digitized like Sweden, it is much easier already to offer instant offerings/quote/underwriting. We may see more innovative offerings coming from outside the US fairly soon.

Perhaps Life is currently not a low-hanging fruit in the insurtech revolution, we may see some changes later on.


#18

I think this post explains some of the hurdles with insuretech for life companies:


#19

thanks @thejpp @amy.radin As you say, the fundamentals of what VCs look for has not really changed. From a quick read I missed why Insurtech is different today. Back in the, long sales cycles was the big issue ie CAC. Looking at t from incumbent POV, what has changed?


#20

Hi @BernardLunn.

Check out Singapore Life. Which is not yet on your list. We’ve been quiet until we have something to say…

Here’s some press:
https://www.techinasia.com/singapore-life-50m-series-a/amp/

Our High-Net-Worth propositition is quickly gaining traction already, given Sinngapore’s reputation as a top destination for private wealth. Our tech-based full retail launch is imminent.

Walter