Hannover Re's U.S. life insurance unit is partnering with insurtech Life By Spot, which sells short-duration life policies direct to consumer online.
Spot's goal is to find new life insurance buyers by targeting them with low-price products, from one to 30 days in length, when buyers anticipate greater risk, according to co-founder Maria Miller. The goal is to both widen the range of life insurance products for a new age, while creating a new funnel of life insurance buyers for longer-term policies.
"Traditional life insurance trigger events have been marriages, births, home purchases, but these are more geared toward experiences," Miller, who was working at New York Life before starting Life By Spot, explains. "Scuba diving is a great example, also something like skydiving or kayaking. We're trying to serve a different subset of America."
Life insurance policy penetration is falling, Miller adds, due to a confluence of factors. The two that she hopes to help solve with her startup are a lack of access to traditional life insurance benefits and the fear of a high-priced, extensive acquisition process.
"We look at this as supplemental, but it's a new type of insurance customer channel," she says. "There's great educational component in breaking down the myths: Three out of four millennials think a $250,000 policy is four to six times more expensive than it actually is. This is how we can break those barriers down and introduce people to the life insurance marketplace."
Life by Spot is currently a browser-only experience, using responsive design, set up so policyholders can complete the application in about two minutes. Hannover Re's Partnership Solutions group helped the company create a rules engine that incorporated mortality and morbidity risk models to quickly process customer information.
"One of the most important things in any modern insurance program is collecting data, understanding it and monitoring the results on the back end to make adjustments along the way," says Tony Laudato, VP of Hannover Re Partnership Solutions. "We provide insights back to the spot team around the business that’s being sold."
Laudato says that Hannover Re is focused on a partnership model for working with insurtechs rather than venture investment
"We work with insurtechs or existing insurance clients in trying to answer critical question: 'How do we bring together everyone in this new insurance ecosystem?'" he explains. "We spend most of our time vetting new distribution channels and models that may be out there to find ways that we can bring that into a cohesive package."
Hannover Re won't be directly funding policies, however. Miller and Laudato said the insurance partner is in place, but has requested anonymity for the launch. Life By Spot plans to roll out nationally in 2019.
