At a distributor's annual meeting recently, I had the pleasure of listening to a fireside chat with an industry icon and former carrier president. He was asked what he thought to be the single biggest mistake the life insurance industry had made during his time working in it (nearly 40 years). His answer? Saying "gotcha" to policyholders; or, more specifically, the fact that the exclusive way of communicating with policyholders seems to be through the use of "terse" 30-day notices prior to major policy events. This way of doing business has corollary concepts in "buyer beware." But the life insurance industry has hurt its reputation this way, so why has it continued?
Being a "gotcha" industry creates a negative consumer association. We now know that "[l]ess than half of those polled (40 percent) have read their current insurance policy" and that when Nationwide instituted "On Your Side Reviews" in which agents were provided with a process to review policies, policyholder spending increased. A separate survey by Deloitte showed that only half of life policyholders are satisfied with agent, and therefore company, advice. And, perhaps most tellingly, less than 1 in 20 policyholders have access to their policy details online. With the possible exception of DMV registration papers, no other service provider today still deals with critical events exclusively via paper.
The most basic example is that most companies only send their "terse" paper notice shortly before the end of a level period, as I heard during the fireside chat, then hope that some people keep paying. Not only does mismanagement of such a simple event lead to lapse and underinsurance, but it wastes the massive opportunity that technology affords us to interact with policyholders more effectively.
One solution is to embrace post-issue technology (in-force) solutions to follow the 'policyholder' after they become one. The foundation is information about the inforce contract; what is it, what needs to be monitored, and how technology can enable it. That needs to be readily accessible to the agency. Next comes the creative aspect: The ability to connect with policyholders' social and banking profiles online, periodic reevaluations of coverage and even risk.
