Startup insurance broker’s carrier deal creates path for tech-enabled life sales

➤ Startup Bestow Inc. is confident that its accessibility will overcome a lack of name recognition in the life insurance marketplace

➤ The COVID-19 pandemic has brought to light an underserved market that has now been made more acutely aware of mortality

Three-year-old Bestow sells term life policies issued by North American Co. for Life & Health Insurance and reinsured by Munich Re in every U.S. state, except New York, and is licensed as a carrier in its home state of Texas. The company recently announced a plan to purchase Centurion Life Insurance Co., which is licensed to sell in 47 states and the District of Columbia, to expand its national footprint as an insurer.

In an interview with S&P Global Market Intelligence, Bestow Co-founder and CEO Melbourne O’Banion spoke about the unique advantages he believes the company brings to the market.

The following is an edited transcript of that conversation.

S&P Global Market Intelligence: When you announced the deal to purchase Centurion Life, you said becoming a carrier was a necessary part of your growth strategy. Why is that the case?

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Melbourne O’Banion, co-founder and CEO of Bestow Inc.

Source: Bestow

Melbourne O’Banion: Life insurance is very much a tech laggard in insurance in utilizing software and technology to innovate with products or distribution. Our vision from the beginning was to build, via a first-principles approach, the first digital life insurance company.

We developed all our own technology and our own product to be able to democratize access to life insurance and scale coverage to millions of new consumers. We have known that we wanted to be a carrier because that allows us to have a lot of autonomy with respect to how we develop our products, how we underwrite them, how we distribute them.

What is unique about how you have applied technology to life insurance?

We have developed the first digitally optimized term life product. We are the only provider where 100% of applicants get an immediate yes-or-no decision. We do not triage anybody to a medical exam.

Because of the software and the algorithms that we have developed, we get roughly 3,000 data points per applicant, and we develop algorithms to underwrite the risks and issue policies immediately. Many of our customers go through the whole application and binding process in as little as five minutes. More than two-thirds of them do it over a mobile device; 85% of our applicants are first-time life insurance purchasers.

How have you managed to get your name out so far, and what is your strategy going forward competing with incumbents that are more than 100 years old with massive advertising budgets?

What we have seen consistently in the fintech space, such as the robo advisory space, with names like Dash Capital Advisors, Betterment Holdings Inc. and Wealthfront Advisers LLC … customers are looking for the right solutions. As long as they are a trusted name, and they see reviews from other customers, they largely find that credibility and validation sufficient for them to engage with that platform.

I would also say that our partners and their brand are really helpful as well. We are partnered with North American, which is a top-15 life insurance carrier, and Munich Re, one of the largest global reinsurance companies. We clearly communicate that to our customers, that we are backed by partners with hundreds of billions of dollars in balance sheet capital.

What about the current environment makes the timing right to be a term life carrier?

Our view is that there are tens of millions of people who need coverage and have not purchased it, and are largely underserved because agents and advisers really have not tried to distribute products to them. Term life insurance is the best product to serve and protect millions of Americans. I think that is very much in evidence in the wake of the pandemic. As people think about their own mortality, probably much more so than they did prior to 2020, the overall demand for term life insurance has significantly increased.

There is no investment component to it. Consumers are paying for the risks carriers are taking by insuring them, and it is the most affordable and full form of protection that they can purchase.

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