At Haven Life Insurance Agency, our mission is to make life less hard. After all, between balancing work, school, family, bills and occasionally treating yourself (no judgment), life can be pretty hard. Even for those of us who obsessively maintain a to-do list and relish the experience of striking a completed item from the list, we finish most weeks with more on our list, not less. Given this ever-expanding list of competing priorities, anything that is difficult, confusing or time-consuming quickly descends to the bottom. And, let’s be honest, for many people, buying life insurance is all three of these things—the wrong kind of triple threat.
But signs of change are emerging, as more and more startups like Haven Life enter the life insurance space. These startups are reimagining the customer experience and leveraging the newest technology to make life insurance easy, understandable and fast. Because that’s a triple threat even Broadway might cast.
The fact is that life insurance is a very important financial product for anyone whose loved ones depend on them for financial well-being. Nevertheless, according to LIMRA,1 individual life insurance ownership in the United States has trended down since the 1960s and currently remains stagnant. At Haven Life, we believe the industry has stagnated due to underinvestment (or inefficient investment) in technology, which has driven a widening gap between what our customers expect and what the industry is able to provide.
To be fair, making life (insurance) less hard is no easy task, especially for actuaries. Historically, actuaries have focused on product design and pricing—if an adviser or a customer has a problem, the first place an actuary tends to look for solutions is in the product itself. Actuaries find solutions in an adjustment to contract language or coverages, adding or adjusting a product rider or rethinking pricing or investment strategies. These solutions can often be very effective, but over time, this product-first approach to solving customer problems leads to more complexity and difficulty, not less. The end result is a hodgepodge of products that solves a wide array of problems for a small set of customers. If we want to reverse the trend, it’s time to start thinking in reverse. How can we solve a small set of problems for as wide a customer base as possible?
Building a Customer-first Digital Insurance Agency
When we set out to create Haven Life, the most substantial problem for which we needed a solution was selling a policy online. At the time, most life insurance websites were a means for lead generation. They included some basic education on the products offered and you could occasionally compare quotes, but in order to do so, you had to include your email address or phone number.
As soon as your phone number was received, the buying process would then move entirely offline, to the phone or even in-person. There was a perplexing yet simple explanation for why the process could not be continued online (after all, this was 2015 and internet sales were widespread in nearly every other industry). The reason was process.
Every insurance company has a new business process that supports life insurance sales, guiding a case from illustration to application taking, then to requirements gathering, underwriting and finally to policy issuance. These processes have been built up over time to cover a vast array of use cases, a wide range of life insurance products (term, universal, whole, survivorship, etc.) and a blend of distribution channels (captive agents, brokers, etc.). In most cases, companies built their new business process on legacy platforms that are lacking in operational efficiency. Sometimes, a single function (such as application taking) may be spread across different software solutions based on distribution channel or product type.
In brief, it’s complicated. And it’s hard to change. So we decided that the best option was to start over. Like many other startups, we went back to the drawing board. We built everything from the ground up, and we didn’t cut any corners. From redesigning the quote and calculator tools to be more user-friendly and fun, to combining a traditionally multipart application into a single, dynamic online application, to working with Massachusetts Mutual Life Insurance Company (MassMutual)—the insurance company that issues and underwrites the policies Haven Life sells—to build an underwriting platform that extensively uses algorithmic underwriting, we did it all.
While none of this technology is simple, we bring it together in a way that drives what we believe is the simplest buying experience in the industry for the customer.
No matter what business you’re in, established or just getting off the ground, things are always changing. Since launching a little more than three years ago, we have embraced continuous innovation—not product innovation in a traditional sense, as we still sell a single product (medically underwritten term life insurance, issued by MassMutual) with minimal “bells and whistles;” rather, our innovation centers around how we can continuously deliver a faster, easier, more transparent experience for customers (the life insurance triple threat).
In learning how and where to innovate, we use a combination of quantitative data (such as completion rates and most common final completed question in the application), qualitative data (from user surveys and focus groups) and targeted A/B experiments that can measure the impact of a single change on our key metrics. (For those who may be unfamiliar, A/B experiments allow us to test out two versions of a page or process, in parallel, on customers, to evaluate which approach is most effective.) Some of our earliest experiments were related to the adoption of a single, combined application.
Our effort to combine the plentitude of life insurance questions into a single online application was a breakthrough in driving a better customer experience, but it also introduced a new problem. In the process of combining, we opted to create a highly reflexive structure of questions so the application could be relatively dynamic to the health and lifestyle of the applicant. The result was a set of nearly 80 base questions and more than 600 total reflexive questions. This demanded a great deal of applicants, as the questions ranged from health status to personal information (such as Social Security number, driver’s license number and payment information) and family information to set up beneficiaries. We noticed that customers would frequently be stopped on the site by the need to track down information that wasn’t at their fingertips.
The first change we made was moving the payment information required for temporary coverage from within the application to the results page. It was a clear success, with a noticeable increase in customers who successfully completed the application. Shortly after that, we moved some of the more sensitive information required for identity verification to the end of the application and added new language before the application to help individuals understand what information they should have on hand in order to successfully complete the application. With each change, we have been able to make a meaningful impact on the customer experience. They haven’t all been successful, but they have all taught us something.
Another big change was around the underwriting process itself. The first iteration of Haven Life enabled customers to go directly from quote to application to coverage all on the website. But the coverage was only temporary while the customer completed a medical exam. Many applicants did ultimately complete the medical exam, but others gave up—after all, these are busy people! So we launched one of our biggest innovations yet: the InstantTerm process.
A real-time approach to underwriting positioned us well to transition from being able to offer temporary coverage to being able to fully bind coverage without requiring a medical exam within a matter of seconds. (With the InstantTerm process, based on the applicant’s responses to health questions, some applicants qualify to finalize coverage without a medical exam, although those who don’t qualify will be required to take a medical exam. Issuing the policy or paying its benefits depends on an applicant’s insurability, which is based on his or her answers to the health questions in the application and the truthfulness of the answers).
To accomplish this feat, we needed to bring new data sets and algorithm enhancements that could help to ensure competitive rates. Unlike other experiments that can (and should) be incremental in nature, this initiative required months of preparation, including analysis and research, contract negotiation, reinsurance approval, and multiple modifications to our algorithms and code base. Even still, we applied an experimentation mindset, releasing InstantTerm Version 2 in mid-2017 and Version 3 in late 2018, although these complex experiments take slightly longer than our usual two-week tech release cycle.
Thinking about the future, there are three areas where I see continued improvement and refinement both at Haven Life and throughout the life insurance industry:
- Reducing the number of applicants who require a medical exam
- Further streamlining the application questions and reflexive structure
- Better integrating algorithmic capabilities with the design and positioning of products
It may seem strange to some that for all this focus on innovation, we continue to offer a single, simple product. For me, that isn’t strange at all. What we have heard from customers and what we have seen from our data indicates that the life insurance industry is behind in delivering the experience customers want. Our data suggests customers may be less interested in more products and more complexity; they want a modern, transparent and fast way to protect themselves and their families. Our objective is to create the best customer experience possible, and we’ll continue pushing forward toward that goal, one small step at a time.
Adapting to Thrive
Looking back on our large number of accomplishments in these three short years, I feel a sense of awe, with a slight touch of panic. I’m sure many of the readers in similar situations can relate to that feeling! As an actuary, the pace of change at Haven Life is a noticeable departure from previous roles I’ve held. While this new pace is refreshing, it has required a substantial amount of adaptation on my part.
The first change is accepting failure as a possible outcome of the development process, and perhaps even embracing failure as part of learning. Actuaries are no strangers to risk and uncertainty, but that doesn’t hold us back from trying to cover every possible scenario through countless sensitivity tests and risk appetites. I’ve learned that sometimes we need to let go of the need to understand everything about the risks involved and allow ourselves to learn as we go. That doesn’t mean throwing caution to the wind—but it does mean getting comfortable with the potential for failure. Fail fast, and we can fail small. Fail small, and we can try again.
The second adaptation was getting comfortable with a certain level of chaos as we work to bring new ideas to market. Focusing on simplicity requires a lean organization that prioritizes speed and innovation over standardization and process. Within this structure, teams can move quickly and autonomously to achieve their goals. However, this sometimes means different teams operating at different speeds in different directions. And in this rapidly changing landscape, communication isn’t always the top priority, which can lead to collisions. In return for autonomy and speed, I’ve learned to accept some amount of chaos. But with the right principles, and with a strong sense of faith in colleagues to do and want the right things, the chaos never lasts for long.
As we grow and as the industry changes, it will become increasingly difficult to focus on simplicity. The temptation will be strong to put more process and structure in place. The desire to slow down and make sure everything is 100 percent right will strengthen as the memories of our past failures linger. But we will continue to fight for simplicity at all costs, because it’s what our customers demand from us. The past three years have been challenging, invigorating, exciting, maddening and just plain fun. I can’t wait for the next three.
Haven Life Insurance Agency LLC is backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, Massachusetts.
Copyright © 2018 by the Society of Actuaries, Schaumburg, Illinois.