➤ Coming out of the COVID-19 pandemic, the insurtech industry is reshaping and moving beyond simply digitizing the insurance process.
➤ By focusing on a younger customer base, insurtech Ladder Life Insurance Co. is avoiding a drop in demand for life insurance that other insurers experienced after the peak of the pandemic.
Insurtech Ladder Life is on track to hold 1% of the U.S. term life insurance market, according to its CEO and co-founder, Jamie Hale.
S&P Global Market Intelligence sat down with Hale to discuss the impact of the pandemic on the insurtech industry, current demand for life insurance and his plans for Ladder in 2022. The following conversation has been edited for clarity.
S&P Global Market Intelligence: What sets Ladder apart from other insurtechs and traditional life insurance companies?
Jamie Hale, CEO of Ladder Life
Source: Ladder Life
Jamie Hale: We are truly focused on modernizing life insurance for the digital consumer…making life insurance easy, accessible, and affordable for all Americans. We do this in part by leveraging technology.
What is your outlook for Ladder for the rest of this year?
We’ve really had quite a strong growth. We more than tripled sales last year. We are on a very good growth plan for this year. We hope to soon hold 1% of the futures market in the United States
The insurance industry is really strong. It really took someone to really redesign the whole process, not just the digital front-end, but the underwriting process and the administration process, to really reduce costs and increase efficiency. We really think that’s going to be the next wave of insurtechs you’re going to see, people who go beyond just owning the digital front end to really owning the whole customer experience.
We do not discuss future rounds of funding. We were really lucky to raise $100 million last year, so we’re very well capitalized. For now, we’ll just keep our heads down and grow the business.
There was high demand for life insurance at the height of the pandemic. What do you see in terms of demand now?
It continues to be very strong for us. I know if you look [Medical Information Bureau] data, they see some decrease in demand. We don’t see that. We are going strongly against this trend.
We are really focused on the next generation of life insurance buyers. Our average client is in their early to mid-40s, which might seem pretty old, but for life insurance, that’s incredibly young. That’s about 15 to 20 years younger than the average customer of most life insurers. Much of the life insurance industry has turned to truly meet the needs of a much older population. That said, if you’re under 50 and have kids, COVID has taught you how quickly life can change, so it’s become incredibly relevant.
Do you think Ladder is in a competitive position to tackle this specific customer base?
Very few companies really actively target this demographic, from how they talk about their product to how they distribute their product.
You can, at 10 p.m. at night, go to our website after you put your kids to bed, apply, underwrite and receive a policy the same evening. It’s what the next generation of customers are looking for in the world of Amazon Prime where you can order whatever you want and have it on your doorstep the next day. It’s just a change in customer expectations.
What do you consider essential to increase and retain policyholders?
Make everything easy for them. We allow you to log in and administer your policy as you wish. If you want to change your address, want to change your payment method, just log in and edit these. You pay off your mortgage, you need less life insurance, just log in and reduce your policy.
Some of these things that seem simple, given a lot of legacy technology, are really difficult for traditional businesses. Customers want to engage with their life insurance company like they do with any other company today – online, digital and instant.
After weathering a pandemic, what will the broader insurtech industry look like in the future?
I think the insurtech industry is going through a transformation. There was what I call Insurtech 1.0 which was really focused on outright digitizing the initial process and didn’t really work on a lot of the core systems, underwriting and pricing systems, which was really driving the profitability of the ‘business. You’ve seen this happen in fintech and in online lending or online consumer lending. There are people who have really focused on digitizing the application process, but haven’t focused on profitable underwriting.
Now you see Insurtech 2.0, a group of next-generation entrepreneurs who truly understand business and what it means to underwrite, what it means to grow sustainably and profitably. This is very exciting for almost all product lines, on the life and health side, as well as the property damage side. I think there’s going to be a lot of innovation.
If you think about it, insurance is fundamentally digital. Insurance is about promising to be there and using data to accurately assess risk. In Insurtech 2.0, you see a strong focus on fundamentals.