Maddock Douglas, Why We Are At InsureTech
Let's have a moment of silence for the sold, not bought paradigm. Before anyone gets panicky, we're not laying agents to rest, but rather recognizing that sold, not bought is about a mindset that served our industry in the past, and holding onto it for too long is now hurting us.
It's not about favoring a particular distribution method. Agents can live without this paradigm and likely be better off for it.
Learning from other paradigms
If people in your company are still having arguments internally around this, let's first look at what we can learn from other arguments that have died over time. These include:
- "the earth is flat;"
- "the four-minute mile can never be broken;"
- "HIV is a death sentence;" and
- "Pluto is a planet."
What's common about all? New capability. Somewhere along the line a new scientific breakthrough, a person with new knowledge or a separate discovery caused us to see the argument in a new way. And then we eventually agree on the new truth. It's time to do the same for the sold, not bought paradigm.
There is new capability in the hands of consumers that did not exist when the paradigm was created. The modern consumer has so much new capability that the term "prosumer" was invented by Alvin Toffler in his 1980 book "The Third Wave."
A prosumer is a very proactive consumer who blurs the lines between professional and amateur, controls information flow, the experience and even the sale. Modern companies like Amazon, Apple and Google have done a great job, both leaning into this trend and shaping it.
As an industry, we have convinced ourselves that nobody wakes up in the morning and wants to buy insurance unless someone makes them do it. This drove the sold, not bought paradigm. It had truth to it in the days when consumers did not have access to information as they do today. However, the prosumer would find this concept disrespectful and perhaps even arrogant.
- Hanging onto this notion has caused the industry to lose focus on the end consumer and shifting the focus to the agent as customer. We then end up with:
- complex products that please a few key sellers but damage the customer experience;
- heavy push marketing strategies that result in expensive incentives and margin pressures; and
- compensation models that incentivize the wrong behavior and impose onerous regulations, such as the DOL fiduciary rule.
Opportunity to relearn
There's a constructive lesson in this. That is revisiting the nature of demand. Economics lessons would tell us that there are several nuanced styles of demand, dictated by the nature of a product.
It's the manufacturer's job to cultivate demand, manage demand or both. The job of creating demand was historically in the hands of the agent and fused with the sales process.
Because of the prosumer's new capability, the role of demand creation and the sale are now decoupled. For those who think nobody wants life insurance, think again.
While not as highly sought after as beer or shoes, the 2014 study by LIMRA and Maddock Douglas indicates there are almost 19 million "stuck shoppers" for life insurance: people who intend to buy but the current experience causes them to get stuck along the way. In addition, if you talk to some of the new startups/disruptors in the insurance space, they believe insurance is a bought product, and it is simply their job to cultivate more demand and create a superior experience.
So if we replace the paradigm of "sold, not bought" with "bought, not sought" we can put the responsibility back into the manufacturer's hands to cultivate demand, deliver better on the experience and, most important, ask ourselves what role advice plays in the new world. Many are pointing to robots as the answer.
However, can an industry so deeply rooted in social purpose really operate without humans helping humans? If not, we have an opportunity to reinvent the agent role in a very profound way.
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