D2C Drives Innovation in Insurance (But Not in the Way You Think)

The D2C insurtech surge has industry leaders staking out positions on either side of what they see as a binary question: Is direct to consumer the future of life insurance? Yes or no? We believe the answer is “yes and.” Here’s why:

Younger buyers start online.

Consumer research shows modern buyers prefer to begin their life insurance journey online. Bestow’s 2024 Hispanic market survey revealed that initiating the purchase online was as important as cost and other features. The survey showed that 71% of Gen Z, 54% of Millennials, and 51% of Gen X prefer to purchase life insurance online. It then falls on carriers to meet those consumers where they are. Translation: Don’t miss out on this increasingly critical distribution channel.

D2C could help create life-long customers.

D2C is still the most efficient and often most cost effective lead-generation method. While a number of those leads result in zero-effort sales, agents still play an extremely integral part in selling at scale and for the long haul. These products can serve as an entry point for new buyers, giving agents (and carriers at large) the opportunity to upsell, cross-sell, and offer personalized services, all of which can help turn low-cost leads into life-long customers and maximize lifetime value.

Customers tell you what they want, it’s up to you to deliver.

The innovations created by D2C insurtechs offer a wealth of data insights for carriers, from how customers shop to what their constraints are. For example, in writing about how tech can help assuage consumer price fears, Nicole Mwesigwa of Digital Insurance Magazine says, “today's AI-based systems enable consumers to indicate how much they can afford to spend on life insurance,” giving carriers the chance to offer applicable options. That same data infrastructure can also help carriers hone their marketing and retarget the right customers, capabilities which can't be matched by an analog sales funnel. Read more at Digital Insurance.

New tech helps balance risk and innovation.

It’s no secret that companies need to be prudent in how to approach the risk on new distribution models like D2C. Partnering with reinsurers can be one effective way to build D2C programs while managing risk. The rich data a D2C program affords can be another mitigation tool, with modern platforms enabling swift, data-backed market responses in pricing, risk, demographic, and more.

"Continuous monitoring of the sales funnel, underwriting risk distribution, post-issue audits, and early claims data allows carriers to make adjustments and ensure improvements that help meet business goals."

Laura McKiernan Boylan - VP, Underwriting Solutions at Bestow

D2C isn’t just about digitizing a product. The fact is, the tech and data innovations that come out of the development of these products will be crucial to the future of the industry. They’ll provide agents with coveted leads and provide carriers powerful new capabilities and insights. D2C isn't the silver bullet, but it is an increasingly necessary tool; a powerful puzzle piece and growth driver.