➤ Coming out of the COVID-19 pandemic, the insurtech industry is reshaping itself and moving beyond simply digitizing the front end of the insurance process.
➤ By focusing on a younger customer base, insurtech Ladder Life Insurance Co. is avoiding a decreased demand for life insurance that other insurers have experienced after the height of the pandemic.
Insurtech Ladder Life is on track to hold 1% of the term life insurance market in the US, according to its CEO and co-founder, Jamie Hale.
S&P Global Market Intelligence caught up with Hale to discuss the pandemic’s impact on the insurtech industry, the current demand for life insurance and his plans for Ladder in 2022. The following conversation was edited for clarity.
S&P Global Market Intelligence: What sets Ladder apart from both other insurtechs and traditional life insurance carriers?
Ladder Life CEO Jamie Hale
Source: Ladder Life
Jamie Hale: We are really focused on modernizing life insurance for the digital consumer … making life insurance easy, accessible and affordable for all Americans. Part of the way we are doing that is by leveraging technology.
What is your outlook for Ladder for the rest of this year?
We have really been growing quite strongly. We more than tripled the business last year. We are on a really good growth plan for this year. We will soon be hopefully holding 1% of the term market in the US
The business of insurance is really strong. It really has needed someone to really re-engineer the entire process, not just the digital front end, but the underwriting process and the administration process, to really reduce costs and drive efficiencies. We really think this is going to be the next wave of insurtechs that you are going to see, people moving beyond simply just owning the digital front end to really owning the whole customer experience.
We are not discussing future financing rounds. We were really blessed to raise $100 million last year, so we are very well capitalized. For now, we are just going to keep our heads down and grow the business.
There was a strong demand for life insurance during the height of the pandemic. What are you seeing in terms of demand now?
It continues to be really strong for us. I know if you look at [Medical Information Bureau] data, they are seeing some diminishment of demand. We are not seeing that. We are strongly bucking that trend.
We are really focusing on the next generation of life insurance buyers. Our average customer is about in their early to mid-40s, which can feel quite old, but for life insurance, that is incredibly young. That is about 15 to 20 years younger than most life insurers’ average customer. A lot of the life insurance industry has pivoted to really serving the needs of a much older demographic. That said, if you are under 50 and have kids, COVID has taught you how quickly life can change so it has really become incredibly relevant.
Do you feel Ladder is in a competitive position to go after that specific customer base?
Very few companies are really actively targeting that demographic, from how they talk about their product to how they distribute their product.
You can, at 10 o’clock at night, come onto our website after you put your kids in bed, apply, get underwritten and be issued a policy that evening. That is what the next generation of customers are looking for in the world of Amazon Prime where you can order anything you want and have it on your door the next day. It is just a change of customer expectations.
What do you see as key to growing and retaining policyholders?
Making everything easy for them. We allow you to log in and administer your policy any way you want. If you want to change your address, you want to change how you pay, just log in and change those things. You pay off your mortgage, you need less life insurance, just log in and reduce your policy.
Some of those things that sound straightforward, given a lot of legacy tech, is really hard for the traditional companies. Customers want to engage with their life insurance company the way they deal with any other companies today, which is online, digital and instant.
After weathering a pandemic, what will be the shape of the broader insurtech industry going forward?
I think the insurtech industry is going through a transformation. There was what I call Insurtech 1.0 that was really focused on just purely digitizing the front end of the process and not really working on a lot of core systems, underwriting and pricing systems, that really drive the profitability of the business. You saw this happen in fintech, and in online lending or online consumer loans. There are people who really focused on digitizing the application process but didn’t focus on underwriting profitably.
You are now seeing Insurtech 2.0, a next-generation batch of entrepreneurs who really understand the business and what it means to underwrite, what it means to have sustainable, profitable growth. That is very exciting for almost every product line, on the life and health side, as well as the property casualty side. I think there is going to be a lot of innovation.
If you think about it, insurance is fundamentally digital. Insurance is about a promise to be there and about using data to accurately price the risk. In Insurtech 2.0, you are seeing a strong focus on the fundamentals.