SoFi, an online lender, recently got an insurance license and is partnering with Protective Life Insurance Company. Here, Mintel’s expert analysts discuss how this partnership will affect the insurance industry and consumers, as well as key learnings for financial marketers.

The story so far

It seems as though every day a new company attempts to disrupt the longstanding models of the financial services industry in hopes of reaching the high expectations of today’s digital customer. In an environment that is constantly changing, it was only a matter of time before one of the largest alternative lenders and a market-leading insurance company came together to form what may be one of the more talked about partnerships in 2017.

Early reports on the agreement indicate that SoFi, who entered the FinTech space focused on refinancing student loans, and has recently been expanding into other categories, is planning to act as the insurance broker after obtaining a license in California to sell life insurance. The insurance carrier partnering with SoFi in the inaugural phase of this development is Protective Life. SoFi has also obtained licenses in five other states, but currently no insurance carrier partner has been authorized to sell on the company’s behalf.

Stephanie Roy Headshot - BW - CircleStephanie Roy, Director of Insights, Insurance, Mintel Comperemedia

The insurance world, often dominated by auto, home and health innovations, has left a massive amount of white space to innovate when it comes to life insurance.  So often, tech startups and digital platforms are designed for the lines of business that are top of mind for consumers, such as auto or health insurance. But in a day when conversations about disruption have reached a fever pitch, it might just be life insurance – thanks to a SoFi/Protective Life partnership – that makes significant progress toward true industry transformation.

Marketing and distribution partnerships that target new consumer segments have always garnered high interest from the industry and this partnership will be no different. As a result, many in the industry are likely to follow the implementation of this model closely to see if innovation turns into significant sales. There is no doubt that consumers will buy into the concept, especially the young Millennial market that is the bread-and-butter of SoFi’s student lending platform. Mintel research shows 59% of Millennials say that innovative products are more important to them than a long history of experience when choosing an insurance provider. SoFi and Protective have the unique ability to offer both as they work to move the needle in an industry hungry for change.

Lily Harder Headshot - CircleLily Harder, VP Research, Mintel Comperemedia

This new partnership brings with it more disruption to the growing landscape of alternative financial management. While the lending process itself was transformed when it left the four walls of the bank and entered the digital space, a similar transformation is set to take place with life insurance. Millennials are putting a lot of trust into online-only and alternative banks because they offer convenient, flexible and hassle-free services that also utilize the latest technologies. As this influential consumer group navigates what could be their most complicated stage of life, from career transitions, to starting a family, to planning for the future, it makes sense that they would see value in a one-stop-shop provider.

The challenge for SoFi as they forge on with this endeavor will be their approach to marketing the product itself. Life insurance can be a complicated and emotional purchase, so the value proposition that SoFi creates, as well as how it fits in with one’s overall financial profile, will be a key determinant of its success in the marketplace.  

Stephanie Roy is the Director of Insights, Insurance at Mintel. She is responsible for providing internal and external stakeholders with insights and analysis on trends in the Life, Health and P&C insurance industries across North America.

Lily Harder is the Vice President of Research for Mintel Comperemedia. Lily specializes in the financial services industry, researching and presenting on the latest industry trends, competitive intelligence insights and newsworthy developments.

 

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