“Amazon launches Amazon life insurance”
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“No, I’m not nervous about it at all. Why not? Because life insurance ownership is still at an all-time low, and it requires skilled and knowledgeable agents to tell the correct story about how life insurance really works – particularly permanent policies. Technology cannot replace that aspect of human interaction.”
“Only if Amazon can tell a better story or engage with the consumer in a better way than I can. If you’re only selling product, and you’re not diving deeper into needs or wants… then those days are numbered. If you’re helping people to solve their problems, and providing a consultation, providing advice and guidance, and do it with a unique experience, Amazon cannot compete with that, nor can any other digital platform.”
“However, since there are far fewer active agents today, and there will always be a segment of the population who are “do it yourself” types… to ignore that dynamic would not be good for companies.”
“With currently low interest rates and larger amounts of face amounts that should be purchased by consumers, I’m all for companies looking to streamline the approval process, particularly for amounts under $1 million.”
“Let’s think about it: To secure a $50,000 annual income (not a large income in today’s standards), it takes a $1 million death benefit to replace that on a human economic life underwriting basis. Coincidentally, $1 million will generally be the maximum that one would be able to qualify for, based on the proposed insured’s age. $1 million @ 5% interest would equate to $50,000 of income. Since interest rates are below 5% right now, $1 million is still not enough coverage, but it’s about the maximum one can qualify for with today’s financial underwriting guidelines with most companies. Individuals should be buying more insurance… and the easier the medical underwriting is, the better job agents can do in securing the proper amount of insurance coverage that families should have.”
“However, for larger face amounts, I don’t see traditional medical underwriting going away. If anything, this should be a clue to agents to do the full and proper job of securing the proper amount of coverage and that better pricing will be made available to those who go through the full underwriting process when they have more income to be secured.”
Giant online retailer Amazon diversifies into life insurance with the launch of Amazon Life (ALife) — a life insurance company that deals with term insurance. The move is being viewed as a game changer in the industry as it is based on a customer’s point of view of obtaining a life insurance policy.
After careful analysis of the customer market and scrutinizing the process from inception to end, Amazon has been able to analyze what the customer needs are. The company, without any legacy limitations or perceived experiences, has brought forth a user-friendly system that is easy to understand and has the potential to offer flexible coverage.
ALife is automated and has extensive data algorithms that give it the ability to run detailed data analytics of the customer, access medical databases of prospective customers, and issue the policy automatically. This new policy is designed to adjust policy coverage based on the current lifestyle of the customer, which means the customer does not have to reapply for life insurance or need to go through medical exams again and again.
A notable example is the Hendersons, who have been using the basic term policy for five years. Now, they have a home and a child. The policy automatically recommends to them that they increase insurance coverage from $250,000 to $500,000. With a single click, the Hendersons can accept the agreement and automatically expand the policy limits. There are no other hassles involved. They simply get an automated addendum issued informing of the change made and the policy is updated. Before sending out a recommendation, the company makes use of the detail analytic algorithms to determine whether the coverage change would have an effect on the profitability of the policy.
Another example worth mentioning is the Jones. It has been 10 years since the couple retired and currently they may not need a large life insurance policy. An email is sent out to recommend that they should alter their policy coverage from $750,000 to $250,000. This helps the customer save on premium costs and limits of keeping the policy till the age of 100.
Free instant message-delivered advice available 24/7 along with easy-to-use online tools makes it effortless for the customer to get access to tailored information according to their time, schedule and needs. ALife also offers group life insurance for employers, which can be continued after the individual retires and spares the trouble of a re-underwriting.
The ALife internet system provides all the information needed by the customers. A simplified policy, rephrased in an easy-to-read format, is also available. The innovative system adopted by the company enables it to deliver an average turnaround time of four business days, starting from the time of applying for the policy to the time it is issued, and it has a remarkable 90 percent approval rate.
“Google takes the lead in innovation with DirectLife”
Getting a quote from a single carrier has become so “old school” with the introduction of Google DirectLife, an initiative that works with multiple life carriers and can provide you with several quotes, features and better coverage instantly. Functioning in about 750 locations in high-traffic malls, DirectLife interacts with its clients using the Internet, phone calls and in-person meetings as a medium. It designs the coverage and the product based on the feedback of the client.
A complete on-site medical examination is conducted either when the application is being taken, or a medical exam is scheduled when the application is being processed. Once the medical results are received and the client’s needs are determined, it is sent into a database and approved carriers can then bid on it. All life policies offered by DirectLife have no fees attached for surrender charges and no service fees billed to the customer. In fact, even after the policy is issued, DirectLife continues to serve as an agent for records. Clients have the ease and feasibility of getting multiple bids through the services of one company along with other added benefits, freeing them of the trouble of applying multiple times.
Sound worrisome? Innovation by tough competitors with greater resources and outreach can eliminate a number of businesses in the life insurance industry. Before this fiction becomes reality, expand your vision, rethink your options, invest efforts into improving your customer services, and design products that bring added convenience to your customers.
Your business’ life depends on it.
US-based retail giant Amazon is said to be investing circa $15.7 million in Indian insurtech Acko, which provides online-only insurance products.
Under the deal, Amazon’s Indian business will reportedly act as Acko’s distributor, and co-develop new insurance products with the company. Acko holds its own insurance license, and raised a $30 million round in May. Amazon has yet to confirm the deal.
The retail giant already offers multiple financial products including SMB lending and Amazon Protect, an accident coverage program, so gaining access to Acko’s product suite would further boost its standing as a financial services provider.
This should concern legacy insurers for two reasons:
- Amazon’s troves of data on Indian customers would allow it to personalize its insurance offerings. Combined with its seamless digital purchasing journey this could make its offerings the most attractive option when compared with incumbents, which usually take a less customer-centric approach to constructing and selling policies.
- The Indian market gives Amazon’s insurance business a huge expansion opportunity.According to the Times of India, currently only 3% of insurance is bought online across India, in a circa $80 billion market. However, the paper adds, this percentage is expected to skyrocket as India’s young and tech-savvy population attains financial maturity, a pattern we’ve already seen in China.
Amazon’s Indian venture is probably a springboard for a move towards more established markets. India is some way away from Amazon’s key US and European markets, suggesting that it’s using India as a test lab for expanding its insurance operations. However, Amazon’s decision to flex its insurance muscles in India is probably also down to the fact that Amazon has stronger competition in this market in the form of home-grown rival Flipkart — which has also begun stepping into insurance.
In Europe and the US, meanwhile, Amazon has fewer real competitors. As such, it’s likely that if Amazon’s venture with Acko succeeds, we’ll see it striking similar partnerships closer to its core markets to bulk out its insurance presence there. If this were to happen, legacy insurers and smaller insurtechs would be up against some stiff competition.
BI Intelligence, Business Insider’s premium research service, has written a detailed report on the future of life insurance that:
- Looks at the world’s biggest and most innovative life insurance markets, and trends they’re setting for the space.
- Explains the major inefficiencies embedded in the life insurance status quo, and the problems they’re causing providers and consumers.
- Outlines the two main strategies life insurtechs are adopting to drive change in this market, for the benefit of buyers and sellers of life insurance.
- Discusses the best practices life insurance incumbents and startups should adopt to steer clear of the risks still attached to applying emerging technologies to such a tightly regulated product.
- Gives an overview of what the rise of life insurtechs has in store for the life insurance space going forward.