The Future of Life Insurance is fun

The life insurance industry is going through a significant transformation (isn’t it always ? — at least that’s what the consultants keep telling us).

Low margins, high regulation, burdensome capital requirements, unhappy customers, and nearly unaffordable CAC (cost to get new customers) are all factors that are pushing the industry further into turmoil.

For nearly 2,000 years insurance has been defined by claims compensation.

It is time to enhance it.

It is time to do more to help the people we serve.

It is time to focus on risk mitigation, and risk partnership with the people we protect.

It’s time to make insurance fun again (“again” might be a stretch).

For life insurance, that means helping people reduce mortality and morbidity risks (*Fancy Actuary* for saying help people to live longer and healthier lives.)

Some insurers have started on this path with wellbeing add-ons and gym discounts.

This is great, but it is limited and self-serving.

It results in positive selection for that insurer, meaning that they attract lower-risk people and potentially higher margins. But, and this is a big but — it does nothing to help the 99% of “normal” people (if such a thing exists).

The real answer of course (he said super confidently) is behaviour change. The beauty is that we don’t need to guess how to do it.

We have seen the solution, we have seen the ultimate life insurance company already.

It’s not Apple, Amazon or even Tesla.

The true life insurance killers are invisible monsters.

The company the industry should fear the most is Niantic, the maker of Pokémon Go.

Why? here are just a few reasons:

• True Behaviour change for the many, not the few (got a ring to it), not just positive selection.
• A study from the National Library of Medicine found that Pokémon GO increased moderate to vigorous physical activity by about 50 minutes per week and reduced sedentary behaviour by about 30 minutes per day.
• The longer people stay in the ecosystem the deeper the relationship, and the more opportunity Niantic has to influence behaviour (and up-sell).
• Data, data, data — they have more than anyone else on what people actually do. (Not just a single form or medical)
• Happy customers, who spend plenty — nearly $6bn so far
• The average player spends about 30 minutes per day playing, the last time an insurer had 30 minutes of your time was when you were on hold waiting to speak to them.

Is it a step too far to imagine the team at Niantic looking for new revenue streams and getting into insurance?

I don’t think so, and you can just imagine the incredible experience & benefits:

• In-game rewards for completing challenges instead of underwriting.
• Boosted game rewards or discounts on premiums for reducing your risk — just by playing the game.
• Dynamic underwriting in the background which leads to better risk & capital management.
• Super low CAC from a captive audience, many of whom are currently uninsured.

The insurance industry should take note of, and be wary of, the success of Pokémon Go.

Pokémon Go showed us that it is possible to influence risk (without education) and to get people to change their behaviour through fun and positivity — not fear.

If we don’t find fun and engaging reasons to get people to stay healthy, and partner with us, then we are doomed to becoming “dumb pipes” at best.

That is an outcome, that I am not willing to accept for an industry that I love, and that has so much potential to change people’s lives.

The end.

Does anyone care to join me in catching some invisible shiny monsters? I am free to play anytime my wife isn’t looking.