Life Insurance 2.0: How Amazon-Inspired Service Providers are Changing the Game

Life Insurance 2.0: How Amazon-Inspired Service Providers are Changing the Game

by: Dror Katzav, Co-Founder & CEO of Atidot

Amazon changed the rules of retail. It is the factory, wholesaler, retailer, producer, and delivery mechanism for the product. It controls the entire value chain. This is not just an incremental change, it is a revolution. The factory knows who buys the product, what they buy, why they buy it, when it is easier to sell, and which customers are satisfied. This provides Amazon with more power and influence than Walmart, Target, and Bloomingdale’s combined.

 

The revolution is not a change in technology from one stack to another. It is a change in mindset. Amazon taught us that a bookstore that controls the value chain can understand and analyze the end customer. Amazon focuses on customer success, easy onboarding, self-service, captured value, and perceived value for the customer. Think how easy it is to start using Amazon delivery, Alexa, and Prime, and think about the level of engagement and customer satisfaction compared to any other retail network. Consider what could happen if an insurance company was no longer a factory that manufactures policies but was instead a service provider to a client who needs risk management. Instead of a premium, think of a subscription to a risk management solution.

 

Amazon optimized the assembly line. Unlike their competitors, they focused on customers’ happiness, retention, and satisfaction. They do not have better products, but they do have a service focused on the customer and not on the intermediary. This makes a profound difference.

 

Insurance companies that focus on improving their services would be eager to personalize their products to make sure they meet the customers’ needs throughout their life journey.

 

They focus on the alignment of incentives and interests to make sure growth is based on customer happiness. They aim to reduce friction in the onboarding process and turn the product from a ‘push’ product to a ‘pull’ product because people need life insurance. The current situation is that insurance companies focus on the wholesaler and distributor, often at the expense of the customer’s best interest. That is the main reason for policyholders’ dissatisfaction, which eventually results in resistance to buy insurance or lapse.

 

New technologies are aiming to change the status quo. They provide insurers with the tools they need to offer their customers the right product at the right time throughout their life journey, and predict their needs in a frictionless way. This is the revolution.

 

These technologies are AI and machine learning based. They use existing and flowing data to constantly improve customer engagement and services. As a result, they optimize the Life Time Value of each policyholder, growing insurers’ revenues and adding to the customers’ happiness and retention.