Jake strikes again!
Brittany Clements of American Family Ventures wrote an excellent piece here with her take on why the first wave of online life distributors failed to disrupt the industry. And she's right: Life Insurance IS Hard. However, it would be shortsighted to conclude that there isn’t still a massive winnable opportunity in online distribution. We just need to be smarter about our goals. Disrupting or displacing human agents is a dumb goal. According to the American Council of Life Insurers - ACLI's latest (invaluable) industry factbook, sales agents and their production have grown significantly over the last decade. There’s obviously more to the story, and perhaps carriers are tired of losing leverage to the independent distributors that dominate today, but the solution isn’t to try to go around them. A much more appealing opportunity is hiding in plain sight, for while traditional distribution has been growing, the ACLI also makes the striking finding that “the percent of households with any life insurance coverage has been steadily decreasing since the early 1970s.” (p. 112). LIMRA's studies reach similarly stark conclusions. Why? After speaking with many agents, wholesalers and others about it, I believe that acquisition costs are simply too high for most distributors to profitably serve the middle market. Life insurance is effectively becoming a luxury good in the US. So we at Everyday Life Insurance believe that a worthier and more lucrative purpose for online distribution is to serve the shoppers that agents can’t. It’s the same playbook used over and over again throughout human history: use technology to create efficiency, lower cost and increase access. Easy to say but admittedly harder to actually do, but we’ve learned a lot about it that I am looking forward to sharing soon. That’s my take. What do you think? (sources in the comments)