Will Google Enter The Insurance Industry?

Life insurance ownership in US is at a 50 year low

Expect flat life insurance sales in 2015

Life insurance company consolidation, late 1990s and early 2000s


In 2001 top 10 life companies accounted for 40% of the premiums

In 2013 top 10 life companies accounted for 46.8% of the premiums

Source: SNL Financial LC.

Let’s examine some Life Insurance industry facts


Total number of Life Insurance companies in 1995

Total number of Life insurance companies 2013

Life Insurance Industry Employment

Source: US Dept of Labor

                                                                                                                      Percent of  Selling Distribution:

                                                                                                                                     2001              2013

                                                                           Independent Agent/Broker          49%               49%

                                                                               Affiliated (Career Agent)           44%               40%

                                                                  Financial Institutions, Work site          5%                   7%

                                                           Insurance Company Direct Response        2%                  4%

Product Market share by Premium

  • 1995 Universal Life 24%
  • 2013 Universal Life 40%
  • 1995 Term Life 15%
  • 2013 Term Life 22%
  • 1995 Whole Life 46%
  • 2013 Whole Life 30%
  • 1995 Variable UL 15%
  • 2013 Variable UL 6%

Profit Margin

This space is reserved for profit margins of products that are featured in the graph on the left. However, unfortunately, it is virtually impossible to report from an industry perspective.

Simply defined, individual life insurance product profit is the balance remaining of premiums and net investment income, after claims and expenses have been paid.

Actuarial speak

For profit margin, you take the present value of all future profits and divide it by the present value of your premiums. In other terms, complex products hide high profit margins. This strategy is used when pricing new products. Products that are easy to analyze, like term life insurance, are competitive, and profit margins are low.

 The TermQuest Challenge provides a transparent design element, which examines the positive impact of profit-test actuarial assumptions to lessen surplus drain, unique to the North American marketplace.     

Will more transparency help or hurt the consumer to by life insurance?  

The Life Insurance Consumer Psyche

Disposable Income


Could a basis for weak consumer buying power be based on the statistics not wildly cited by the US Department of Labor, stating that individual life premiums, as a percent of disposable income, has dropped form 1.4% in 2000 to 0.7% in 2010?



Tragedy brings into focus


The purchase of life insurance is more likely to occur after a disaster rather than prior to it. This is a tough one to exploit. In these days of social media, marketers can take advantage of major events. Not necessarily a tragedy, but a few years ago at the SuperBowl during the blackout, a number of hashtags surfaced. These hashtags benefitted multiple companies with their quick and witty reply to the situation.

The Herd Mentality


A prospective consumer has obtained insurance information through their conversations with friends or neighbors; therefore he/she will be inclined to purchase insurance. “Cousin Hayley just bought life insurance, maybe we should too”.  As a marketer, position your message on social media to gain interest. “The new social norm: buying life insurance” happens to be less than 140 characters, by the way.

Event driven approach


Getting married, having children….  Most of the consumer marketing efforts are concentrated towards “Major Lifestyle Events”. Standing out in a sea of other marketers, your message has to have the connotation that “some of us are leaders, others are followers”.

The Manufacturing of Life insurance

To credit the largest life insurer in the USA, METLIFE has in the past few years introduced an initiative, which has targeted middle market consumers via direct methods and the testing of a Walmart promotion. These two METLIFE methods are priced exactly the same as the product their field agents sell, but presented differently. To the consumer, what is the benefit to buying direct?

Will a non-traditional distributer of life insurance, like Google or Amazon, with their technological juggernaut, enter the market place?

Attempting to secure a unique spot in the marketplace is a real challenge in any industry. Can our industry attract any new players? Or better yet, can any existing companies truly adapt to a consumer centric model that the digital world demands and improve their ROI, simultaneously?

There is a simple and profound way to improve profitability and lessen surplus drain.

There is a simple and profound way to position products in a merchandising fashion.

There is a simple and profound way to reinventing prospecting for the end consumer.

Who wants to be the first to attempt this feat in USA marketplace?

Current life insurance product positioning

Regardless of whether life insurance is sold or purchased by self-directed consumers, comparing similar products from different insurance companies is impossible to ascertain. On the surface they appear alike, but the way products are truly priced, in terms of underwriting criteria and sales loads, makes for the discussion of transparency a significant issue.

Case in point, underwriting risk classification is no longer uniform from company to company regardless of which product is examined.

“The extent of recognition of policy size and sex varies from company to company, giving the buyer the opportunity to select against the industry as a whole by buying from a company whose classification system favors him”. Link file on desktop SOA  James Anderson

The net provides a powerful amount of information. Aggregators use their sites to formulate their best collection of information, whereas it truly only provides a method of frontend product positioning. However, the broker still does not deliver a true informed marketplace to the consumer.  Let’s take term life insurance for example; what company sells the most term products by premium in North American? Are they indeed the least inexpensive?

Assuming there is no underwriting or sales load transparensy ever, can the life insurance industry take a lesson on effective merchandising strategies from retailors?

You walk into a sneaker store; you are immediately presented with various sneakers made by 10 different manufacturers. Your budget is $100; chances are you will walk out of the store spending $100 for shoes.

You’re looking to buy life insurance; you notice on a television commercial that for $100 a year you can buy $50,000 worth of life insurance. After going through underwriting, the insurance company determines that your family history negates you from that top classification and as a result, cannot offer you that $50,000 policy. They counter their offer with a $175 deal. You, however, cannot afford it and consequently, they are unable to offer you any lower face amount.

The ways in which life insurance products have been, and still are, described in the marketplace, not only create confusion for consumers, but also actually impair consumers’ inclination for buying.

The TermQuest Model

  Not just for term insurance 

TermQuest incorporates automated risk underwriting technology along with a levelized commission structure. This element will positively impact profit-test actuarial assumptions to lessen surplus drain, resulting in better product profitability and/or further reducing consumer (premiums) prices.

TermQuest presents four different term products that contradict “the commodity approach” that the industry has presented to the digital world. This merchandized platform provides a number of options as to how consumers select products based on speed, ease of acquiring a policy, and/or providing them with the best value.

Regardless of how the consumer entered their quest, technology will either confirm or suggest an alternate type of policy based on the consumer’s risk classification or their monetary commitment.

TermQuest creates multiple touch points via either a “quick quest” (for self-directed consumers) or storytelling theme “extended quest”.  In either case the consumers experience a familiar retail product approach similar to everyday products.

There are several opportunities to create a new channel utilizing the TermQuest brand, thereby avoiding channel conflict for the cede insurer and providing an innovative scalable solution to sell life insurance to Middle America.


Internet invented 6 months ago?

Why hasn’t the life insurance industry created products for the digital world that utilize the efficiency of e-commerce as of yet? “One Click Life Insurance”, “Predictions for Life Insurance in the Next Few Years”, “Massive and Potentially Disruptive Change” (as discussed by PwC) and the latest article “Google is a Possible Threat to Life Reinsurers”: reading these articles today, you might conclude that the internet was just invented 6 months ago. The financial services industry has made significant progress in attracting new consumers and has offered them incentives for their “online only” offerings. For saving and checking accounts, the highest rates can only be found with virtual banks that don’t have brick and mortar facilities. Trading stock has a lower online fee today than it did 15 years ago. Online auto insurance marketplaces have influenced industry change. Today life insurance companies that have consumer direct marketing approaches, sell the very same products that their agent field force sell (MetLife). What is the advantage for the consumer to buy protection products online if the pricing is the same as with the field agents/brokers? There are fewer cede life insurance companies today than there were 15 years ago.  Has that helped consumers, or only improved the acquiring insurers...

What are all those numbers?

On September 17, 2014, LifeHealthPRO reported (utilizing SNL Data) on The Top 10 Life Insurance Sales Leaders for Q2.  All of the top 10 companies reported sales increases from 1% to 3.89%.  Based on those numbers it appears that those 10 companies with a total market share of 51% are doing quite well compared to the previous year. Examining the SNL data a bit closer, it uncovers that insurers report a combined sales production of both individual and direct group life business. Why do the insurers report to the public a combined sales product production when they report individual sales of product lines on their statutory filings? Taking the individual life production and extrapolating the MIB data for flat application sales (first two quarters), doesn’t the logic interpolate that these 10 companies should report 0% sales activity? How would the buying public react to news that for all intents and purposes very few people are buying individual life insurance? Who is best served reporting on the combined sales of product lines, the consumer or the insurance company? Why does the MIB make their individual life report...

About me

This site provides a broad overview of the forces affecting the insurance industry, and offers possible models of ways to innovate Life Insurance. These ways can open up a very fruitful discussion with various life insurance manufacturers.

TermQuest® started operating as a web site in 1995 recognizing the efficiency that the web provides. At that point, we began to offer Low-Load term life insurance. Here is what the site looked like in 1996: 


Let’s talk,

Herb Katz