Life
insurance rebooted
Marius Botha,
managing director of life insurer Stangen, sees lockdown and social
distancing having a similar impact on long-term insurance.
Ironically, for a company that has been around for more than 80
years, it was also prepared. Recently acquired by
short-term insurer King Price, it was in the process of launching
King Price Life when the pandemic began.
“We
call ourselves a restart-up because the company has been transformed
and re-transformed many times, and has been using a direct life
insurance model since 2017. When the short-term industry moved
towards a direct sales models and even online sales models, it was
only a matter of time before the life insurance industry did so. But
large insurance companies have seen a slow adoption of direct
fulfillment online channels.
“It
was a market heavily dominated by brokers, which then transitioned
into more of a call centre-based model. COVID-19 and the lockdown
will start changing those dynamics, so life insurance can also move
increasingly towards online sales models. I don’t think that
necessarily has to diminish the role of brokers and intermediaries in
the advice space. There’s a large need and purpose for advice. But
even some of the advice engagement needs to happen online.”
Life
insurance is not the same as short-term insurance, however, as so
many risk factors come into play. Medical check-ups were a key
element of addressing that risk. Doubly ironically, the current
health crisis has meant that check-ups increase risk.
“One
of the things that was most unexpected for life companies was that
the regulator intervened to stop medical tests in the underwriting
process,” says Botha. “They specifically asked us to no longer do
medical underwriting tests so that the laboratories have capacity to
test for COVID-19 instead.
“That
is a major disruption for a life company from a sales point of view.
Many companies can’t adapt to that, and some of the traditional
players still used paper application processes in their broker
models. Those brokers couldn’t reach the customer, and then they
struggled to get customers to complete the forms.”
Stangen
had one advantage: it had been a sister company to African Bank when
that company went into curatorship, although it was the one entity in
the group that avoided that fate. Nevertheless, it had to reinvent
itself.
“As
one of the smaller players in the industry, given our history and the
need to set ourselves up after the African Bank era, the best way to
describe it was innovation through necessity, not design. So we ended
up in a position where we had to invest in a new technology stack
that was fully integrated front and back end. We wanted to create a
cloud-based solution that bolted online direct fulfillment
capabilities.
“Pre
COVID-19 a large part of sales, about 75%, was all done through call
centre assistants. Direct fulfilment, where customers do the full
journey on their own, was 25%. Post-lockdown, although it’s obviously
early days, we’ve already seen another 10% shift to direct
fulfilment compared to the call centre.”
Stangen
also found itself well-positioned to operate from staff’s homes,
due to all operations being cloud-based. The challenge that then
presented itself was addressing medical risk. Here, too, emerging
technology came to the rescue. But so did a strategy adopted several
years ago.
“When
we launched three years ago, we cut out full blood tests in terms of
a medical underwriting process, and everything was done through an
online health-based questionnaire and then only a small percentage of
customers was sent for an HIV test based on a scorecard. When we
couldn’t send out the travel nurses to go and do HIV tests, we
launched an Express Life product, which cuts out the need for even
an HIV test.”
Botha
is adamant, however, that Stangen is not a fully digital insurer.
Since many find the online process alienating, it also uses SMS
marketing and human interaction. The key, he says, is in the customer
journey. Where technology facilitates this, it will be embraced.
For example, it is piloting the use of tools like facial recognition software, which allows the patient to take a selfie for identification, as well as verification of age and gender, and even assessment of body mass through analysis of facial features.
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