Julien Descombes was appointed as Chief Underwriting Officer of Swiss Re Life Capital with effect from 1 January 2017.
What would make you buy life insurance?
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Even today, the words of my manager in my first job as an actuary still ring loud: "Life insurance is sold, not bought."
As the world became more customer-centric, I thought that life insurance distribution would keep pace with it. However, not much has changed in our industry over the past 25 years. Despite massively improved digital customer journeys, for the most part, life insurance is still mainly sold.
But why is that?
Largely, it's because people are more likely to take out life insurance cover at a very specific point in their life, like getting married, buying a house, having a baby or following a tragic event. Insurance and financial advisors are on the lookout for these "trigger points", and often a new policy is sold following a contact around this time.
However, this was not the case for me.
Several years ago, my wife and I decided to buy a house to settle in with our two young daughters, so we looked for a mortgage. The process we went through here in Switzerland was quite arduous: lots of forms, delays, and back-and-forth with banks. But we went through it anyway because we really wanted to live in our house and needed the mortgage in order to do so.
Along with the mortgage, I also wanted life insurance. Unfortunately, like the mortgage, buying life insurance also turned out to be quite taxing. But since I know how important it is to have protection, I was prepared for the grunt work. My occupation inspired me to take action.
As Chief Underwriting Officer at Swiss Re Life Capital, I see the need for life insurance every day. It makes a tremendous difference when people need it most. However, most people don't naturally understand this need. If they think about it at all, they struggle to see the value, don't make it a priority, or don't see the risks of not having it.
As a result, life insurance is not something that people rush out to buy, and more often than not it is sold following contact from an agent or advisors. Fundamentally, it is an altruistic purchase that people make for the needs of those around them – like your partner, your kids, or your parents – but typically not for yourself. The consequence is that we have a huge and increasing protection gap.
How can we solve this?
Firstly, in Life Capital we're committed to working alongside our partners to help close the protection gap, and I'm proud that we are contributing to make the insurance purchase process faster and easier than ever. But we need to recognise that this is only half the battle.
Simply put; people do not buy things just because they are easy to buy. They need to see the value of life insurance, and we need to help them recognise this need before (or soon after) a major life event.
We need to put as much effort into identifying the right moment to engage with our customers and convincing them that they need life insurance rather than just making it easy.
So how do we increase people's awareness?
One way is to make better use of those existing "moments of truth." Take my mortgage experience – what struck me at the bank is that life insurance was never mentioned by the broker, though I clearly needed it.
Here, I see an opportunity for data, technology and "nudging" to bridge the protection gap. If an app knows that I'm facing one of those moments of truth (like buying a house), it could automatically alert me about life insurance options. The technology exists today to generate the right prompt at the right time.
The good news is that this approach seems to work. A recent a/b test that we ran with one of our iptiQ partners tested an alternative way of presenting life insurance to customers. Instead of showing them the price and features, our behaviourally-informed test version presented them with the question: Do I even need life insurance? This was followed by helpful tips on who should buy life insurance (e.g. people with dependants, a mortgage, other debts, etc.) The result: a 24% hike in requests for quotes!
Let's be honest: life insurance will never compete with many other purchases in terms of immediate gratification or tangibility, but it fulfils a far greater purpose – every customer who buys life insurance is making their family and society more resilient.
So alongside making the purchase process easier, let's use technology, data and behavioural science to improve at engaging with customers at the right moment, and "selling" the value of life insurance to those who need it most.