Is Decisioning the New Selling?

(An Alternative to a Growing Industry Problem)

New life insurance premium sold (average/year over last five years)
$512,000,000,000*

First year lapse rate (based on premium-same period-approximate industry averages)
6%*

Dollar cost to companies (based on above)
$30,000,000,000*

As if this picture is not bad enough, consider all the other ancillary losses and costs (e.g. policy owner losses in premium and benefits…agent and office charge backs…underwriting expenses…threats to company financial stability…lost opportunity from dollar losses…litigation) to name a few.

The larger question is HOW does this continue to happen?

Sales and Marketing
Agent Training/Education
Due Diligence and Suitability
Misrepresentation or False claims
Commission Based Distribution
All Others

Before you yawn at this list, let’s add one more…Decisioning.

Consider this:

One of our team members had the opportunity to consult with and observe the hiring and training practices of a 100+ year old “Traditional Mutual” company. Having been a manager in a similar organization a few years back, it was amazing that (with the exception of the computers and technology apps, compliance regs, product design and newest marketing techniques) little else had changed over the years. For one example, selling to friends and family was not discouraged, but it was even emphasized in order to fulfill the training requirements. It is well documented that the lapse rate in this category is sky-high.

The larger issue was that there was absolutely no emphasis placed on the idea of a decision model and its development considering the effect that it could have on policy lapses and many other transactional issues. It was sales training 101 as usual, and we believe it is happening in more places than this one.

Paradigm Shift

In other words, the emphasis and recognition of the life insurance transaction could be seen as primarily a decision (vs. a “sale”), and that the delivery and persistency of this product could more distinctly depend on a decisioning relationship with the consumer.

Once professional “decisioning” becomes the objective (vs. the “sale”) and agreed to (buy-in), the opportunity to build a solid industry model could then be developed. The answers may be found under these sheets:

Beam up “the role of decision making in selling” to get millions of results on any number of search engines. I believe this also shows the growing appetite of the public for such a role.

Even further, if this industry were to shift their focus to a “decisioning” process as their methodology, it could even become a template to other larger decisioning purchases in other industries e.g. (automobiles < first year back to lender = cost $22 billion…home mortgage lapses = Zillion$...and others).

Point is, this industry has the unique opportunity to bring its transaction methodology up to the digital speed of their mechanical and software technology. If not, they may run the risk of being perceived as the railroads were (years ago) who could have dominated a much larger market if they had only realized that they were foremost in the transportation industry.

The Financial Services Industry could have a window. Yes, the insurance industry could potentially save billions in just this one category of policy lapses, but the influence and leadership they could have on the other larger markets through a decisioning based methodology…Zillion$.

Your thoughts?

* Approximate figures per industry sources