They call them ‘insurtechs,’ and the focus is on using the latest in data and AI technology to sharpen the competitive edge for life insurance companies. One of the hottest players in the game, Fabric, has targeted new and expecting parents.
“Life insurance isn’t something you think about – or buy every day – and the existing system is built to take advantage of your confusion,” says Adam Erlebacher, a co-founder of Fabric. “You should be able to make a good choice by default. Life insurance is a fundamentally important product for new and expecting parents. It should be affordable, simple, and fast.”
According to Erlebacher, Fabric offers two products as part of their startup. One, an accidental death policy, is dubbed Fabric Instant, and it takes just two minutes for customers to purchase online. The second, Fabric Premium, is an offering of a comprehensive, 20-year term policy.
Fabric say they’ll also offer a wider range of financial products – all targeted toward parents – with the first of those being 529 savings accounts for college.
Fabric went live in 32 US states this week, and the company has completed license applications which are pending approval in the remaining states.
With some 37 million US families lacking life insurance, Fabric says their market is consumers who are fed up with ‘inconveniences’ such as requirements which mandate face-to-face meetings to obtain approval on products.
Erlebacher says Fabric Instant will make an end run around those practices by offering consumers in the 25-50 age demographic a policy after simply providing basic details such as their name, date of birth and social security number. The firm says Fabric Instant users will also be offered an upgrade to the company’s “Fabric’s Premium” coverage down the road. That plan will require customers to complete a considerably more detailed questionnaire and take a medical check-up.
Fabric’s policies are underwritten by insurer Vantis Life Insurance. Prices for the products begin at $6 per month to receive $100,000 in total coverage.
It’s a ‘niche market’ strategy which calls for a narrow product focus, and Fabric hopes to elbow their way into the life insurance industry by starting with a relatively low-cost offering. The founders, Erlebacher and Steven Surgnier, say that by launching one product at a time in a deliberate rollout, their company can focus on getting each product correct before moving on. The pair say, the strategy will result in a higher level of customer satisfaction, and thus inclined to purchase other products as they’re launched.
Experts say the global insurance industry is worth almost $5 trillion in total. They say that if traditional insurance companies don’t pay attention to insurtech innovations, the entrenched players risk losing a share of valuable markets to new innovators.
