Digitally Disrupting the Life Insurance Industry
A Conversation with Yaron Ben-Zvi
The Life Insurance industry has not quite met the rapidly expanding customer expectations of the digital world. A combination of ‘expensive to replace’ legacy computer systems, intricate state and national regulations, paper application processes, and complex and traditional distribution methods make for a long and somewhat torturous digital transformation for life insurers.
One company, Haven Life, has partnered with a traditional life insurer MassMutual, to disrupt their industry by streamlining the purchase process online.
Recently Innovation Excellence had the opportunity to speak with Yaron Ben-Zvi, the CEO and co-founder of online life insurance agency Haven Life. Previously he worked at BuzzMetrics, an early innovator in online social measurement that later became part of the Nielsen company.
How did you become involved in the life insurance industry?
I came to the life insurance industry as a customer first. My background has always been early stage companies. I actually started in media and social media. Then I started a company in the asset management space. After my wife and I had kids, I was looking around to buy life insurance online. Because of my background, I actually had a certain expectation in my head of what that experience would be like. I do my banking online, I do my investing online. So I thought I would go to Google and find a company who was willing to offer me a life insurance policy online and it could be done in short order. What I found was not at all consistent with that expectation. It was confusing. I wasn’t sure who all the players were or what all the products were. I thought I should be able to get my arms around it. And that really lead to the genesis of what became Haven Life. Which was an idea that there needed to be a simpler more transparent way to deliver a policy. Especially to a customer like myself, who is very technology driven and has certain consumer product-centered expectations of what a life insurance transaction could be.
What transformation opportunities did you see?
What I saw as the opportunity was starting from a customer-centric type view. And since I happened to be a customer, it kind of came naturally. I started thinking about how the life insurance transaction needed to change to really become a digital experience in order to meet that customer’s expectations. The opportunity was taking this customer-centric approach and bringing technology to bear in a way, quite frankly, that lots of other industries had already implemented. Certainly in financial services, in areas like banking and asset management you already saw this. We focused on bringing that line of thinking to life insurance.
What has been the main innovation that your company has accomplished?
We view ourselves as the only place you can completely buy a term life insurance product completely online. To have an arduous and complicated purchase process, which can take 4-6 weeks, and make that happen in 20 minutes. Allowing the customer directly on a website to start and complete the process, is what is truly different and transformational.
Life Insurance has traditionally not been able to be purchased completely online, how did you succeed?
This is one area, especially coming from outside the industry, I didn’t have an idea of what to expect. Life insurance in particular gets very complicated, very fast. Every little thing affects the other and can have large implications. Whether it’s how you ask a question on an application or how you are filing with a regulator. Every piece is really critical. To deliver the customer experience we wanted, we took a holistic approach and thought about how to design the process from the beginning to end. This started with working with MassMutual to create a policy from the ground up, which we designed specifically for digital purchase and a direct distribution channel. Of course, we had to file the product with state insurance regulators, which is quite a process and different in each state. We also had to think about the process and how we were going to take the questions in real time through a website and underwrite them immediately. As a result, we ended up rethinking almost every component of the life insurance transaction. Policy wording to the underwriting platform, and the entire process forward.
Does it take a small company to create such innovation or do you think large insurers can achieve transformative changes?
There is a lot of talk about innovation now, but it’s tough for a large insurer where the average player has been around a very long time. The process has not changed much over the years. Because of this, I do think there are advantages to being small and coming from outside the industry. It brings a different perspective.
When we launched in May of 2015, we were a team of about 10 people. This kind of smallness, agility and flexible were really important for us. Moving quickly and thinking differently about how we could build something really different in the space, was vital to what we wanted to accomplish.
What role has customer centricity played at Haven Life?
When you think of innovation in life insurance today, customer centricity should be the driving force. It’s certainly the driving force of what we are doing here at Haven Life. I think a lot of the other things flow from that, especially in terms of how the product can and should change. Also, how the cost models needed to change. All of these should be driven by what is good for the customer.
How important was it to partner with a traditional life insurer, such as MassMutual?
For us it was critical. In thinking about innovation in the life insurance space, I basically think there are 2 options. If you want to be disruptive and change products and processes to better serve the customer and not just the distribution method, then you really need to be a life insurance carrier yourself or you need to find a good partner. A partner who can truly innovate various parts of the transaction. For us, MassMutual has been that partner. They have been really instrumental in innovating how we deliver a policy with the right features and thinking about things holistically. For example, we get a lot of support from them on legal and compliance issues. Obviously, they are ultimately the issuer of the policy we sell. What customers are buying is a promise from MassMutual to pay over a 20 or 30 year period. So the financial stability they bring to the table is critical.
Do your products and services reach customers not targeted by traditional life insurers?
Yes, I do think our customer is a little different. I think we are targeting a customer who is expecting a digital experience. Very much like I was when I went to buy a policy. These customers have been underserved by the industry to date. We are focusing on customers who are a bit younger and a little more digital savvy. And this is the type of customer we have been seeing.
What roadblocks did you encounter in simplifying the purchasing process for life insurance?
How do we choose…there are so many! When I thought about creating a customer-centric life insurance experience, I didn’t realize how many stakeholders would be at the table with input into the process. One of the significant stakeholders is definitely the regulators. It’s interesting to have the central onboarding process, the application, be subject to every word being reviewed by the regulators. And potentially different opinions in each state. The point of view they have is really about legalese and disclosure, as opposed to customer centricity – which isn’t necessarily the same thing. Going through that process was non-trivial and we are not even in all 50 states yet. We are in 43 jurisdictions and are still working on some of the big ones. The regulation makes it difficult to move quickly and to keep the customer-centric hat on. One example is that we wanted, somewhere in the policy language, to call a “Rider” a “Policy Option” but one of the regulators objected that it was not clear to the customer.
How to you see the traditional distribution methods of life insurance evolving?
Omni-Channel is sort of the hot word of the day. There is going to continue to be, as there is today, multiple distribution methods and channels. What will be different is digital and customer experience will be at the forefront, no matter what channel a customer chooses – direct, agent, or broker. A customer-centric digital experience is going to influence and make the process easier for the advisor, and for the customer, every step of the way. There will continue to be a mix of different distribution methods. Some customers want an advisor to work with, however, the direct channel is a new market.
Depending on the customer, and the types of products relevant for that customer, digital is going to transforms every touch point.
How do you see post issue customer service processes evolving to meet customer experience expectations?
Digital is going to be central to service and it will change the customer expectations and experience post issue. At Haven Life, you can log into our website to see where your policy is in the process and make policy changes, digitally. We haven’t gotten all the way to the end of the servicing processes yet as there are many touch points. The claims process is another area ready to be transformed. It will be simplified through technology and digital.
The biggest opportunity of all is the engagement of the customer past the point of purchase. Customers typically buy a policy and then don’t speak to the life insurer again for 20-30 years. Digital technology will be significant in keeping customers engaged post issue. Whether it’s through programs like Vitality (John Hancock). Or to keep up to date on changes in customers’ lives so we can make sure their coverage is still relevant. It will also be easier for customers to maintain coverage based on changes in their lives. These post issue engagement scenarios are enormous opportunities moving forward.
The personal finance industry has evolved to a digital focus at a rapid pace. Why do you think life insurance companies are lagging behind banks in the innovation of financial services?
There are a number of different reasons. First, it’s the nature of the product. Life insurance is a product you buy once and it lives on a system for 30 years. As a result, there has been less need to embrace digital. It’s the nature of the industry, the regulators, the type of data we are dealing with, as well as the complexity of the channels. These dynamics require a focused and meaningful approach to innovation. In banking, most of these areas are simpler and there is a different relationship with the customer which is much more daily and active.
What technology advances in personal finance can be translated to life insurance purchases?
I think of it broadly. Number one is putting the customer experience first instead of the product. You are seeing this with the Robo-Advisor market. The products being sold have been available and can be purchased other ways, such as index funds and basic securities. However, they are putting the customer first with a great website experience, great customer service. As well as very open and transparent pricing models. These are approaches we look at to see how this be translated it to life insurance.
Often we think of technology as synonymous with innovation. However, it’s not just technology. It’s about the customer experience.
Most life insurance companies tend to be product-centric. What steps do you believe companies need to take to move toward customer-centric?
It is a big culture shift. A lot of companies have been thinking about this a certain way. Most are organized around product verticals. The industry is starting to think in terms of market segments, which is a completely different mindset to be in. It’s both an organizational shift and a cultural shift.
Which do you see as most critical to innovation success in the life insurance industry, e.g., leadership, culture, risk-taking, process, or team?
A combination. Culture is huge and speaks to a lot of these things. It’s a culture of customer centricity. Also, risk-taking is very important. Especially in an industry that is built to mitigate risk. It’s a challenge to make changes which add risk. It’s a big shift, but it’s really required to do things differently.
What types of innovation in products and services do you believe life insurance customers expect?
That’s a tricky one. I don’t know life insurance customers can articulate their expectations. When they come to us, customers have an impression of what a life insurance transaction looks like in today’s day and age. And that expectation has been set by Amazon and Google and their banks. That’s the expectation they bring to the table.
As an industry, we need to rise to meet this digital expectation. It’s about ease of use, convenience, and transparency.
What current trends in the life insurance industry do you find exciting?
I am seeing lots of talk about innovation and many key players thinking about it, both venture companies as well as bigger traditional companies. It’s a topic on everyone’s minds and clearly, a lot of thought and energy coming to the table. It’s still early as far as what will be transformational. However, there are some intriguing ideas. There are some very interesting things happening in the underwriting space, as well as on demand and episodic insurance.
What types of innovation can we expect from Haven Life?
The first thing we are focusing on is streamlining the customer experience further. We still have an application process which can be improved on. We still ask people to take medical exams. We are looking at all these points in the process to make it even easier and more convenient for customers. The second big thing we are looking at is the post issue engagement process. In the next 12 months, we will be announcing some things related to how we think differently and engage the customer on an ongoing basis. Such as benefits we can offer throughout the life of the relationship we have with them. The last thing we are working on is getting to new markets – we still have a couple of big states we want to get to like New York and California which are on the radar for this year.
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Mari Anixter is the Managing Editor for Innovation Excellence. Based in Chicago, she serves as director of community, digital editor, and content curator for the global IX community. Please follow @mari_IX and @IXchat
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