In Pursuit of the Elusive but Attainable
Scottish novelist, historian and politician John Buchan once said that the charm of fishing is that it is the pursuit of what is elusive but attainable – a perpetual series of occasions for hope.
For the past few years, the insurance industry has embarked on a fishing adventure in pursuit of what is elusive but attainable – the modern consumer. Perhaps the most challenging line of business in insurance today is life. There’s the popular saying that there are plenty of fish in the sea, but with the traditional bait geared towards families, life insurance companies are experiencing difficulties: the Pew Research Center reports that half of Americans over age 18 are married – down from 72% in 1960. And those that are getting married are doing it later – the median age for first marriage rose to an all-time high in 2018: 30 for men and 28 for women.
Speaking of traditional, reinsurers traditionally have several insurers as partners in risk management. “With our long history and focus on life reinsurance, we are recognized as mortality experts. Mortality risk reinsurance – removing some or all of the risk associated with life insurance from the client company – is an important business for us,” Reinsurance Group of America (RGA) highlighted in their 2000 annual report. But as insurers’ needs became more complex, reinsurers have evolved to add value in other aspects of the insurance process. “Growth has been a challenge for many of our customers in the primary insurance industry,” RGA outlined in their 2012 annual report. “As these companies reassess their strategies and recast their focus on their core strengths, RGA increasingly becomes part of their solutions. In addition, as these same customers seek ways to prosper and grow, they often look to RGA for technology, product ideas and support services.” And by 2018, RGA had taken the next step via its transformation engine RGAX. “In partnership with insurance carriers and insurtech entrepreneurs, RGAX is building businesses across the insurance value chain in the areas of data and analytics, digital distribution, consumer engagement, and technology-enabled insurance services.”
Dennis Barnes, the man leading RGAX since 2017, didn’t make it here by climbing the insurance ladder. In 1997, he founded Marketing Direct, an integrated healthcare marketing services company that was acquired in 2010 by WPP – the world’s largest advertising company. He then joined the WPP Group where he served as President of Wunderman St. Louis and Chief Client Officer of Wunderman Health, a digital agency for insurance, pharmaceutical, medical devices and other health and wellness verticals. Two years into his current role and after visiting clients from around the world, Dennis hasn’t forgotten the way of the marketer. “You have to have a door for every customer,” he said in a phone interview. After spending 20 years in marketing and advertising – an industry that’s all about personalization – Dennis doesn’t believe in generalization.
With a mission to help people live longer, healthier, more financially secure lives, RGAX is working with clients and often their consultants to incubate and accelerate new products and services that advance and expand the life insurance ecosystem. As less people in the US are married today, Dennis highlights the importance of offering tailored products that fit the needs of modern consumers, and in the past few years, RGAX has invested in and partnered with a variety of startups that are doing just that. “We look for businesses that can improve distribution, increase consumer engagement, and leverage analytics and AI for precision and personalization,” says Dennis. RGAX, which often invests in the early stages along with participating in Series A and B rounds, is also on the lookout for businesses that impact the value chain, from product development through claims, often with the goal of taking them global. But if there’s one thing the company isn’t looking for it’s businesses with hockey stick projections. An experienced leadership team with realistic expectations is more attractive to RGAX.
Agents have been a trending topic in the age of insurtech. As more insurance products are distributed online, the role of agents becomes increasingly unclear. But if you ask Dennis, agents are here to stay: “Agents play a crucial role in educating consumers, helping them navigate insurance options and establishing trust, so they will always have a role.” Yet agents will need to “step up their game” as Dennis points out – specifically when it comes to deepening the relationship with consumers – but not solely for the purpose of selling more. Insurers also have responsibilities and they’ll need to equip agents and advisors with the right tools to help them succeed. For Dennis, the system has to work together with the consumer at the center.
In 1996, Gillette surprised the business world when it announced a deal to acquire Duracell. “Duracell emerged head and shoulders above all other candidates,” said Gillette’s chairman and CEO Alfred Zeien. ”It produces the best-performing, highest-quality battery in the world, bar none, with more than 40 percent of the alkaline battery market. At the checkout counter, there is going to be nobody that can touch what we can do.” While the Duracell acquisition didn’t turn out as expected, companies going beyond their core offering is common and we’re seeing it even more today, especially when it comes to insurance. Automakers are offering insurance as part of their subscription programs, digital mortgage lenders are offering home insurance via the application process, and online travel agencies are offering travel insurance at checkout. “D2C will always be there but the B2B play is really interesting to watch,” says Dennis. Indeed, as more companies enter the industry, some insurance companies will benefit from new distribution partners which will help make the buying process more convenient. And while we haven’t seen a lot of activity from P&C and life insurance companies beyond insurance borders, Dennis predicts that insurance companies will enter new territories in the years ahead.
Depending on different factors, working in insurance today can either be extremely challenging or extremely exciting. For Dennis, it’s been the latter, even though it wasn’t part of his career plan. And if he wasn’t working in insurance – you’d find him fishing – patiently pursuing the elusive but attainable .