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On Choosing Baseball Bats and Life Insurance

When I was growing up, one of the rites of spring was going to the local sporting goods store with my dad and picking out just the right baseball bat for the upcoming season. The choices were modest compared to what are available today. Did I want a bat made out of wood or aluminum? What length should I choose? A thin handle or a thick one? I would pick and choose and take numerous practice swings until I found one that was “just right.”

My son is a freshman in high school and has played baseball since he was a 5-year-old. He just bought a new bat for the upcoming season, and it arrived the other day via FedEx. His bat is made of a special composite material that adheres to specific tolerances that measure the trampoline effect when it makes contact with a baseball About the only thing it has in common with the bats I used is that it’s 32 inches in length. He took his first practice swings in our family room the day it was delivered.

What do the evolution of baseball bat design and the shopping experience have to do with life insurance? More than you might imagine.

In today’s competitive landscape, consumers routinely use the Internet and social media to get advice on, shop for, compare and buy retail products. This is carrying over to the insurance industry. With an increased level of complexity compared to my day, how did my son know which bat would be just right? He did research before making the purchase. Scouring various websites, he pored over online reviews, and he sought recommendations from those he trusts: his friends. Sound familiar? It’s the same pattern many consumers follow during the life insurance buying process.

Consumers are evolving, the world is changing and the insurance industry must adapt. It’s an increasingly consumer-centric environment. LIMRA research reveals that consumers want to engage with us differently than in the past. They want to use all the technology at their disposal to make the buying process more efficient and effective.

Consumers today are time starved. As they juggle responsibilities between work and home, their time is precious. Consumers are also stretched financially like never before and are looking for value. They are tech-savvy, using the tools available to dictate when and where they get things done.

As part of the strategy to serve consumers on their own terms, LIMRA research predicts an increase in easy-to-understand life insurance policies designed for those who are tech-savvy and self-directed. Product choices and options will be limited, making it easier for consumers to choose. Information overload (too many choices) commonly makes consumers feel overwhelmed and confused, which leads to inaction. People tend to put off difficult decisions to avoid the regret from making the wrong choice.

The shift to a more simplified approach goes beyond underwriting. Policy design changes also apply to language. We expect greater use of simple, transparent terms that consumers hear every day and an increased effort to avoid industry jargon.

Our research also shows that predictive modeling will take on greater importance going forward and may be the key to unlocking the middle-income market. Predictive modeling has the potential to reveal consumer needs and preferences, uncover desired product enhancements, and bolster underwriting decisions – all in a cost-effective way that provides value to the consumer.

Many consumers are interested in simple, easy-to-understand solutions. Predictive modeling could help bridge the gap between simplified underwriting and full underwriting.  Premium pricing for limited underwriting with predictive modeling could potentially be on par with policies that undergo full underwriting. For many organizations, it is too expensive to meet the needs of middle-market consumers with fully underwritten products sold face-to-face.  Predictive modeling may lead to alternative solutions.

Expanding markets and growing sales with life insurance products that are convenient to purchase, easy to understand and provide value to customers will come together to hit a home run for the industry. It’s in our best interest to help consumers pick the products that feel just right.

Scott Kallenbach is associate research director for LIMRA’s Strategic Research. He is responsible for identifying strategic issues that can impact the financial services industry, and for helping member companies develop strategies to meet these challenges. [email protected].

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