The threat to advisors is coming. It’s not a matter of if; only when.
Brace yourself advisors.
It’s only a matter of time before one of the social media giants jumps into the life and health insurance industry.
“I would expect there are some smart life insurance underwriting people in backrooms somewhere with people like Google, Facebook and LinkedIn working out how they can make the best of the access to the data they’ve got,” said Simon Tomlinson, CEO of Bluesun. “I’d be more surprised if they weren’t.”
Google recently entered the P&C space with its auto rate comparison service, Google Compare. Rumours have been circulating for years that Google, Amazon or Facebook would make the leap into the life and health insurance space because of the vast amount of consumer data each organization has.
“It could be a threat to advisors, yes absolutely,” said Tomlinson. “It’s hard to imagine at some point those organizations won’t stare at the value of the data they have about the general public and find a way to become involved in the selling and distribution of the product.”
The numbers bear that out.
While there is currently no source outside the industry providing life insurance, LIMRA research on middle market consumers found 21 per cent would be willing to buy life insurance online from a non-traditional source, such as Google or Amazon.
Meanwhile, research by Accenture found 67 per cent of insurance customers would consider purchasing insurance products from organizations other than insurers.
Tomlinson sees any potential new entrants trying to take the low hanging fruit first, meaning advisors will have to up their game.
“Selling the commodity product is something that a call centre can do or a robo advisor or a good web portal could do very well,” he said. “New entrants are going to probably focus on where they can win relatively easy and product selling is less complicated than true advice and planning for clients.”
It will require a change in mentality for advisors to compete.
“Whilst I like to think in the future advisors are true advisors to their clients there’s still a lot of plain product selling going on and I think as we fast forward in the industry that’s what we have to focus on,” he said. “Our industry would do well to look up the food chain a little bit to selling more complex situations rather than just selling simple products.”
The situation has also gotten the attention of life insurance executives, with another LIMRA report finding 57 per cent of financial executives believe an outside source like Google or Amazon will be a disruptive force in the life insurance market within the next five years.
“I think all of us are going to have to be thoughtful about what happens if Facebook or Google enters the insurance market,” said Tony Garcia, President and CEO of Foresters. “I don’t know if they ever will enter it as a carrier but they have access to so many people that we have to be thinking about the direct to consumer market, how we support and positon the independent distribution market to be able to get through that and compete.”
It’s only a matter of time before one of the social media giants jumps into the life and health insurance industry.
“I would expect there are some smart life insurance underwriting people in backrooms somewhere with people like Google, Facebook and LinkedIn working out how they can make the best of the access to the data they’ve got,” said Simon Tomlinson, CEO of Bluesun. “I’d be more surprised if they weren’t.”
Google recently entered the P&C space with its auto rate comparison service, Google Compare. Rumours have been circulating for years that Google, Amazon or Facebook would make the leap into the life and health insurance space because of the vast amount of consumer data each organization has.
“It could be a threat to advisors, yes absolutely,” said Tomlinson. “It’s hard to imagine at some point those organizations won’t stare at the value of the data they have about the general public and find a way to become involved in the selling and distribution of the product.”
The numbers bear that out.
While there is currently no source outside the industry providing life insurance, LIMRA research on middle market consumers found 21 per cent would be willing to buy life insurance online from a non-traditional source, such as Google or Amazon.
Meanwhile, research by Accenture found 67 per cent of insurance customers would consider purchasing insurance products from organizations other than insurers.
Tomlinson sees any potential new entrants trying to take the low hanging fruit first, meaning advisors will have to up their game.
“Selling the commodity product is something that a call centre can do or a robo advisor or a good web portal could do very well,” he said. “New entrants are going to probably focus on where they can win relatively easy and product selling is less complicated than true advice and planning for clients.”
It will require a change in mentality for advisors to compete.
“Whilst I like to think in the future advisors are true advisors to their clients there’s still a lot of plain product selling going on and I think as we fast forward in the industry that’s what we have to focus on,” he said. “Our industry would do well to look up the food chain a little bit to selling more complex situations rather than just selling simple products.”
The situation has also gotten the attention of life insurance executives, with another LIMRA report finding 57 per cent of financial executives believe an outside source like Google or Amazon will be a disruptive force in the life insurance market within the next five years.
“I think all of us are going to have to be thoughtful about what happens if Facebook or Google enters the insurance market,” said Tony Garcia, President and CEO of Foresters. “I don’t know if they ever will enter it as a carrier but they have access to so many people that we have to be thinking about the direct to consumer market, how we support and positon the independent distribution market to be able to get through that and compete.”
