Innovation in insurance has more often come from the property & casualty side (for example, telematics in auto insurance). Partly because of the nature of the products, and perhaps also because of the age of company systems, life insurance has been slower to change.
But change is definitely afoot. Our colleagues at Celent are launching a new series of reports looking at the Insurance Company of the Future: Life and Annuity Edition . Authors Tom Scales and John Barr discuss four potential models for life insurers: transformation, “greenfield startup” (a startup company within a carrier), direct insurance, and the virtual insurer. Other reports in the series will look at the models in greater detail.
This is a sharp contrast from January 2017, when innovation seemed even more distant. In Why Are There No Drones in Life Insurance? , author Tom Scales noted the difficulty in making the business case for change. "There is no revenue generated when a life insurance policy is converted from one system to another," Scales observed then. Further, "Conversions are ugly, expensive, and time-consuming. They are also fraught with risk, as many of the source systems are fragile and contain complex, in-house designed calculations where the knowledge and even program source code are long missing."
Today the world looks different. Now there's a focus on alternative distribution channels in the press and in conversation. These channels run the gamut from direct-to-consumer, telesales, bank partnerships, retail partnerships, and other affinity relationships. The report notes that huge investment is currently being made by carriers, vendors, and venture capital firms, with a significant portion of that investment focused on millennial buyers.
The future is closer than ever.