Daily Fintech

InsurTech Could Help Fix The Decline in Life Insurance

Life Insurance

This is the first of two posts by Amy Radin, a guest author. In this first post, Amy describes the business context and outlines some pointers towards a solution. In the second post, Amy will review some InsurTech ventures targeting this pain point.

No one disputes that life insurance ownership in the US has been on the decline for decades.

The question up for debate is what to do about it.

The emergence of an insurtech sector indicates that entrepreneurs and investors have confidence in upside potential. The hundreds of millions of dollars being poured into technology by carriers is another indicator of bullishness.

However, before investors and legacy insurers pour piles of capital into attempts to capture the opportunity using digital technology, they should reflect upon the root causes of this seemingly unstoppable trend, and prioritize innovations that aims at solving the biggest issues.

The Root Cause of the Decline of Life Insurance

The industry chased the high end and ignored the mass market.

The industry has, effectively, painted itself into a corner, and is trapped in a business model that, given its own complexity, is difficult to change from within.

How have carriers painted themselves into a corner?

Carriers face what Clayton Christensen termed, in his eponymous 1997 classic, “the innovator’s dilemma.” While continuing to do what they do brings carriers closer to mass-market irrelevance, today’s practices, products processes, and policies don’t change. They deliver near-term financials and maintain alignment with regulatory requirements, but ignore large, unmet market needs.

It’s worth acknowledging how the carriers have ended up in this spiral (particularly the top 20, who, according to A.M Best via Nerdwallet, collectively control over 65% market share).

What is the path to opportunity?

Here are innovation thought-starters to create value for an industry undergoing transformation:

Amy Radin connects customers to companies to create growth. She brings an unexpected combination of insight, reinvention and pragmatism to companies in transformation. Amy serves on Advisory Boards, is an angel investor, keynote speaker, and workshop facilitator. She consults with companies from startups to Fortune 500 applying her Framework for New Growth (c) to help companies attract new clients and expand client relationships.

 

 

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