It has already started: life insurance industry disruption
I’ve met a lot of people in the life insurance industry who have been very successful in the past and think that all they have to do to stay successful is to keep doing what they’ve always done. There’s a word for that: denial. Look around—everything else is changing, from entertainment to medicine, to the climate. Why would the life insurance industry be any different?
It’s important to be proactive, to recognize what changes are coming and to develop strategies to meet the new challenges as early as possible. If you wait until a change is “here,” that is, until everybody else has adopted new practices and you have no choice but to follow, it may be too late. Responding to industry disruption takes time. Basically, it takes more than a few weeks to change a system that’s stayed the same for the last 200 years!
Here are six major sources of disruption that I see starting to challenge our industry. The faster you can adjust, the better for your business.
1. Online Processes
The old, paper-based underwriting process is on its way out. Now it’s usually possible to pull all the medical necessary medical information from online sources. The decision comes in days, not months, and costs much less. In general, paperwork is on the way out, in favor of online, seamless processes. Faster and less expensive, what’s not to like? But like it or not, you won’t be able to do business any other way much longer. And that means that all of the people involved in the old processes—the middle people—will have a lot less to do. Maybe that means layoffs. Maybe that means retraining and reassignment. Either way, you’ll have to adapt.
2. Tech in General
The tech revolution goes beyond the internet. From CRM systems to software running commissions and handling contracting and even learning steps in the process for you (Zapier, IFTTT, Flow), computers are dramatically changing our industry. Maybe you want to keep doing things the old way. It’s your prerogative to want whatever you happen to want, but there are deep pockets behind ventures like Insuretech and Fintech, and they don’t care what you want. Maybe the changes are coming to the health insurance and auto insurance faster than to life insurance, but we’ll get our turn. And we’ll have to adjust the way we do business or be left behind.
You’ve heard me go on and on about this one before; marketing is completely different than it was ten years ago, even five years ago, and it’s continuing to change. The marketing industry has been disrupted, which is both a harbinger of what will happen in our industry and something we have to cope with as we market our own services. Now, I’m a big believer in combining eras—learning from the past—using the tools of the past and combining them with the tools of today and tomorrow. That’s where the good stuff happens. So shake hands, meet people, use the phone, but don’t for one more second underestimate the power of social media. Twitter doesn’t work? Can’t get a client on Instagram? Facebook isn’t for business? Keep telling yourself those stories if you want your business to shrink.
4. Millennials Do Not Believe in Life Insurance
Now, I don’t want to make blanket statements, there are exceptions, but in general, millennials are less interested in insurance than these age groups have been in the past. There are a variety of reasons. What matters for us is that these people are less likely to buy insurance, and more likely to talk their parents out of buying life insurance. Sales, overall, are going to slow as this generation gets older. And, without insurance, if the worst happens, these families won’t be protected. The situation is bad for us and bad for them. So, how are we going to adjust to the change in our industry? Can you give reluctant millennials a reason to change their minds?
5. Taxes and Policies
This source of disruption is not new, but it’s not going away, either. The fact of the matter is that that the government can change the shape of our industry without much warning. Right now, for example, estate tax kicks in at 20 million and above (for a married couple), but the target could easily change to 10 million (in 2024)—that would mean a lot more people interested in life insurance in order to pay the estate tax, but the target could go up again just as easily, and confusion makes people less interested in buying. Other regulations could also change, forcing alterations in how we do business, either on a state-by-state basis or nationally. Life insurance itself could be taxed. The point is that you can’t assume that the current status quo will last. You have to be ready to adjust.
6. Consolidation of the Life Insurance Industry
In recent years, we’ve seen the number of carriers drop dramatically. Mostly it’s been companies buying each other up after the financial crisis in 2008. But fewer carriers means less competition for those that are left, and fewer choices for the rest of us. One change in the industry (consolidation) leads to others (fewer options), which in turn leads to more changes….It’s a lot to keep up with.
And One More….
Trusting that the old processes are the only way is itself a source of disruption—self-disruption, or maybe self-destruction. Thinking things can’t or won’t change is a tried-and-true way to lose market share.
What will you do to stay relevant in the life insurance industry? Will you be like the people who insisted TV would never overtake radio, or that digital media would never supersede the newspapers? Or will you be like the people who responded creatively and intelligently to a changing world—and found new ways to take advantage of the new opportunities?
It’s not about out with the old and in with the new, and it’s not about chasing the latest thing. It’s about knowing how and when to adapt.