Life insurers are constantly devising ways to update their products and customer interface to reflect what customers want.
Peter Schaefer, CEO Hannover Re Life U.S., spoke to The Geneva Association at its 2019 Global Ageing Conference about the potential for technology to help life insurers reach more segments of the population and how far technology could go to transform the industry.
Ronald Klein: Thank you for speaking with us here at the 16th Global Ageing Conference, hosted by RGA.
For my first question, let’s talk about life insurance sales in the U.S.
In reinsurance, you want to achieve market share against your competitors, but this depends heavily on how much business the direct companies are writing. At least in your market, in the U.S., sales have been so flat that that’s actually been your biggest obstacle.
Why is that, and is that going to change?
Peter Schaefer: You make a great point there, Ronnie, and the easiest thing for a direct writer to do if they don’t hit their sales goal is to keep more of the business they write, which means we get less. So we do have to deal with that.
One of the biggest problems is we’re losing the youngest generation, the generation coming into adulthood today. The average age of insurance producers seems to go up by one year every year, so I think it’s about 58 or 59 right now. We’re not getting to the young people, but the young people also probably don’t want to buy insurance across the kitchen table with someone who’s trying to sell them something. They want to buy it online. They’ve grown up in an Amazon Prime world where everything comes immediately, and that’s not where we’ve been as an industry.
But we’ve done a great job making changes in that. I think Principal was the first to start a strong, accelerated underwriting program to turn a seven- or eight- week process into a seven- or eight-day process. Now you’ve got some really strong tech people who are doing the same thing, but taking it from seven or eight days to seven or eight minutes, and they’re successful with that.
We work with a group out in Silicon Valley called Ladder Life, and they’re trying to change the experience. They’re able to deal with younger people, with lower face amounts, i.e. the ones it didn’t make sense for agents to sell to and probably didn’t make sense for insurers to administer.
I’m optimistic, but I think we do have a real challenge. When one of the top funding campaigns on GoFundMe.com is for bereavement expenses, that’s an indictment of our industry. We have to get better, and luckily we have some people coming into the business now who want to radically change how the business is done and the customer experience.
Peter Schaefer, CEO, Hannover Life Re U.S. and Ronnie Klein, GA Collaborating Expert
Ronald Klein: You brought up technology. Do you think there’s room for a major disruption, where technology comes in and absolutely disrupts and takes over and it doesn’t look like insurance anymore? Or do you not think that’s not going to happen?
Peter Schaefer: I think regulation is going to make that very difficult. The good thing is that state regulators are working to at least adapt the regulations which were, for the most part, written in a paper-based world in the 70s and 80s, and bring them into the 21st century, so it deals with things that you need to correct in order to do things from a digital fashion.
I don’t predict a huge change, but I see more-and-more people using the technology. After all, it means a lot more flexibility for the customer. Take a young parent with kids. You can’t talk to them about insurance at 3:00pm or 5:00pm. Maybe you can do it at 10:00pm, after the kids have gone to bed and they have that five free minutes. If people can do it in that timeframe, perhpas they’ll buy the insurance. Otherwise, it’s not going to be at the top of their mind.
Ronald Klein: It’s really nice to hear from an industry leader like you – your views and optimism. Thank you for your time, and I look forward to your participation in the conference.
Peter Schaefer: Thank you, Ronnie. Great conference.
Ronald Klein: Thank you very much.