There is a monster lurking beneath the insurance companies. For now, it lies dormant, having already been satiated by enormous feasts of industry. But soon it will soon grow hungry again and may turn its voracious appetite and overwhelming puissance on the insurance industry. I am speaking, of course, of Apple. The tech giant is one of the biggest potential competitors of insurers, having the capital, ingenuity, and distribution to become a major player in the industry. And this monster moves frighteningly quickly. Within a matter of months, Apple could release a top-notch life insurance product coupled with an enticing marketing campaign, effecting disaster for major insurance companies.
Picture the following scenario: the Apple execs, eyeing their unholy pool of liquid capital, begin brainstorming, “How to use it?” Stagnation must be prevented, growth is the mantra, the motive. “The phone and computer markets are nigh entirely tapped! Not much growth to be had there. We must look… elsewhere.” And then, an idea! Insurance! And the more they turn this idea over, the more practicable it appears, until they have a detailed plan, a proof of concept, laying out exactly the methods and means, and growth timeline, and everything else required to break into insurance.
The plan, fitting very neatly within Apple’s modus operandi, is to galvanize some of their best and brightest into creating a sophisticated machine learning program for underwriting. Even the execs can see that machine learning software has potential for revolutionizing underwriting, it being a chancy, complex business. Not only would the software handle variables with an incredible efficiency, it would be able to identify new markers of mortality with ease. The program would also be able to draw from the huge amount of user data. Apple Health Kit alone could be a great treasure trove of data plundered for mortality tables. And how much more does Apple have than that! Location tracking, financial information… our whole lives are stored on our phones! One reels at the sheer amount of underwriting power this machine learning program would have.
While the underwriting software is being developed, the marketing team goes to work setting up all the pieces they will need to successfully move into insurance. They set some other developers to work building the app on which the insurance products will be purveyed and managed, directly embedded in iOS, just like Health Kit and other apps. Then, they produce a slick commercial, as Apple is known for, introducing their newest product ‘Apple Life.’ Apple Life is ‘life insurance as it should be,’ i.e. hassle-free, cheaper, personalized, etc.
Now, there’s just one more step before going public: getting the paper, as they say in the industry, which means making products legally compliant. Although Apple would have no problem doing this themselves, the quickest route would be to engage insurers and reinsurers who have already paved the way in all 50 states, and who would be amenable to such a partnership, to say the least. Once the deal’s done, the app is developed, and all teams are prepared to take this thing live, the execs pause, and they smile the kind of smile when one knows he’s won for sure but no one else does. Smugly satisfied, they release the app, queue the oh-so seductive marketing campaign, and Voila! the public is smitten. Life insurance for all!
Yet, perhaps after pondering a little more, the execs may realize there is an even quicker, deadlier way to realize Apple Life. They propose, “Why spend months on end developing proprietary underwriting software when we could simply assemble the most effective underwriting practices of existing managing general underwriters and put our distribution power behind them, the one thing insurers have always lacked?”
“And then, why not, instead of building our own life insurance app, engage an insurtech? Knowing Apple, they would probably buy one to keep everything in-house, only making sure that the insurtech acquired has a viable product for them to release.
The execs gloat, “Ah this plan is so much easier, so much quicker than the first. All we’re really doing now is draping our brand over products others develop for us. And with our distribution power, not to mention our vast, unholy pool of liquid capital, these products will be a smashing success, without the time and hassle of us building them from scratch.”
A clever plan, isn’t it? Apple would likely be able to execute it within a matter of a few months, which should put the fear of… something into life insurers, maybe extinction. All Apple really needs to do is leverage their $260 billion in cash to hire the right people, then throw their brand and distribution power behind what those people provide. It’s that simple. And it’s clearly not just Apple that could do this — Amazon, Google, Microsoft, etc. are equally scary monsters looming far too near the insurance industry.
So what can life insurers do to prevent against this kind of scenario? Simple. Tap the talent before Apple does. Contract or buy a good insurtech, so you, life insurer, can release the hip, new life insurance product first.