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Emerging technology and the future of distribution: there is a place for the independent life insurance producer in tomorrow's multi-channel, consumer-driven "I want it now" world. But it's not so much face-to-face with the customer (unless it's a video chat).



Get used to the term, because you are going to hear it over and over again in the coming years as life insurance carriers and agents use the phrase to describe how they seek to reach customers across a variety of interactive channels--online, via a smartphone using an app, through social media, video conferencing, a live support call center, or talking in person to an agent.

Many of today's and even more of tomorrow's tech-savvy consumers are or will be demanding instant, constant access to information, service and purchasing ability across a variety of devices and platforms.

A LIMRA study released in October 2012 found that 61 percent of consumers who researched individual insurance or annuity products looked online, which is a significant increase over the 38 percent who did so back in 2006.

"With two-thirds of Americans conducting searches online, it is not surprising that the number of people seeking information about life insurance and annuity products online has increased more than 60 percent in the last six years," said LIMRA Technology Research Director Mary Art in a news release announcing the study's findings. "However," Art continued, "despite the popularity of online sources, more consumers (69 percent) sought information from agents, brokers and advisors, who are often viewed as the most valuable and influential information sources."

Art said companies need to understand that one size does not fit all when it comes to reaching and educating consumers about products and services. "Using a multi-channel approach will reach a broader audience in the ways they want to collect information and will most likely lead to more sales," Art said.

The carriers are aware of this.

As customers grow ever more accustomed to the digital experience, life insurance carriers are taking steps to improve and increase their digital channel capacity, and dramatically shorten what has traditionally been a very lengthy underwriting process. They are also going to get better at collecting and analyzing information about their customers, and these digital customer records are going to make it easier for carriers--either themselves or by providing information to agents--to upsell and cross-sell customers. By utilizing advanced analytics technology, they can mine customer data and search for trends. A good demographic profile of a customer allows a carrier to target that customer with products and services tailored to that customer's specific needs. And identifying customers and niches that are the most profitable allow them to identify other high potentials and tailor messages to them.

Anyone who wants to sell to the ever-growing wave of digitally savvy consumers needs to be able to accommodate a customer wanting to switch modes of interaction according to their preferences. They may start researching online, which might lead them to a smartphone app. They might finish with questions for a live call center rep or be referred to an agent in their area. And let's not forget about how social media fits into the picture. Producers who can successfully navigate the compliance issues associated with social media (which more and more producers are realizing isn't as daunting as originally feared) and make effective use of common social networking tools such as Facebook, LinkedIn and Twitter give themselves the opportunity to reach potential customers in a setting where they are increasingly looking for help.

Life insurance has traditionally been about community and building relationships, and that's what social media is all about. Life insurance agents have always been social networkers, educating clients, investing in creating long-term relationships and growing their businesses through referrals long before social media existed. Social media is a logical tool for producers to embrace, as people share details about what's happening in their lives freely via outlets like Facebook, LinkedIn and Twitter. When they get married, have a child, change careers or move, they post it. These are great triggers for life insurance discussions, and producers have an opportunity to use this information to initiate a discussion. Finding out more about your customers via social media is just part of a natural evolution to be where your customers are.

Producers need to "buy in"

At a breakout session ("Building Your Business with a Better Process") during the National Association of Independent Life Brokerage Agencies (NAILBA) annual meeting in Orlando in November, in a room largely comprised of brokerage general agents (BGAs) and carriers, a speaker noted that carriers today are embracing new technologies designed to simplify and speed up the life insurance underwriting process. Consumers expect it. The trick is getting agents to buy in.

"The challenge in this room," as one speaker put it, is for BGAs to work to get their agents comfortable with these newer technologies like electronic signatures and electronic policy delivery. Show them how easy it is to use and how it speeds up the process, and agents tend to become quick converts.

That breakout session featured speakers associated with LIDMA, the Life Insurance Direct Marketing Association. In a related breakout session at NAILBA 31, LIDMA's Pat Wedeking cited a LIMRA/ LIDMA survey finding that roughly one in four life insurance policies sold today are sold without face-to-face interaction with an agent. Wedeking and fellow session speaker Byron Udell of AccuQuote said they see buying habits trending this way, but reiterated that that doesn't mean agents are out of the loop on these sales--they just aren't meeting the client in person. They talk to the customer over the phone. "Nobody can buy without talking to us," Udell said.

Big impact for middle market

ING's Dan Mulheran, speaking from an interview for this series earlier this year, said he certainly sees increasing use of technology in life insurance distribution, and it is mostly focused on the middle market, "as we are not likely to find mass affluent or affluent people buying this way." He notes that ING has a couple of different approaches to technology that have helped that company penetrate the middle market.

"One approach is through ING's Specialty Markets channel. This channel engages independent direct marketing companies. Through web, print, and other mass advertising, these organizations generate leads for their captive agents to make contact with Americans who need life insurance, mostly term," Mulheran says. "These distributors make wide use of technology, with most of their sales and processing being done electronically. Applications and signatures are gathered electronically. And, ING is now piloting the electronic delivery of policies.

"Technology has brought big improvements to the economics of distribution. This model has agents at their computers and on the phones interacting with consumer leads of people who are likely to buy. The technology support allows the paperwork and back and forth normally associated with an insurance sale to be cut down significantly. This model is greatly helping us reach middle market consumers," Mulheran says.

Fewer handshakes, more clients

It is clear more and more consumers are using online resources to shop for life insurance, but it's also clear that the agent still has a key role in helping consumers finalize decisions and close the deal.

Producers who want to remain in the loop will have to adjust to closing sales over the phone, via Skype or similar video conferencing technologies, or via live web chats. A study of experienced financial advisors released in November by LIMRA and McKinsey & Company predicts the use of Skype/video technology will quadruple over the next four years, while the use of social media will more than double.

Again, the message is that savvy producers will embrace these technologies to keep up with the modern consumer.

As for the possibility of "live" producers becoming obsolete at the hands of automation? Not so fast, says Don White Jr., CLU, ChFC, AEP, CEO of Treasure Coast Financial Services in Stuart, Fla.

"This whole idea that people are ever going to go to the Internet and buy life insurance --I think there's always going to be a few," says White, who was interviewed for this six-part series while attending the MDRT annual conference earlier this year. "But you know the truth is, I just bought a new car. I did look on the Internet initially, just to sort of get a feel for what was out there. At the end of the day, I bought a car. But where did I buy it? At my local dealership. I'm using this analogy because I really believe that it is truly, ultimately how most life insurance will continue to be sold. People may look for it on the Internet; they may get a pretty good feel for it there. But when they start looking at it, their chances of pulling the trigger themselves with life insurance is way different than Progressive. I can see people pulling the trigger on a Progressive automobile policy ... It's a commodity."

But with life insurance, people need advice. How do they know how much coverage they need? What type of policy is right for them? White likes to use the money printing machine in the closet analogy --if you had a machine that could print out $1,000 every week, would you insure that machine for theft and fire? How much would you insure that machine for? The answer, White says: "You'd insure it for as much as you possibly could." People are stumped to provide that answer, White says. "How do you quantify that? Do you multiply it by 50? 100? 200? Well, how many weeks do we have?"

At the end of the day, White says he absolutely believes the old adage that life insurance must be sold. "There is always going to be a need for people have somebody help them make these very difficult life decisions," White says, "and to be able to give them the reason for insuring the machine in the closet--and how to do it, and what to insure it for."

Brian Anderson is the editor of Life Insurance Selling. You can reach him at

Better data, better rates?

Beyond the technological advances occurring in the life insurance industry, it should be noted that advances in the medical profession and the digitization of medical records will also impact life insurance underwriting.

As the adoption of electronic medical records increases, and the use of non-invasive devices grows, it facilitates the capture of huge volumes of data that can provide the necessary information for insight into predictive variables that are leading indicators of health issues. Younger consumers may very well be willing to share their personal health records with life insurers if it can help them secure a lower premium for their policy.

Insurers may also use advances in analytics to develop predictive models that can help "auto-underwrite" life insurance policies. If they plug in a consumer's credit score, purchasing habits (diet, lifestyle, activities) and personal health records, this aggregated data can lead to more accurate underwriting. The better insurers can predict the claims experience, the more accurate rates will be.

Think about the concept of how some auto insurers now offer devices that can be voluntarily installed in the cars of policyholders. The devices measure one's driving habits and can adjust rates accordingly. Will the availability of all the aggregated data someday do the same thing for willing life insurance policyholders?

The Fight for Independents

Editor's Note: This is the six and final installment of our series on threats to the independent life insurance distribution channel. Each of the previous articles can be viewed online at

Part I: Facing up to a graying producer workforce (July)

Part II: The impact of a universal fiduciary standard (August)

Part III: Alternative distribution channels (September)

Part IV: The dangers of ignoring the middle market (October)

Part V: Combatting consumer apathy (November)

Part VI: Emerging technology and the future of distribution (December)
By the numbers

61 percentage of consumers who
 researched individual insurance or
 annuity products online in 2012.

38 percentage of consumers who
 researched individual insurance or
 annuity products online in 2006.

69 percentage of consumers who
 sought information from agents,
 brokers and advisors in 2012.

73 percentage of Gen Y consumers
 who seek life insurance
 information online.

61 percentage of Gen X consumers
 who seek life insurance
 information online.

56 percentage of Boomers who seek
 life insurance information online.

Source: LIMRA
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Title Annotation:The Fight For Independence, Part VI
Author:Anderson, Brian
Publication:Life Insurance Selling
Date:Dec 1, 2012
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