Three powerful examples of life insurance innovation

Other parts of this series:

Growth in life insurance sales is tepid. Annuity sales are stagnating. What should the industry do about it?

The life insurance industry in America is at a crossroads. As discussed in the previous post, U.S. households that have individual life insurance policies is at the lowest point in decades. Annuity sales, meanwhile, have stagnated despite favorable demographic shifts. The industry is investing in improving the experience for prospects and customers. But it continues to grapple with a fundamental issue: consumers question the relevance of these products.

Life insurers have not been idle in the face of this. Accenture surveyed the American life insurance market on the basis of three criteria: offerings, services, and distribution. From that analysis, four different strategies for succeeding in this shifting marketplace emerged.

Some life insurers are focused on building a scalable, “always on” customer relationship by broadening their service offerings. This often involves new initiatives in connected wellness, financial wellness, or digital wealth management.

Others focus on distribution and service innovation. They seek to meet demand for life insurance as close to the moment of consumer awareness as possible.

The third strategy our analysis surfaced involves trying to fill the “peace of mind” void for customers by creating new trusted relationships. Insurers using this strategy often focus on improving the customer experience, especially in claims.

Finally, some life insurers are focusing on being where and when “the conversation” is relevant in a consumer’s life. This often means building ecosystem partnerships.

Accenture also analyzed the annuity market on the basis of three criteria: messaging, offerings, and distribution. Our analysis identified four different strategies here.

Some annuity providers are putting new levels of focus on communication. They are growing their efforts to build a new narrative on how to create a reliable, steady stream of income that the customer cannot outlive. It’s about a new form of ROI for retirees—reliability of income.

Other annuity providers are more focused on refining their offerings. They seek to balance simplicity and flexibility to meet fast-changing consumer needs. Many are experimenting with offerings like “micro” annuities with recurring payments, or otherwise “unpacking” the benefits of a variable annuity to make products more digestible.

The third strategy Accenture identified focuses on building trust. By making their operations less opaque and easier for the consumer to understand, annuity providers seek to build stronger connections with the people they serve.

Finally, some providers are combining annuities and other investments to pursue the outcomes that consumers want. This approach starts with assessing a consumer’s goals (capital preservation, not outliving assets, protection against inflation or market volatility). This strategy bears some similarity to how the pharmaceutical industry now advertises. It’s not about the pill; it’s about what the pill makes possible.

It should be noted that annuity providers and life insurers can engage in more than one of the above strategies at the same time.

If this all seems abstract, it may be helpful to look at concrete examples.

  • Fabric is an excellent example of filling demand for life insurance instantly. It advertises that customers can be convered in as little as two minutes. Seventy percent of its customers purchase life insurance within 10 minutes. It is an excellent example of the “life insruance made easy” approach.
  • Blueprint Income, formerly Abaris, is using a mix of the first and second annuity strategies discussed above. Blueprint offers no complex products and provides a real-time price comparison engine that makes it simple to shop, compare and purchase. Blueprint is beginning to target younger buyers. It is also working on dynamically priced subscription plans.
  • Brighthouse Financial is addressing the “peace of mind” gap by providing clients a level of protection in down markets. It is an outcomes-oriented approach offering protection against market volatility. Brighthouse also operates with no financial fees.

So much for what insurers are doing right now in response to today’s market conditions. But what characteristics will distinguish tomorrow’s high performers in the industry? Come back next week for a look at what life insurers and annuity providers will need to succeed in the future.