Life insurance needs to become more attractive to consumers, says Manulife executive

by David Keelaghan07 Oct 2016
That the life and health insurance industry needs to modernize is no secret to anyone in the business. It’s certainly not news to Manulife and its SVP & Head of Insurance, Retail Markets, Alex Lucas. A major part of his job is guiding the firm through this transitionary period and making sure Manulife remains at the forefront of progression in the space.
 
“I really see a big opportunity for change and Manulife is taking the lead,” he says. “I think we have been the first on a few fronts – the first to reduce the use of fluids, the first to accept applications for people that are HIV positive. Now, Vitality is our big play to add value for people that actual own a policy.”

Manulife’s Vitality program launched last month in Canada and seeks to reward policyholders for making healthy lifestyle choices. With lower premiums and perks such as reduced gym membership on offer, the insurance giant is hoping to engage clients on a much more personal level. 

“The Vitality program is really a no-brainer for the industry,” explains Lucas. “When you look at the stats, about half of deaths are attributable to lifestyle choices – smoking, lack of exercise, diet. So this is a shared values scenario where the industry can encourage and reward people to make good choices. They are better off and we are better off.”

The campaign is part of a new approach by Manulife to change perceptions about life insurance. With many millennials deciding to forego coverage altogether, the industry is clearly in a bind. As one of the firm’s point men with regard to driving innovation, Lucas and his team recognize why insurance can be something of a turn-off for many people. That doesn’t have to be the case, however, as he explains.

“If you think of insurance, it’s not an attractive consumer category right now – it’s pretty hard to access with applications and questionnaires being pretty long, we use a lot of jargon that is unrecognizable to average consumers,” he says. “Then, once you have the product, you don’t really see the value, but still have to make regular payments.”

That’s life insurance as it always has been, but not how it will be in the future, in Lucas’ view.
“The buying experience needs to evolve,” he says. “Think about the expectations we now have about interacting with a company, in particular with things like mobile devices. That expectation is only growing, so we need to make products easier to access and then add platforms like Vitality, which is already having an impact.”  

Having come into this industry from the wealth management business, Manulife’s financials is another major concern for the head of Retail Markets. Low interest rates have become the norm in the Western world and the Bank of Canada’s rate decision on October 19 likely won’t deviate from that. This has had a malign effect on the bottom lines of Manulife and its competitors, but rather than hoping for a rate hike, these firms need to adapt to things as they are, suggests Lucas.

“The market is still making an assumption about improved interest rates and returns in the future, but I see continued pressure on profitability and a fair amount of change over the next 12-18 months, be it from the exempt test, interest rates, or adaptation to the capital rules that are coming in 2018.”


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