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Life Insurers Fail to Follow Through on Customer Service

Rob McIsaac | February 10, 2014

We live in a time of remarkable convenience and incredible advances in the technologies which permeate our daily lives. The once unimaginable stuff of science fiction quickly comes to us now in ways that are hard to fully comprehend. 

The iPhone is now approaching its sixth birthday.  With the current state of smartphone technology, an individual can now pocket better computing power than a state-of-the-art desktop PC circa 2005. Many people carry two. And the Mac which arguably revolutionized the last generation of computing with its user interface?  This week it will turn 30.

Some industries have capitalized on this, creating smooth and easy-flowing business processes that make information access nearly transparent and gratification immediate. Companies such as Amazon and Zappos have forever changed customer expectations around what good service looks like and what expectations for timely delivery should be. In the financial world, banks, investment firms and personal lines P&C carriers are finding ways to deliver service that delivers what the customer wants, when they want it, and through the communication channel of choice.

And then there's life insurance, which seems to be mired in a sales and service paradigm that is more in synch with the Eisenhower era than our own. A recent, personal, experience punctuated just how much of an issue this can be.

As part of my own life insurance portfolio, I recently embarked on the replacement of a 10-year term policy that was at "end of life."  This provided a remarkable “Mystery Shopper” opportunity as I traversed the options in front of me.

My first touch was with Google, who took me to an aggregator. Less functionality than I remember from 2004, with a call to action of "we will call you." They eventually did, quoting a rough price and outlining a six to ten week process involving more questions, needles, fluids and very little proactive communication. Somewhat disappointed (but not surprised) at the described process, I green-lighted it. And then they went dark.

Somewhat concerned by how this was going by week two, particularly since I'd "only" budgeted three months for the effort, I started searching for options. I decided to apply to a true direct carrier and with a large national brand with a traditional agency force. Both provided quotes, but with somewhat odd warnings about "this might not be the real price." The only possible call to action was to be through telephone calls.

Now fascinated, I allowed all three carriers to go forward to see who could come up with the best offering in terms of features and price. It ultimately took two to three weeks for the lab to do blood work my doctor got done in two to three days. All three carriers insisted on wasting money on the para-med work, even though my doctor had done the same tests only a week before I applied. Thankful, all three used the same para-med service, which minimized the number of times I had to grapple with an unnatural fear of needles.


About two months into the effort? Longer than some wars have lasted, I've achieved my objective of a new policy. The results were mystifying.

The first carrier I went to, via the aggregator, has simply fallen off the face of the earth.  No communication other than that they seemed to be having trouble with getting the para-med scheduled, and a request that I be more proactive in trying to drive this interaction.  This seemed particularly odd, since I’d already spoken to the para-med who was too busy to do things quickly, yet somehow incapable of scheduling things outside of a prospective two-week window.  We finally got it done, concurrently with the same work for the other two carriers, but this company shows, literally, no signs of life. 

The direct carrier was quicker on the uptake, but warned me that the rate they quoted was, effectively, a “come-on” rate that few people could actually get.  Despite this warning, we proceeded and, after what seemed an inordinate period of time, they came back with a quote that was 50 percent higher than the quote I got via their website.  That seemed extreme, particularly in light of what the third carrier accomplished.

Armed with a traditional career agent who received the lead from my website query, this company got off to a slow start and was completely dependent on hard copies and wet signatures to get anything done.  Since the agent lives four hours away from me, all transactions had to be done via overnight mail.  Still, seemingly devoid of any technology more complex than a FAX machine, they concluded their work faster than anyone else … and managed to deliver the lowest-cost product for the desired coverage.  At this point, as a middle of the pack Baby Boomer, I am reasonably satisfied with the outcome. I'm also secure in the knowledge that I am unlikely to ever have to do this again.

Which actually may be the real problem that carriers will face in the future.  While some younger Boomers and older Gen X prospects may be willing to endure the prototypical life underwriting process, their numbers and tolerance will both wane. Even more painfully obvious: younger prospect groomed on Amazon and iTunes, will never be willing to go along with a process that is as arduous, inexplicable and arcane. Life carriers have talked about the need to find a better sales and service model for years. It's time to stop talking and start doing, lest they risk falling into irrelevancy.

(Rob McIsaac is a principal with Novarica.)

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