(Image credit: Hermann Schmider.)
Life insurers have historically taken a product-centric approach not only in the way policies are administered, but also in the way they are sold. A more customer-centric approach to selling life insurance would be to focus not on what is being sold, but rather on why a customer is considering buying it, according to Martijn Moerbeek Director of Digital Strategy & Innovation at Legal & General (L&G, London). The insurer is combining its involvement in the construction and real estate industries with its digital innovation strategy to sell life insurance to customers at a moment when they’re especially prone to buy—on the occasion of purchasing a new home.
Homebuyers are among the consumers most prone to buy life insurance, along with new parents and those who have recently lost a loved one, according to Moerbeek. In the U.K. homeowners are required to have life insurance when they take on a mortgage, and L&G happens to own the U.K.’s sixth largest home builder. “We build about 5,000 homes annually, with a portion of those being build-to-rent. This gives us a steady income stream to balance pension obligations.” Moerbeek relates.
The company is also a large player in the surveying industry, conducting about 30,000 property surveys annually, and is also one of the largest wholesale mortgage providers, with 2017 sales of about £73 billion.
“If you look at these puzzle pieces, we can put together a housing ecosystem,” Moerbeek comments. “Within that we can present life insurance not merely as a product, but a way of getting a job done that they need to do. We can drive them to us and make it as simple as possible to buy life insurance.”
One way that L&G does that is through Smart Quote application, a consumer app which leverages a home insurance proposition into an opportunity to buy life insurance. “If you’re looking to buy a house, from L&G you have a range of related options, including mortgage, survey, valuation—or even the home itself,” Moerbeek says. “If a customer is doing any combination of those things, it’s an easy sell for life insurance as well—but it must be coherently integrated into that housing ecosystem.”
L&G takes an application process that formerly required dozens of questions and by using external data and artificial intelligence (AI) reduces it to five. “You can buy home insurance easily in a couple of minutes as opposed to 10 to 15 painful minutes,” Moerbeek comments.
Through its surveying business, L&G also offers consumers the ability to assess the quality of a house before purchase with the SmartSurvey tool. In the traditional scenario, an assessor will visit the property and report on the condition of various features of the house, such as the roof, the hot water heater, electricity, etc. Using Big Data and AI, L&G is able to produce a digital valuation conducted remotely. “We’re taking a very traditional home buying survey and then rebuilding it for the digital world,” says Moerbeek. “It’s much quicker and more cost-efficient, and we often don’t have to send a person out.”
L&G offers related tools to intermediaries, including a broker version of SmartQuote for home insurance. In July 2018, the company the company announced a £3 million investment in Smartr, a company that software vendor to the U.K. mortgage intermediary market. As a result, L&G now offers SmartrCriteria, an application that steers financial advisors to appropriate mortgages for their clients.
“Again, using many data sources and layering in simple user experience, the independent financial advisor can look at 390k ‘criteria outcomes,’” notes Moerbeek. “For example, if you’re self-employed you won’t map to criteria of certain providers; if you only have a certain amount of profit you might not meet certain criteria—you have to look at personal circumstances of the borrower and find the best option.”
How Incumbent Insurers Can Disrupt Themselves: Martijn Moerbeek, Legal & General