It’s not provocative to say that 2020 has been a strange year, and that extends to every line of business in insurance.
As witness to over 1 billion online comparison shopping events for major-life purchases — of products like insurance and consumer finance products — every quarter, Jornaya acts as a proverbial front-row seat for trends in the consumer buying journey as they develop.
(Related: My Life Insurance Buying Journey)
Here’s what has happened in 2020 across insurance.
- Auto: Consumers were more budget-conscious and drove less, which flooded the auto insurance market with shopping activity. This marked 2020 one of the largest land-grab opportunities in recent memory for auto insurers.
- Home: With mortgage rates at historic lows, consumers fleeing cities for suburbs, and the interdependent shopping activity in auto, home insurance shopping also skyrocketed.
- Health: Shopping topped Open Enrollment Period levels throughout the year, with record unemployment and concerns about adequate plan coverage being large drivers for the activity. This was coupled with a drop in visits to the doctors. Profitability was OK in health this year — although it remains to be seen what ramifications will come in ensuing years as a result of reduced use of care.
So, what happened in life insurance this year?
The Pandemic and Life Insurance
COVID-19 fears at the beginning of the pandemic piqued consumer interest in life insurance products above normal levels, extending the busy season.
But along with that increase in interest came challenges.
Fed rate cuts decreased return on carrier investment assets. Medical exams became more difficult to complete for fully underwritten products.
So, while demand for life insurance was high, achieving profitability was tough.
Carriers narrowed their product suites and lowered face amounts. Some products experienced rate changes.
Delays and restrictions eventually led to mid-funnel breakage, and consumer shopping for life insurance dropped in mid-April almost as quickly as it rose in February.
At Jornaya, life insurance was the only line of business in insurance that experienced year-over-year decreases in shopping activity this summer. And it certainly doesn’t help that life insurance isn’t a required policy. It is often the first to evaporate from the consideration set when consumers are tightening their wallets.
But There’s Good News…
The life insurance market is stabilizing, with consumers making life insurance a priority. Life Happens cited life insurance coverage dominated dinner discussion in 30% of households surveyed. Jornaya saw shopping levels go up in September (6%), October (8%), and November (15%) when compared with shopping levels for the same months in 2019.
The MIB Life Index reported a 7.6% increase in insurance applications in October, the largest year-over-year increase in nine years.
LIMRA projects life insurance sales growth to continue its rebound in 2021 and 2022. And carriers have undergone unprecedented digital transformation in 2020 to better equip themselves to meet evolving consumer expectations.
Capitalizing on Life Insurance Sales Opportunities in 2021
Consumers’ increasing comfort with shopping for insurance online, and carriers’ efforts to shore up their digital presence, does not imply that the role of an agent is diminishing. In fact, it’s quite the opposite.
In the sea of information available to a consumer now, especially with the heightened stakes of the world today, life insurance buyers need more guidance than ever in navigating these waters and making informed decisions. Yet, only 4 out of 10 policyholders received a call from their agent during the pandemic, according to news from a recent J.D. Power study.
The advisors who will benefit from the heightened consumer interest in the market are the ones who leverage the data and technology available to them to better understand their clients’ needs and have a timely and relevant reason to call.
Consider the findings from a recent research study that Jornaya conducted with iptiQ by Swiss Re on the impact that comparison shopping has on application activity and policy issuance.
- 1 in 3 consumers shopped on a comparison shopping site in the year leading up to applying for life insurance.
- 57% of consumers witnessed were on a comparison shopping site the same day they applied.
- Consumers witnessed on comparison shopping sites before applying completed their purchase 68% more often than those who were not seen.
- Applicants who were witnessed in-market for a mortgage product before applying for life insurance were 45% more likely to become a policyholder.
Here’s the 2021 Checklist for life insurance distributors.
1. If you haven’t done so already, shore up your digital capabilities.
This is table stakes in today’s market. Leverage technology to establish a digital presence: marketing, quoting, and applications. Maintain a centralized platform where customer information coming from these activities is stored. Be able to ingest data about customers, append external data to those profiles, and create marketable segments based on that data. This will help with #2.
2. Personalize each experience a customer has with your brand.
No two consumer journeys are alike, so why should the buying experience be the same? Use the data available to you — your first-party data collected from previous interactions you’ve had with them, paired with third-party data about their interests, recent shopping, etc. — to create a unique and memorable experience for the consumer. This goes for lead generation, quote nurturing, and application follow-up. Whether that’s a well-timed phone call exactly when the person needed it most or a spot-on email that introduces an idea the consumer hasn’t previously considered, offering a tailored experience, powered by data and technology, will be the unfair advantage for distributors in 2021.
3. Return to the basics.
Consumers need help making major-life purchases. Being able to meet them in the market when they need that help is the first step. The next step is simply to offer expert advice they will appreciate. Be the trusted gateway for your customer for all of their considerations, whether you can sell them the product or not. It’s the best way to create long-term, sticky relationships that result in value for the client and the advisor.
Customers (current and prospective) are out there shopping. Data and technology will help with identifying who. The role of the advisor in today’s market is to understand why. If an advisor knows why someone is shopping, they can help them make the most informed decision. Why will shine a light on where they are in the buying journey, which informs what that person needs at that time, and when to spend more time with them.
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