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After a career at South Africa’s Old Mutual (Johannesburg) that took him to several locations globally, Brett Wilson came to the U.S. to complete post-graduate studies at Stanford. While at the university, he met Ethos Life (San Francisco) founders Peter Colis and Lingke Wang (now respectively CEO and CTO of the company). Their endeavor to make life insurance more accessible to an underinsured public was a perfect fit, for Wilson, who was most recently CFO for Old Mutual’s Latin America operation. Today Wilson is VP of Risk & Actuarial at Ethos, leading its underwriting efforts, focused on managing risk while maximizing efficiency and ease-of-use for consumers and carrier partners. Wilson describes the direct-to-consumer life insurance distribution startup’s mission as defining a new era of life insurance, one built with ethics, technology, and simplicity at its core. The company, which began doing business in June 2018, sells policies underwritten by Assurity (Lincoln, Neb.) and Legal & General (London) and has relationships with reinsurers RGA and Munich Re. In Aug. 2019, the firm announced that it had raised $60 million in C-series funding, bring its total capital raised to $100 million. Ethos is currently doing business in all U.S states except New York.
Insurance Innovation Reporter: Tell us a little about your insurance background in order to better understand the appeal of Ethos at this point in your career.
Brett Wilson, VP, Risk & Actuarial, Ethos: I’m an actuary and started my career with Old Mutual. I worked as chief actuary for the Zimbabwe business and in 2009 moved to a work on a joint venture Guodian Corp in Beijing. I was chief actuary in China and then moved to the Latin America business, based in Bogotá [Colombia], but also doing business in Mexico and Uruguay.
I’m passionate about increasing life insurance access, and having worked around the world I’ve seen the devastating impact not having life insurance can have. The lack of life insurance in some parts of the world is perhaps not so surprising, but I was surprised when I came to the States to learn that 40 percent of Americans don’t have any kind of life insurance. What’s more disturbing is that 70 percent of families would be bankrupt in three months if the primary breadwinner were to die. So, this is a great market to address that problem in.
IIR: What are some of the causes of the problem that could be addressed?
BW: There’s a general lack of education and awareness of what life insurance is, and it’s often misunderstood by the families that need it most. Also, if I can state the obvious, the application process can be long and invasive, lasting weeks if not months. Another problem is that when life insurance is distributed by commissioned agents, their interests and that of the customer are not in alignment.
IIR: What is Ethos doing to address the problem?
BW: In a nutshell we’re trying to redesign a centuries-old process, and we see three areas to approach a solution. The first is education—demystifying life insurance and how it works. For example, there’s a big misconception about how much life insurance will cost people. Research I’ve seen has customers estimating it at three times the actual cost. We’re educating them on what they can get for their buck.
The second area is access to insurance. In that respect, Ethos is eliminating barriers, using predictive analytics and sophisticated data and designing the experience to make it relevant to people’s lives. An Ethos customer can apply and complete the process in minutes, and the majority will not go through medical exams so they can complete the process quickly.
The third area is about incentives and who really benefits from the sale of the policy. One of Ethos’ value is to treat each customer like family and make sure they only purchase for the amount of coverage they need. In the commissioned sales model, overselling is in the agent’s interest. The fact that Ethos is direct-to-consumer makes it much easier to align interests. We have no interest in selling someone a policy they might not be able to afford.
IIR: How does Ethos differentiate itself from other direct-to-consumer, InsurTech approaches to life insurance?
BW: What distinguishes us is that we’re trying to bring the whole life insurance experience into the 21st century; we’re not putting a website on top of a traditional insurance process. It’s an end-to-end experience not just for the application, but also for underwriting and distribution. We’re not just the distributors; we own all the underwriting as well. That enables significant changes to the whole client experience. We’re integrating an advanced system into our [carrier] partner’s system so that the customer has a much more seamless experience. Our technical co-founder literally slept in the partner’s office—some of our partners wouldn’t be as integrated as that.
IIR: Tell us about how Ethos’ technology works within your carrier partnerships.
BW: We ask a number of questions and [applicants] give us permission to access data such as MVR, pharma etc.; that enables us to recommend a policy that will suit their needs together with a likely price. It’s a lot about integrations to connect our predictive analytics with our partners’ systems. Seamless experience and getting good decisions quickly—that’s the key thing there. Given the fact that our technology spans the whole spectrum from application to underwriting decision when a lot of the other players have the front end rather than full underwriting experience, by definition there wouldn’t be the same degree of integration.
IIR: Given the importance of data access to the emerging life insurance underwriting and service proposition, how does Ethos think about data?
BW: We use every source in way that doesn’t unfairly prejudice our clients. Insurance is a trust industry and we’re keen to build on that rather than detract. That’s how we approach using data.
IIR: The name “Ethos” suggests that culture is an important shaper of how the company operates and how it thinks of customer experience.
BW: Yes, and I think that it’s hard to compare Ethos to other startups because of how important our values are to everything the company does. Treating customers as family is one of the key drivers of product and experience design. And, of course, the company’s values drive its approach to sales. People get oversold because of the commissioned agent framework, and as a result term life insurance is generally undersold because it doesn’t bring in the income. In many cases permanent life is not the best investment and many policies lapse. People lose a lot of value from the early lapse—which can be avoided if you focus on meeting clients’ needs. That’s what we’re trying to do.
IIR: How has Ethos been doing since it opened its virtual doors in June 2018?
BW: We’re servicing thousands of families in 49 states and adding thousands every month. It’s been quite a steep growth curve, but we feel we can do more. We’re opening offices in Austin, Texas and Singapore, mainly to grow our engineering and customer service teams to keep pace with our growth.
Ethos Raises 60M Led by GV to Support Mission to Modernize Life Insurance