Sudhama Gopalan is the CEO and Co-Founder of Averisana, a data sciences and technology firm that uses health risk analytics to evaluate insurability prior to sales and underwriting. Sudhama was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc.
How do Americans perceive life insurance, and what gaps do they encounter as they seek coverage?
“Life insurance is seen primarily as a death benefit for your beneficiaries as opposed to a financial investment. In that sense, linked to mortality, it’s seen with a certain amount of trepidation. So, it’s a big step for a consumer to get from awareness to consideration, in marketing terms, when it comes to life insurance.
Once into the process of buying life insurance, a lot of information is required along the way, especially health-based information, which is seen as convoluted and cumbersome. Finding the right product for the shopper is not the easiest thing either, since it might take a couple of iterations to find what you qualify for. If the product were a high-face amount, long-term policy, it might take you about six weeks to get approved after a blood test, an attending physician statement or similar probing into your health.
With so many complications, it's no surprise that about 40% of American adults do not carry any or enough life insurance. This problem becomes stark in the middle market where household income is less than a hundred thousand. Here, the policy size and affordability makes things even more difficult.
Let’s talk about the root causes of these issues because consumer expectations go largely unmet. I’m not just talking about having an Amazon or Uber like experience. Comparable markets such as health insurance or mortgage have seen significant advances in the success achieved by shoppers in securing the right product. That has not been seen in life insurance, even though digital transformation is well under way and consumers now largely do their research and get advice online. But, the activity and the speed of what they achieve has not significantly improved, so the root cause is really a legacy approach to products and channels.”
How is data science helping you address these gaps?
“Our big insight was to solve for insurability and customer intent simultaneously early in the distribution process for success through the buying experience. We had seen data science used largely in optimizing around customer intent. Insurability was considered an underwriting and product “black box”. As a result, agencies and carriers had not been able to reduce their customer acquisition cost by any significant amount over time. Averisana has made breakthrough gains for its clients using predictive health risk scores applied at the top of the sales funnel, to allow a better match of the shopper to the right product. Our first launch partner has campaigns in production, using our scores since late 2021, and achieves twice the number of placed policies at 25% lower customer acquisition cost.
The goal is a more productive journey for the consumer at each stage of the process. By the time they need to disclose their health information, their odds of qualifying for a matching product should be significantly higher. Even at the back end when an insurance policy is submitted, their odds of being approved immediately should be higher. For instance, with our new product for independent agents we predict whether an application is likely or unlikely to qualify within the rate class in which it was submitted. This will reduce unproductive effort and result in 30% lower costs for agencies and weeks shaved off the cycle time for customers. These are examples of how our data science helps optimize products and channels to significantly enhance customer convenience and fulfillment. And, at the same time, create efficiencies for agencies and carriers”
Are life insurance market participants receptive to this new technology?
“We find a lot of receptivity among large life and health insurance agencies, carriers and technology platforms. Most of the immediate interest is among performance marketers in the insurance lead marketplaces, agencies with call centers and fully digital insurtech carriers. Our pilot and production programs bolt on to our partners’ existing marketing campaigns and provide sustained competitive advantage. These results are being achieved by analytically sophisticated and well-resourced partners who are pretty well optimized to begin with. For other clients with limited data stacks and analytical resources, we can bridge the gap with a managed service.
Independent agents are a significant part of life insurance distribution, but they have been late to digital. The pandemic upended their business model since face to face conversations were no longer possible, and consumers increasingly went online for research and advice. We see an opportunity to transform the business model for independent agents and allow them to leverage the strength of their client relationships. Imagine if an agent were able to input a few pieces of information and get a preliminary idea of their client’s health risk, the agent would be better equipped to advise the client as well as efficiently navigate the health questions in the insurance application to make it a simpler and productive customer experience. That's the untapped part of the value chain for providers of technology and data science solutions like Averisana.”
How do you see the life insurance market evolving to meet Americans where they want to be?
“The shopping process of searching and matching both in agent-assisted or digital direct distribution has to become a lot more productive. Absolutely no doubt about it. Once consumers get to the point of considering a life insurance product, omnichannel approaches to generating those leads and converting them more effectively is absolutely essential. This is something that will happen much faster than the products themselves would evolve. It's a question of survival where firms have to get more productive with the use of their physical agents or their capital. Even in a fully digital process, the productivity of converting an interested shopper via match to a product needs to be significantly improved.
I see that happening with all the frictions removed, especially around health information. How would we validate progress? Today, same day fulfillment into a life insurance policy is very low, less than 10%. I see that increasing quite dramatically as we go along.”
How is Averisana stepping toward this better, new future?
“Our clients are agencies and carriers who acquire or generate life and health insurance leads online. With our InsurabilityIQ predictive health scores, we help our partners better target within their prospect population by pinpointing the sweet spot for better conversion. What that does for these agencies is that in the same prospect pool, they're able to double or triple their production of policies while reducing the cost per acquisition by 25 - 50%. That's one part of the process where we are getting the consumer to be twice or thrice as effective in finding their destination.
That's just the front-end of the process. Our second product, InsurabilityEQ, specifically for independent agents and Brokerage General Agencies, is aimed at the back end of the process when agents submit business to carriers via BGAs. Normally, it takes 6 weeks to complete this process, and 30% of the business submitted falls off track because it has been priced incorrectly. What we’ve been able to show is that we can identify these applications before any work is undertaken. This makes BGAs more effective by cutting wasted effort on unproductive cases, which reduces cost and frees up capacity to drive more revenue. The most important outcome is that we speed up the cycle time for the independent agent and compress the journey for the customer, which takes a long time.
As we evolve, we will work across the entire sales funnel to bring about change with our partners and strengthen what they are able to accomplish. For the consumer, that means a significantly less complicated journey to get life insurance coverage in minutes or hours as opposed to days or weeks.”