Bruce spoke with Novarica in early May 2020 during the height of the pandemic.
When we look at the potential impact of the pandemic on the life insurance industry, what changes do you see in buyers’ situations, now and in the recovery?
People out of work may not be able to afford life insurance. On the other hand, they may also place greater value on life insurance now that they see that they really cannot predict when they will need it. We have been seeing an increase in applications since the pandemic started.
What will buyers be looking for in new products?
They will still be looking for inexpensive term insurance. There is also an opportunity to sell more whole life insurance. Again, it gets back to the uncertainty that is raised by COVID.
Especially digitally, the simpler, the better. No one is looking to become a life insurance expert. And without an agent to explain complexities, we need to make sure what we deliver online is clear and understandable.
There is also a good opportunity to sell annuities online, where little activity has taken place so far. People will be hesitant to put their money in a volatile stock market; annuities are simple to understand, and their rates are guaranteed for some period of time.
What changes do you anticipate in distribution preferences? How are people thinking about engaging with sellers?
There will always be some people who prefer to meet face to face with an agent. Also, larger policies and more complex planning situations do not lend themselves to do it yourself. What I think the pandemic has done, though, is that it has helped many middle-market individuals get more comfortable with buying things like life insurance online without much assistance.
What about service needs?
As we move more to digital sales of life insurance, we can finally get away from all the needless paper. Applications can be submitted online. Policies can be delivered electronically. And people will be more comfortable with that.
There are also some things that the COVID crisis has highlighted for insurers. First, there are some paper processes that just did not lend themselves to working remotely. For example, physical check stock had to be fed into a particular machine. Second, signatures needed to be wet signed. The insurance industry can do better than that. Hopefully, some or most will.
Also, health exams and APS’s have been very difficult to get. Many people do not want a stranger in their house, no matter what they say about the precautions they took. Many doctor’s offices are not open. Life insurers need to find alternatives to these tools so that they can effectively underwrite people in virtually any circumstance. Electronic health records will help, although there are not enough people for whom those records are thorough enough yet.
How do you think insurers will manage the return from 100% work-from-home?
We can expect to go back to the office on a staggered basis, maybe beginning as early as late May. Vantis has already said we will not start our return until at least September. There are many people, myself included, who have really liked working from home. I save commuting time along with the associated car costs and such, and I am more productive.
I would like to work at home a couple of days a week after we go back. I have spoken to people, though, that really do not like it and want to be back in the office. So, it is a mixed bag; I am expecting that employers have seen that it really is doable to have the company work from home and will be much more willing to let people have more flexibility in where they work. An additional bonus for the company is if they can reduce their real estate footprint. It could be a real win/win for the company and the employees.
How do you anticipate that a greater acceptance of WFH will change talent strategies?
This is the single biggest benefit that I see from this modern-day plague. Now that employers have seen WFH work well, they can think about remote talent acquisition. Instead of choosing from a few people in the local area or finding the few willing to relocate, the entire country or world becomes the pool from which forward-thinking leadership can choose candidates. Done correctly, a company can truly get the best and brightest talent available.
Do you see changes in how life insurers will want to engage with InsureTech startups? What will they be looking for?
Life insurance companies are concerned right now about their income statements and balance sheets. As a heavy investor in corporate bonds and equities, both are taking hits as COVID takes its toll on many companies. While some companies are still hiring, many others have hiring freezes or have cut back. Higher claims from COVID are also a consideration, although most companies seem to be comfortable with their claim expectations. Many projects are either being slowed or shut down. Larger, agent-dependent companies are seeing sales declines. They are playing their cards close to the vest, so, in the near term, I expect companies to be choosier about which startups they support and will likely support fewer of them.
It is going to take some time before companies have clear enough direction to go “back to normal,” whatever that is. I believe they will want to see a greater proof of concept, a better chance of a clear win for the company.
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