Life insurance is among the world’s oldest financial products, yet the industry is still coming of age. Rapidly changing demographics, disruptive new technologies and rising consumer expectations are reshaping the way insurance is bought and sold. The need to find new solutions and business models has become urgent, but while innovation labs and partnerships have proliferated, results have not. Today, RGA and RGAX are working together to transform the industry and make insurance products more accessible and affordable for more people. We met with Derek Kueker, Vice President and Senior Actuary at RGAX, to discuss.
Critics have argued that innovation labs and similar initiatives have become over-hyped. Executives make pilgrimages to Menlo Park or Silicon Valley, set up sleek new innovation labs and expect the breakthroughs to arrive … and often they don’t.
This happens when established companies attempt to use lean startup tools without understanding them. Innovation is about more than bringing together big thinkers and a few beanbag chairs and foosball tables. Ideas are like raw material – they have potential, but they’re only the starting point. It takes a process to get to the product. At RGAX, we use a lean startup model with four phases – idea/concept, concept validation, prototype and scale-up – to deliver results.
Innovation is nothing new at RGA; we’ve been innovating for 40 years – and so RGAX benefits from all that insight and experience because we are within RGA. We also have a strong incentive to take concepts and convert them to results rapidly – we act as a transformation engine.
Explain the RGAX model a little more.
Successful transformation starts with identifying the right problem to solve. The RGAX advantage is that we sit within RGA, so we benefit from RGA’s more holistic view of the market and this helps us deliver solutions that matter.
Think about the insurance gap: there are huge numbers of uninsured and underinsured. People need life insurance protection, yet they’re not getting it. Why? Too many barriers. I think about my own experience of trying to get life insurance. I had a nurse come to my house, and I found myself standing there with a blood pressure cuff on my arm, watching my kids running around destroying things, and out comes the needle. It was not a great customer experience. And you have to wait nine weeks for an outcome. In between, my agent was fighting with the doctor, trying to get my medical records. This is a problem affecting our entire industry. Our goal is to develop solutions that remove weeks of friction, needles, calls to the doctor and waiting.
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 a non-traditional market participant in TransUnion, a credit data agency, to expand the insurance ecosystem and create a powerful new tool for our clients.
Reinsurance also came into play. We weren’t selling a stand-alone product; we were offering partnership and willingness to share the risk. Reinsurance from RGA was the warranty.
That’s another important point: we stand side-by-side with our clients at every stage, from the initial brainstorm to the meetings with state regulators. RGA’s research and transparency has helped reiterate the value to the carrier and the consumer. That’s a true partnership mentality: our clients know we’re there to celebrate when things work and to fix things when they don’t.
When do you know when to let go of an idea?
One of the challenges facing any fluidless process involves applicants who are not honest about their smoking status. We looked at a number of traditional insurance and insurtech partnership opportunities, but the models didn’t work. Ultimately we pivoted to an adjacent market – into the medical arena – and found a very promising solution to test. The first lesson here was that we needed to stop looking inside for solutions, and start looking outside of the industry bubble. The second lesson: our failure was a success. We believe that if we fail fast and get to a no-go decision quickly, we are able to learn and adjust.
It’s not uncommon for innovation labs to arrive at an idea that the parent company ignores, perhaps because it could disrupt existing businesses or relationships. How does RGAX manage this risk?
We see it as twofold: clarity in our mission and innovation as a service. Our process starts with ensuring that any idea aligns with our fundamental mission of helping people live longer, healthier, more financially secure lives. We then assess compatibility within our four lines of business – data/analytics, digital distribution, customer engagement, and insurance services.
And that takes me to innovation as a service. Ideas come from everywhere because challenges can come from anywhere; we need to look at a potential solution from every angle – RGA, RGAX, our partners, our clients. Ultimately, we wouldn’t want to pursue any idea we couldn’t fully stand by or any client we couldn’t protect as a reinsurer. That takes communication and collaboration at every level.
Not all companies have an appetite to devote the significant resources and focus it takes to spin up a new insurance concept. You have to evaluate all the emerging technologies, explore marketing options, perform testing … and after all that you may learn your solution is just not viable. Some carriers could benefit from a partner with eyes and ears on the ground, product commercialization experience and an understanding of the industry. With RGAX they get a dedicated team from a trusted partner who is aligned in the same measures of success. For example, we are building direct-to-consumer products where our incentive is based on commissions, so we have a real motivation to stand by the client through the launch and beyond.
We’ve found that transformation demands patience and requires an appetite for a certain amount of risk. Not everything will scale. Not everything will work. Determining what will requires discipline, ingenuity and a lot of industry insight. That is what RGAX is geared to provide. Every time an idea succeeds, we win because our clients win.
About Derek Kueker, FSA: As Vice President of RGAX's Data Solutions team, Derek Kueker is responsible for leading the data strategy efforts for RGAX. Derek, along with his team, creates detailed plans for optimizing the value of data assets. Previous to this role, Derek led RGA’s Experience Studies team and spearheaded all internal and external experience studies. He also assisted RGA’s U.S. pricing team on assumption setting and client bench-marking, and worked in RGA’s U.S. valuation department.