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Thought leadership, insights, and success stories

Insurtech Can Remove Barriers to Personal Financial Responsibility


Most people would probably agree that getting adequate life insurance is the responsible thing to do, yet 70% of all households say they would struggle with everyday living expenses within a few months if the primary wage earner died. At RGAX our mission is to help people live longer, healthier, more financially secure lives, so we’re working with carriers and insurtech developers to find innovative ways to address this problem.

Overcoming the Four Most Common Barriers to Financial Responsibility

To solve a problem successfully, you first need to understand it. Our research has found that most of the barriers to buying life insurance can be aggregated into four main categories: an antiquated sales process, complicated products, competing priorities, and intangible products. Let’s take a look at each of these barriers and how insurtech innovations can help carriers address them:

Barrier #1: An antiquated sales process.

One of the biggest obstacles is the requisite physical exam before the policy is approved. This exam usually involves a visit from the carrier’s healthcare representative, which may require the consumer to take time off from work or otherwise disrupt his or her routine. And once the exam is complete, there’s often a month’s wait for the privilege of buying the policy. In our “e-everything” world, that’s just not the way most consumers shop for products.

Solution: Changing an antiquated process requires a modern approach. Enter big data analytics. Research has shown that data such as motor vehicle records and credit data can be predictive of longevity. Additional evidence to help insurers evaluate the applicant can help speed up the approval process, and potentially skip the medical exam altogether. For example, TransUnion TrueRisk® Life is a credit-based insurance score that is predictive of mortality and lapse risk and offers one such solution. The score, validated by RGA, relies on data to introduce a far faster, fluidless application process. We were able to combine our industry experience with an external market participant in TransUnion, a leading provider of risk and information solutions, to expand the insurance ecosystem and create a powerful new tool for our clients. 

Barrier #2: Complicated products.

Carriers often think that if they just build a better product, consumers will be motivated to get the coverage they need. This mindset leads them to create ever more complicated policies. In reality, consumers are often looking for simpler solutions to their problems. When a buying decision is too complex, they’re more likely to put it off until they have more time (and many never do).

Solution: Since insurtech start-ups aren’t challenged by the legacy mindset, their products are often simpler with fewer options. Partnering with an insurtech to build a product instead of building a solution in-house can help expose carriers to a different mindset. For example, RGAX partnered with Amica Life and Cardiogram to leverage a Cardiogram app that allows wearable tech users to claim $1,000 of accidental death coverage for 12 months at no cost.

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Barrier #3: Competing priorities.

Those who need life insurance the most have more competing priorities in their monthly budgets, e.g., families with children still living at home or going to college.

Solution: Numerous studies have shown that consumers overestimate how much a life insurance policy will cost, so providing them with tools to estimate accurately how much coverage they need and how much it will cost is a great start. In addition, offering simpler solutions (see barrier #2) can help carriers offer targeted solutions at a lower price. For example, Ethos leverages the latest, people-first technology and predictive analytics to offer a new kind of protection for the digital consumer that’s accessible, affordable, and simple. Consumers can quickly get an idea of insurance costs by answering a series of questions and then receive coverage options based on their answers.

Barrier #4: Intangible products.

No one actually wants to use their life insurance policy, but paying for something that never gets used can also make consumers feel like they’re just throwing their money away. 

Solution: Products more relevant to consumers’ daily lives can help them feel like they’re getting value from their life insurance policy. For example, Quealth has developed an innovative digital health improvement program that leverages wearable technologies; physical and mental health assessments; multimedia integration; and gamification techniques that make working on personal health and wellness fun.

Ultimately, these wellness programs can also help carriers reduce the cost of a policy even further by potentially lowering mortality rates. One study showed Quealth users achieving remarkable results:

  • BMI: average reduction of 3.2 % (8.8% in high-risk individuals)
  • Waist girth: average reduction of 3.7%
  • Cholesterol: average reduction of 8.2%
  • Blood pressure: average reduction of 3.6%

Innovative Solutions Require Innovative Thinking

These four barriers to personal financial responsibility have been around for a long time, but they’re getting worse. At one time, an estimated 70% of Americans had life insurance. Now, almost half don’t own any, and those who do don’t have enough protection.

Reversing this trend will require carriers to step out of the box when it comes to the policies they offer and the ways they engage with consumers. To learn more about how RGAX can help, check out our new video.

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Written by: Julianne Callaway

As Vice President and Actuary, Strategic Research for RGA’s Global Research and Data Analytics (GRDA) team, Julianne Callaway researches emerging areas of interest to the insurance industry including insights on wellness, wearable technology, and genetics. Julianne joined RGA in 2013 as an Assistant Actuary in GRDA, where she oversaw research development for the department. Prior to joining RGA, Julianne spent nine years with Towers Watson, where she was a Senior Actuarial Analyst, responsible for loss reserving for several lines of business, establishing funding amounts for self-insurance funds, developing predictive models, and developing methods to estimate asbestos liabilities for corporations and insurers.

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