The life insurance industry is making serious changes to how it does business in a way that some executives say may not have happened without the conditions caused by the COVID-19 pandemic.
During S&P Global Ratings' 2020 Virtual Insurance Conference, life insurance executives said efforts toward digitization have been rapidly accelerated, leading to more digital adoption in the past several months than in the prior several years.
"The biggest pivot that we're seeing right now is that digital is not the enemy of face-to-face distribution," said Manulife Financial Corp. CEO Roy Gori. "I think digital should be and can be seen as a huge enabler to allow for the productivity and efficiency of distribution to connect with customers in more ways."
Digitization also allows for greater efficiency, which can ultimately translate into an ability to drive better margins and go a "long way" to mitigate the impacts of the lower-interest-rate environment, Gori said.
News about the novel coronavirus is everywhere, and it may be causing people to think more about mortality, Massachusetts Mutual Life Insurance Co. CEO Roger Crandall said. According to LIMRA data, the industry has seen its best quarter for term life sales in 12 years, Crandall said, noting that half of MassMutual's policy count ran through a digital platform.
More than 90% of Manulife's products can be sold digitally, Gori added.
Protective Life Corp. CEO Richard Bielen said electronic policy delivery for Protective is up 86% in May compared to January, as buyers show more interest in their products than they have over several years. Regulators are also approving certain products more quickly, he said.
Although mergers and acquisitions activity is largely paused, Bielen said he believes companies will continue to reexamine their businesses and look at what might be most strategic for them.
"As we get through this period of disruption, whether it's later in this year or 2021, I would expect there will be some opportunities to do some things in the M&A space," Bielen said.
Crandall likewise expects M&A activity to pick up again, but he stressed that there first has to be a level of stability in the market.
Although Bielen expects elevated mortality claims during calendar year 2020, he said the pandemic should be mostly an earnings event for the industry, not a balance sheet event. He remains optimistic about the industry's ability to push through the tough times.
That said, he did warn that it may become more difficult for smaller companies to continue operating, especially those that do not have the ability to spread the added fixed costs that are necessary under the conditions of the pandemic as time goes on.