When fintech upstarts began to gain traction, the media, at least, began to portray the relationship between these upstarts and the incumbents as an all out war. Incumbents were meant to be threatened by these new players, who were out to disrupt just about every single link in the financial services chain.
More recently, the use of battle metaphors to describe the incumbent-fintech relationship has toned down, in part because incumbents have realized that partnering with fintechs can do them a world of good. And instead of crawling up in a ball and crying at the prospect of a hostile fintech takeover, incumbents are also acquiring fintechs or just coming up with fintechs of their own.
One incumbent that’s been on a role with the latter option is MassMutual, the 165-year-old insurance magnate. In May 2016, for example, MassMutual launched its own fintech product: ValoraLife, a direct to consumer online life insurer targeting Latinos across the US. A year before, MassMutual launched its ‘in-house startup’, online life insurance provider Haven Life.
Insurtech products like Haven Life and Valora Life are a hot commodity in the insurance world. Witness the excitement around P2P(ish) insurtech company Lemonade.
For incumbents like MassMutual, in-house startups aren’t just a tool to acquire and retain millennials; they’re a way to gain insight on the trends informing the insurtech market. We spoke with Yaron Ben-Zvi, CEO of Haven Life, to get an inside view on the trends he sees impacting insurance over the next five years.
VCs are investing millions of dollars into startups in the life insurance space. We will continue to see increased competition in direct-to-consumer policy sales, which we find very exciting. When we were creating Haven Life, there really wasn’t an example to look to for entirely online policy sales. With more companies entering the space, it’s setting a consumer expectation to be able to buy a policy online and provides us with an opportunity to learn more.
All speed ahead
In tandem with the first point, I think we’re going to see a significant change of pace within the industry. With life insurance receiving more funding and more attention, carriers and reinsurers will need to iterate and innovate more quickly.
Big data and machine learning for underwriting
In a recent post, I wrote about the data available to insurers that could be more thoughtfully utilized. We’re always looking to access more data, but I think there’s a huge opportunity to analyze existing information in a more efficient manner that simultaneously benefits the customer.
Streamlining the back end of insurance
Currently, most back-end policyholder support is pretty time-consuming and involves multiple human touch points. I believe a focus for many life insurance companies and agencies will be streamlining processes like policy servicing, changing beneficiaries and submitting claims.
Perhaps fittingly for a startup born of an incumbent, Ben-Zvi doesn’t see direct-to-consumer products replacing other, more traditional insurance products, like those offered by MassMutual. As Edward Casas, vp and general manager of ValoraLife told Tradestreaming, “At this point there’s a lot of complexity in financial planning, and consumers are looking for someone to lead them through a process, to help them understand.”
Still, with in-house, separately branded fintechs like ValoraLife and Haven Life testing the waters, MassMutual has its hands in oh-so-many fintech trends. Not bad for a 165-year-old.