Attacking the Insurance Industry With Technology

Attacking the Insurance Industry With Technology

In 2015, Jonathon Mabelmann moved to Dallas, Texas with one of Melbourne O’Banion’s three existing companies, a housing concern, and the two began to see different problems hampering the insurance business world. O’Banion had started two other companies in that sector and saw problems with the lack of applied technology. Mabelmann saw issues on the […]

Attacking the Insurance Industry With Technology

In 2015, Jonathon Mabelmann moved to Dallas, Texas with one of Melbourne O’Banion’s three existing companies, a housing concern, and the two began to see different problems hampering the insurance business world. O’Banion had started two other companies in that sector and saw problems with the lack of applied technology. Mabelmann saw issues on the consumer side. So they put their heads together to form Bestow.

The Ideas Behind Bestow

The two men looked at the insurance industry with a focus on where these identified problems existed. What they found was an industry built on antiquated technology, an industry that has always been 95% agent-based but which was seeing its overall sales slip as the number of active agents shrunk. They felt these problems were due to lack of proper distribution methods and technology. In short, they saw how they could make the process easier and more cohesive for customers and providers.

That’s when they were bestowed with an idea. O’Banion now serves as CEO and Mabelmann as President of their joint brainchild.

Realizing they could offer customers a better and simpler process by building the technology themselves, Bestow takes a full stack approach to insurance. They redesigned their life insurance product to optimize it around digital distribution. They then found out how modern advances can smooth out the purchasing process. The goal was to make a better and more cohesive experience for the user.

Starting with $3.1M in self-funding, the company completed a seed round led by New Enterprise Associates that brought an additional $2.5M to help them democratize financial products. Building on models used by Morpheus and Adipar, Mabelmann said the company was fortunate to have thought of company leaders as investors with deep balance sheets.

The Products Bestow Offers

The company has opened a path of using technology to distribute and service both financial and insurance products. Based on two simple questions (What is going to solve the problem, and How do we do that?), the company came up with answers.

On the technology side, the company built its own underwriting technology forming a linear dataset to look at potential customers and their attributes.

  • What are they looking for?
  • What are they attracted to?
  • What are they buying?
  • How do those things change over time?

Using these questions, they moved the focus away from lifetime value and commissions. Mabelmann said that a sound technology platform can be really helpful in using data in the product development process, a fact that ultimately helps the customer.

On the insurance side, term life is a great place for families without life insurance to start when they are looking to just nail down a solution. Many of the uninsured have remained so because the hurdles to obtaining coverage are too high. Term life is a good place for them to start as it is the simplest and most affordable.

Mabelmann said the company started with a simple product and then rebuilt it to offer a lower acquisition cost with a more efficient process. By partnering with industry leaders and leveraging their experience and wisdom, the company created a product that is simpler and faster to acquire.

Noting an historic problem that the insurance marketplace isn’t a place where you can just go in, make a purchase, and move on, Bestow has partnered with A+ rated providers and integrated to acquire customers, underwrite, and manage the policy without it getting passed back and forth between several people over and over. Noting that more factors than mortality risk and health history influence insurance pricing—there are also things like underwriting cost, marketing costs, and overhead costs to consider—Bestow is banking on the use of the automated streamlining to reduce the cost of policies over time. This, plus a more informed acquisition funnel, can help to reduce a lot of the problems consumers experience and help to bring quality life insurance products to consumers for a very attractive price.

How the Bestow Process Works

Mabelmann said the application process is going to be available to consumers completely online through third party databases. Initially, there will no requirement of medical records as a list of questions about prescription drugs and other medical information will allow the company access to databases that will provide the appropriate insights necessary for risk management.

“We’re the only company to rebuild the product from the ground up,” he said. “To have a more meaningful outcome for people, we make it easier and more accessible for the consumer, instead of forcing them to transact for 30 minutes online and building tech for the sake of tech.”

How Far Have Bestow Come?

Just now putting the finishing touches on the product, the company will launch in January. They offered an early sign-up list and had several thousand people sign up at the end of 2017.

The target demographic includes young families who are busy and have life insurance on the To-Do list but haven’t gotten around to purchasing it. That includes single parents, two-thirds of which don’t have life insurance, and freelancers, an ever-growing block of the population, who don’t have access to traditional corporate benefits.

The company will set a rising trend of automation, but it will not completely eliminate the need to understand the all-around risk management, including the health and condition of the applicant.

Mabelmann said the industry is at the intersection of many decades in which it could do whatever it wanted and maintain, sacrificing the growth in the number of customers to the growth of the value to the customer. At Bestow, he said, they believe that to see a re-emergence of Americans getting life insurance, there has to be low hurdles to acquiring it. Customer preferences, technology, liquidity of data, and payment preferences are all changing, and they have found that if it’s too hard to make the decision, then the consumer simply won’t make it. All of those preferences are factored in at Bestow in order to make the decision an easier one to make.

Starting with a simple term-life policy helps customers prepare for a better financial future, and to do this a company needs to help the consumer make good decisions on coverage. As the customer’s needs change with the growth of wealth, Bestow plans to stay right there beside them, continuing to offer better suited products, making the journey with the customer, as life insurance isn’t just a simple purchase but a long-term relationship.

The company sees awareness as a simple foundation to grow on. “Letting people know is a great solution…. When we talk to people, they’re shocked that what we’re bringing to the market is possible,” Mabelmann said. They are also relying on a “massive market,” and getting the word out to people that life insurance is more accessible.

Partnering with the company are the American Division of Munich Reed, the world’s largest re-insurer, and the Sammonds Financial Group, trusted companies that work with consumers the way the consumers want. Given the product as Mabelmann has described it, it seems that having partners such as these can only be beneficial.

The Future Awaits

The thought processes behind Bestow seem solid enough, but there are so many unknowns to be able to predict whether or not the company will succeed in what it’s attempting to do. Still, this ground being broken, if they don’t, you have to know that someone will, and the average American family should benefit from the advances that Bestow is making.

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Written by Paul Keenan.