(Robert A. Kerzner, president and CEO of LIMRA. Courtesy of LIMRA.)
The forces of consumerization and new online competition are disrupting the ways insurers have traditionally operated, but insurers should embrace the opportunities that disruption presents by differentiating themselves and engaging customers, according to Robert A. Kerzner, president and CEO of LIMRA, LOMA and LL Global, in his opening remarks to the 99th LIMRA Annual Conference in Boston this morning.
The theme of the LIMRA 2015 Annual Conference is “Pivot Point: Striking a Path for Success,” focusing on the challenges and changes affecting the financial services industry. Over 500 senior executives from life insurance and financial services companies worldwide are attending the meeting.
“Technology can be a disruptor or an enabler ─ websites like Google Compare and Policy Genius make price the top driver for consumers,” said Kerzner. “For some companies these sites represent an unwelcome disruption while others are leveraging these sites to enter new markets and reach new customers.”
Kerzner highlighted the impact commoditization can have on an industry and noted that to avoid it, companies need to differentiate themselves through innovation, service or segmentation. He cited John Hancock’s partnership with Vitality, Mass Mutual’s Society of Grownups and Protective’s relationship with Costco, as examples of how insurers can turn the challenges of disruption into a foundation for building relationships with customers.
“The rise of the consumer is having a tremendous impact on every industry,” Kerzner remarked. “Consumers have more choices and more power to determine how and when they access information. We need find ways to be where they are in their day-to-day lives.”
According to LIMRA research, 41 percent of people shop for life insurance as a result of life events, such as getting married, buying a home or having a child. Kerzner suggested that insurers find ways to connect with consumers during these life events, speculating that companies could engage new parents at the hospital through kiosks, educating them about the importance of life insurance to ensure their family’s financial security.
Kerzner also addressed the potential of a growing robo-advice market, allaying fears that it would disintermediate producers. “Our research demonstrates that people still want advice from a person,” he said. “But the model will change and advisors will need to leverage more of the tools and technology available to meet consumers’ expectations. Companies too will have to shift their strategies, building platforms and relationships that attract consumers to seek the advice in new ways.”
Positive Impact of Advisors
Kerzner concluded his address with comments on the Department of Labor’s proposed fiduciary rule. He characterized the rule as the most imminent disruptor of the financial services industry and cited LIMRA Secure Retirement Institute research that illustrates the positive impact using an advisor has on retirement savings rates and retirement planning.
“In the next 10-20 years, there will be an unprecedented shift of assets as the majority of Boomers enter retirement,” he noted. “It is likely their financial goals also will shift from accumulation to principal protection and income generation. They will need help to achieve those goals.”
(Related: Three Macro Trends Reshaping Life Insurance)
“Our research indicates that people are more likely to save and plan for retirement when they work with an advisor,” Kerzner added. It seems clear that this is just the beginning of an effort to limit how we can serve people who are trying to get the financial advice they want and need.”