Direct to consumer sales of life insurance have long been a small percentage of total premium sold. Up until the pandemic, online and direct sales accounted for around 5% of total premium in the United States. Today, this number has risen to about 7 or 8 percent, so still not a large percentage of the market. What is important is not the size of this market today, but the potential for the future.
Covid-19 resulted in many people facing the reality of their mortality when people were dying around them. This meant searches for life insurance term rose and demand for the product increased. Because these searches typically are conducted via a digital channel like a quote aggregator, a digital agency or insurer, or even on the website of a brick-and-mortar insurer, any online search about or for life insurance represents a potential sale. Life insurers must be ready to capitalize on this opportunity and meet the customers where they are, offering them as close to what they need in a digital manner. This means life insurers must understand the potential of direct-to-consumer sales and the various channels or technology they can use to enter this market.
DIGITAL SALES OPTIONS
Source: Celent analysis and public announcements; not exhaustive.
Distribution channel platforms are used by the channel partner to distribute and sell products; some channel partners bear risk; some platforms can be sold white labeled
*White labeled D2C platforms are sold to insurers; they neither distribute nor bear risk but serve as a platform for those who do one or the other
Celent's recent report Back When In-Person Sales was a Thing: Digital Point-of-Sales Platforms in Life Insurance: A Primer discusses the evolution of the digital channels and the technology used in these channels. Insurers must understand what each channel can provide them and decide if they want to work with a pariticular digital channel or perhaps go D2C on their own. Doing the latter requires the implementation of a platform that facilitates the online sales. A D2C channel will most likely sell simple products (term, whole life, disability, and maybe a few others) and they might also not be completly without an agent being involved.
The biggest concern is making sure that the customer doesn't abandon the new business process. The insurer must make it easy to buy a policy and, if necessary, give the applicant access to an agent! That's where the digital POS platforms can help. The digital POS platform can smooth out the application process and the underwriting process if done right. Both are the cause of abandonment because the application questions may not be clear and the underwriting requirements can be honerous. They can include an agent as needed by providing the agent access to the same information the applicant has. The insurer must work with the various stakeholders, outside specialists, and the technology developers to reduce the friction in the new business and underwriting process and build an experience that enables a straight-through completion of the application and underwriting.
Celent's latest research attempts to help and insurer think about which digital channel to pursue. The next report will look at the various vendors who offer the POS platforms. Celent is not estimating how far the D2C market will grow, but in the near future we believe insurers should be aware of who offers what and how they will enter and embrace the digital sales market.