Waking up at 4:30 in the morning for my flight on Monday, I did not expect to see the news that I did, when checking if my 6:50am flight was on time to head to Las Vegas for Insuretech Connect. Receiving an e-mail from Jay and Caribou at 6:11am affirmed that I would be heading there and the event would be on. It was a horrific and sickening event and I send my heartfelt condolences and wishes to those that attended the event or had family and friends that were there.
I was physically shaking when I arrived on the strip around 12pm. I wasn’t really sure what to expect.
While the streets were quieter than normal and there were police everywhere, Jay and Caribou’s statement in their e-mail ‘the people of Las Vegas are united in strength and resilience’ seemed to be true. I walked into Caeser’s Palace, and people were happily gambling, drinking and laughing, as you would expect to see in Las Vegas.
As I strolled across the casino and up the escalators to the conference rooms, I started seeing more and more business-casual dressed people, wearing a similar name badge. #ITC2017 was on.
The event, as with any conference, had some really good things, some that were ok, and some that could use some improvement. For next week’s post, I will do a write up and summary of the event in total. A quick thank you goes out to the organizers and all staff working the event. It was amazing to see so many people energized to talk about Insurance!
For this week, I am going to feature two start-ups who made announcements this week (one at the event, one not). These two announcements were not the ‘sexiest’ of announcements/solutions. These are not drone powered chatbots feeding the blockchain. However, these are solutions, and enhancements to existing solutions that make fundamental step changes for the Insurance value chain for their respective business verticals (one is life and one is auto). I also had the opportunity to speak with senior management from both of these companies and get some further insight as to how they view Insurance and how their companies are impacting the industry and enhancing customer experience.
Speaking of customer experience, these two words were mentioned in almost every conversation, panel talk and workshop that I attended this week. As it should be. What is it that we can do to help with the customer experience value when it comes to Insurance? For Life Insurance, Haven Life may have the answer.
Haven Life is a US Online only Life Insurance startup that is backed and wholly owned by MassMutual.
On Wednesday, Haven Life made some big announcements, namely the introduction of a ‘real rate’, in addition to dynamic underwriting, optimization on all devices and some new UX and logo. The ‘real rate’ is a real game changer as it relates to the Life Insurance purchase process in the US.
Ever applied for Term Life Insurance online in the US? The first step in the purchase process always starts with a quote (regardless of sites like TruStage, AAA ExpressTerm, Fabric, Ladder Life or Quilt). This has been the industry standard for years and has worked for some time. Even though some companies I just mentioned ask a few more questions than others, to make the quote a bit more close to the actual, the quote still remains, a quote. This is OK if you are a non smoker, in great health, with no previous medical history and who never travels overseas. However, for those that don’t, who have to go for a medical exam in order to get an actual rate, may be surprised when the rate comes back much higher than the original quote and in even more extreme circumstances, not even be offered a rate at all. It would be nice to know upfront, wouldn’t it? After all, doesn’t that help to positively impact the customer experience?
Haven Life sure thinks it does (and I tend to agree with them).
With the introduction of the ‘real rate’, Haven Life’s platform asks an applicant the underwriting questions first (and not just in a long form questionnaire form). A list of options is then presented to the customer both in terms of coverage term and amount. These rates are based on answers in the application, and industry standard third party data (such as identity verification, prescription history and motor vehicle records) that is collected on the applicant. This information is then analyzed in real-time using proprietary expert systems that the Haven Life team built in partnership with MassMutual. In some cases, qualified applicants will not need to go for a medical exam to get their policy – they may simply purchase and their policy will be issued. For others, they may need to go for a medical exam. However, due to the emphasis on providing a ‘real rate’, it’s likely their final rate won’t be too far off from what they saw (unless they failed to disclose something during the application process).
Below is some Q&A between Haven Life’s CEO Yaron Ben-Zvi and I.
Real rate vs. quote – Would you please explain to me the difference between the two?
It’s an industry standard to lead with an initial Life Insurance quote from the beginning, which is based on an applicant’s perception of their health without reference to underwriting guidelines. Starting with a quote made sense when it took a manual underwriting process several weeks to find out your eligibility and final pricing. However, because every company views medical conditions differently from a pricing perspective, the quote only provides a vague estimate of cost and often results in people being disappointed with their final price. If you were to price compare quotes across sites, it would be a general estimate that doesn’t factor in much about you as an individual. Therefore, it’s probably going to be pretty far from what coverage would actually cost you – especially if you have a more complicated medical history.
We see an opportunity to provide more transparency into pricing (and ultimately to build more trust) than there has been before. We have created the technology to take an application and underwrite customers in real-time. Why provide people with a quote when they can just answer a few more questions about themselves and know their real rate?
So, an applicant will only get a real rate once they have filled out the questionnaire. What happens once the questionnaire is complete?
There are three core experiences an applicant is met with when getting their real rate:
- They qualify for our InstantTerm process, which means they get their real rate and can instantly start coverage with no medical exam required.
- They get their real rate, pending a medical exam. In these cases they can start temporary coverage immediately and have up to 90 days to complete their medical exam.
- We can’t provide an applicant with a real rate or with temporary coverage, because we need additional information, such as a medical exam, to determine if they’re eligible for coverage. In this scenario, they won’t be able to start coverage immediately. Once underwriting is completed, we follow up with a decision on coverage eligibility and their rate. While this isn’t our ideal user experience, it’s still far more streamlined than the traditional application and underwriting process because the application was done online, and we’re able to utilize our algorithmic underwriting platform to analyze the medical exam results combined with the application data.
It’s worth mentioning that we find that most people schedule and take their medical exam within two weeks. We make it very easy to schedule and complete the medical exam from wherever an applicant prefers. As a result, many applicants complete the entire process, including the medical exam, within a matter of days.
For people who qualify for our InstantTerm, no medical exam process, it will be their real, final rate. For people who fall into scenario 2 that we outlined above, a medical exam will be needed to offer a final rate. With many applicants, the rate will be the same or very close to the final price so long as the applicant disclosed their full medical history and there are no surprises in the medical exam. The estimated rate we give them is much more personalized and accurate than a general quote.
Part of the reason we are doing this is because of pain points we saw in our own process. When we launched, we led with the upfront quote (but made it self directed and no-contact-information-required) as a way to give people an idea of how much coverage costs. What we found was that some customers were frustrated if their price was higher after the underwriting process. Understandable.
I agree with the points you make. Customer education will be key here, right?
While we’ve gotten a lot of positive feedback about our experience, it disappointed us to disappoint some people with their final rates. Coming out of those experiences, we saw an opportunity to focus our efforts not so much on a quick-win quote but on providing real, honest, personalized rates. That said, we do still provide estimates if people want to do high-level research in a few seconds, but we try to set their expectations better by actually showing them prices for a range of rate classes.
That’s great and makes a lot of sense. If I understand correctly, only if an applicant is approved, then all the options of coverage/terms will be made available to them (under whatever limits they can be approved for based on the data you have collected). Is that correct?
Great question, and this is a nuance that is a big deal and that we’re very excited about. Traditional Insurance processes require that you select a coverage amount without having a real sense of what your premium will be. At Haven life, when you get your real rate, we are providing you with all the coverage options you may qualify for. Some clients already know upfront how much coverage they need, so we do allow individuals to include it in their application in order to confirm eligibility for a specific amount. But for many clients, it makes sense to make a final decision on coverage and term length once you know how much you’ll be paying. Clients can dynamically increase or decrease coverage based on their financial need and budget.
Additionally, now this page allows you to see how much coverage you qualify for and what the price difference is. So, if you maybe wanted more coverage but thought you couldn’t afford it, you now know that there is a small difference that fits in your budget between the 20-year, $400,000 policy you applied for, and the 20-year, $500,000 policy you actually wanted.
Currently, Haven Life coverage starts immediately, even if still need medical, will this still be in practice?
Yes, our aim is to provide as many people as possible with an instant decision on coverage eligibility and allow them to start their coverage immediately. For many people, we can. That was one of the aspects of the process that frustrated me most when I went to buy a policy years ago, and ultimately, that experience is why I created Haven Life. You give up all this time and information about yourself and then have to wait several weeks to find out if you’re even eligible for a policy. Life Insurance buyers – who are usually husbands, wives, parents – want and deserve the instant peace of mind in knowing they have protected their family.
How can Haven Life limit the questions and still ensure good underwriting results as to not disrupt their long term profitability models?
It’s largely due to a combination of the underwriting platform and the mortality model we built in partnership with our parent company MassMutual. The application taking and underwriting process were traditionally two of the most time-consuming aspects of the Life Insurance buying process. The problem was that the data being reviewed was not dynamic and personalized to the individual and was also being reviewed manually. This led to many applicants answering questions that weren’t at all relevant to their situation. We were able to streamline the application and remove questions that weren’t needed in the underwriting process. Also, questions in our process are reflexive, so we only ask applicants questions that are relevant to their medical history. Lastly, we use industry standard third-party data sources, including Rx history, in order to identify cases which are eligible for our InstantTerm process or which may need additional information (like a medical exam). This allows us to improve and shorten a customer’s experience by tailoring the application process to each individual.
Snapsheet is a claims management solution for US Automobile Insurance that has been around since 2011. Snapsheet is a virtual claims provider that integrates with existing carriers to make the claims process frictionless for the carrier, customer and adjustors alike. Their solution is white labelled and is currently being used by carriers like USAA, Liberty Mutual and The Hartford. From the notice of loss to repair, the process takes about 2.5 days.
But that wasn’t enough for Snapsheet.
On Tuesday, Snapsheet also made a big announcement, that they have partnered with Keybank, to launch Snapsheet Transactions, to complete the final step of the claims process – payment to the customer. The industry standard for the US Automobile Insurance market is to pay claims by check. A major reason to this is due to carriers having legacy systems and the checks enable for better recordkeeping. However, with Snapsheet Transactions, Snapsheet is able to integrate directly with the legacy systems so they still have records, but now the actual payments are digital.
A cynic may look at these two announcements, and say, ‘big deal, Stephen, the first one does dynamic underwriting and moved a quote from the beginning to the end and called it a rate – and the other one is just doing e-payment, which was only a matter of time anyway’. And that’s the problem (cue the foreshadowing for next week’s post..). Many people are so concerned about the latest, greatest and sexiest chatbot, AI tool, drone, blockchain, etc, that they tend to overlook the fundamentals. Let’s be transparent and give customers money in a timely manner. Don’t get me wrong; the other stuff is cool, real cool. And it is going to massively change and transform our industry. However, as mentioned in my first post, the ‘existing stuff’, is still around, and is still going to be around for a long time. Customers of the ‘existing stuff’ need enhancement to ensure that their experience is a great one.
Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.
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