Icing on the cake

Life-insurance policies with perks make it to America

Insurers hope ancillary services will cut losses and keep customers loyal

Print edition | Finance and economics

Aug 18th 2018| NEW YORK

PEOPLE only contact their insurers when things go wrong and they need to make a claim.
This generally means losses for the insurer. It also means stress and hassle for the
customer. In order to mitigate both problems, insurers increasingly offer extra services
alongside their bog-standard policies.

Aviva, a British insurer, for instance, installs sensors on customers’ water pipes to detect
even minuscule leaks, so that these can be repaired before causing greater damage. This
spares Aviva the cost of a bigger claim, and the client the misery of a flooded basement.
Other benefits are intended mainly to foster customer loyalty. Porto Seguro, a Brazilian
insurer, offers access to locksmiths, electricians and taxi services.

Life insurers have so far been slower to catch on. But that is changing. Often ancillary
services nudge people to live more healthily. AXA, a French insurer, gives its customers
access to check-ups. Union Life, a Chinese one, guarantees policyholders a place in an old
people’s home and advises them on activities in retirement. Desjardins, a Canadian
insurer, offers advice during treatment and recovery from illness.

On August 15th Haven Life, an American life-insurance agency and a subsidiary of

MassMutual, an insurer, announced it would include a set of ancillary benefits for its
customers. That makes it a pioneer in its home market.

Haven Life’s new perks fit neatly into the global trend. Its ancillary benefits centre on
health and planning for death. A digital service for compiling a will, and online storage for
important documents, are included. Policyholders also get discounts on family-health
services at some clinics, and access to a genetic health test. Yaron Ben-Zvi, the firm’s
boss, says the initiative is squarely meant to increase customer loyalty.

A few rivals dangle the odd optional extra. Ladder, a life-insurance startup, offers some
help on financial planning through an online tool. State Farm, a large American insurer,
gives clients a discount on in-home sensors that monitor old people’s health. But the
MassMutual policies that Haven Life sells are the first in America to offer other services
as part of the package.

This is not for lack of demand. A survey by Bain & Company, a consultancy, finds that
American consumers have very similar preferences to Australian, British and Chinese
ones on the sorts of services they want from life insurers.

But America is not a friendly place for innovative insurers. New policies must be
approved by each of its 50 state regulators. Mr Ben-Zvi says that some states’ laws are too
inflexible, and do not allow for such ancillary benefits. The result is that Haven Life will
not initially offer the perks in five states, including Florida and New York, though the firm
hopes to make them available nationwide. Even when an offering suits insurers and their
customers, it can still take time to spread.