Over the last few weeks, I’ve read articles in The Wall Street Journal, insurance industry trade magazines, and futurist publications about the impact of technology on the insurance industry – the life insurance sector, in particular. Recent start-ups like Ladder, Lemonade, and Haven are all trying not just to tweak the way life insurance products are purchased, they are attempting to turn the traditional model of what insurers sell and how they sell it on its head.
Smart, simple, affordable, and fast are the characteristics of these technology-driven insurers. And their objective is transforming the sale of a complex product that took place over a kitchen table and required days or weeks to conclude into the purchase of a commodity without blood tests or physical exams done online in a matter of minutes.
Whether these three new entries will ultimately prove successful has yet to be seen. After all, Napster changed the way that we listen to music, but Apple made the online purchasing and downloading concept viable and profitable. The company that is first to discover a new product or delivery mechanism need isn’t always the one that reaps the most benefit.
But the underlying message of Ladder, Lemonade, and Haven is clear: fundamental, transformational, and technology-driven change is coming to our business.
And those organizations that can’t or won’t invest in and adapt to those changes will face a future with a very predictable outcome: a slow and steady fade into obsolescence.
There are hundreds of examples of how technology has transformed businesses and changed the way we purchase goods and services. When was the last time you went to a travel agent, a record store, a bookstore? Have you walked into a bank branch lately? Do you still get a daily newspaper or do you access multiple papers online? What about your children and grandchildren? It’s not just nostalgic but downright dangerous to think that the financial services business is going to be exempt from these forces of change.
I am not predicting the demise of agents or financial advisors. A certain (but most likely a shrinking) segment of the population is always going to want to help from a competent and trustworthy professional. And the fraternal life insurance model, with its often undersold virtue of community service activism and financial support for causes that reflect the values of members, may be the ideal niche for field representatives that truly embody the society’s financial and fraternal missions.
That said, fraternals will still need an online door through which new (and primarily younger) members can enter. These individuals may very well be attracted to a particular society – or the fraternal business model, in general – because of our unique “giving back” features. But smart, simple, affordable, and fast are still going to be extremely important to these consumers. And if we can’t offer that option, then they’ll climb the Ladder, drink them Lemonade, and seek a safe Haven somewhere else.