Who is the Life Insurer’s Customer
Disruption is coming to life insurance as traditional insurers are feeling threatened by insurtech. One feature that I have heard said about insurtechs is that they know how to put the customer first, but who is the customer?
This question “who is our customer?” has been asked internally within insurance companies for decades. The traditional answer was either the sales agent or the insured… and companies that answered the insured, more often than not, meant the sales agent who reaches the insured.
But there is another alternative that even the insurtechs have missed, I would encourage insurance companies to consider the beneficiary as the customer.
Traditional Debate: Agent vs. Insured
In North America, the sales agent is more often the true customer of the insurance company.
This is rarely admitted, but companies are driven by sales and the medium for these sales is the sales agent.
This has driven sales approach and product design — riders and features are designed to give sales agents tools to differentiate their product even though these features may have very little real value to the insured.
It is also inhibited innovation as anything that may threaten the agent-centric status quo is shot down quickly, even though it can be easily argued that everyone would benefit from more innovative distribution options.
The Beneficiary
It may be silly to argue that a newborn child who is not even aware of the purchase is the customer, but the important question to ask is why the insurance is purchased.
I’ve heard it argued that insurance can be purchased without a beneficiary, for example, to leave a legacy via a charitable donation. I call B*S* to this, it is just another angle used by outdated sales agents to remain relevant. Charitable donations are good, they can be made tax efficiently during your lifetime or on death without the costs (and commission) associated with guaranteeing a specified amount.
Thinking about the beneficiary as the customer means focusing on needs and what the insurance is for.
Does it really matter?
Just like the argument between insured and agent; you can argue that the beneficiary is the customer when you really mean the insured.
Also, you can’t ignore affordability, which is an issue for the insured.
But, the most significant difference would be in how the insurer would think about solutions such as engagement platforms.
Most importantly considering the beneficiary as the customer moves the spotlight further away from the agent and features designed primarily to benefit the agent.
There will always be multiple stakeholders, and it will always be hard to say who is your primary customer, but putting the beneficiary first has the potential to have the greatest impact the character of your business.
