The Reinvention of a Life Insurer
Vantis Life is banking on a new accelerated underwriting platform, a distribution shift and a shrewd marketing strategy as it repositions itself.
- Jeff Roberts
- August 2019
- A New Path: Vantis, like many other life insurers, is transforming itself amid stagnant industry sales, rising consumer expectations and a prolonged low rate environment hindering investment returns.
- Startup Mentality: Vantis sees itself as somewhat of an insurtech startup and views Ladder, Haven Life and Ethos as its competition.
- Superheroes: Marketing is crucial, and Vantis is casting those who buy life insurance as heroes because they’re protecting their families when a death occurs.
The crumbling, old road meanders through the Connecticut River Valley, carving a boundary between the remains of a tobacco farm and the Vantis Life building.
Beyond the pitted stretch of blacktop, fields of rye roll along the contours of the land to a distant tree line. Two timeworn tobacco sheds stand in disrepair not far away.
Vantis executives watch the vanishing tableau each day from their third-floor offices in Windsor, Connecticut. The surrounding farms of Tobacco Valley continue to be sold and developed, a graphic reminder that change is inevitable and those who don't adapt are left behind.
But on Vantis' side of Old Day Hill Road, a different sort of transformation is unfolding.
An old life insurer is plotting a new course, shifting to a direct-to-consumer digital strategy as the financial institution channels it depends on come under pressure. It is built on an accelerated underwriting platform and enhanced customer service.
The foundation is supported by predictive analytics, experimentation and a cagey marketing strategy casting middle-income parents with life insurance as real-life superheroes.
This is the reinvention of Vantis Life.
You’ve got to be able to deliver a world-class experience to consumers or they’re going to find somebody who will. If your experience isn’t good, you have no shot.
“We've been hearing about the great untapped middle market for 30 years,” said chairman and CEO Ray Caucci, who came from Vantis' parent, Penn Mutual, to replace retired chief executive Peter Tedone in January. “Now the technology has matured to the point where it's possible to hit this underserved market.
“The integration of frictionless underwriting with fully underwritten rates without sticking people with a needle makes life insurance more accessible.”
The strategic repositioning is emblematic of the entire U.S. life industry, which continues to remake itself amid stagnant individual sales, rising consumer expectations and a prolonged low rate environment hindering investment returns.
Vantis stands as a case study for how some companies are evolving to meet the market's growing challenges.
Vantis' focus remains on the financial protection of middle-market families (with annual household incomes of $250,000 or less) through simple products. But how it is reaching those customers and serving them is changing radically.
The long-term vision, Caucci said, is for the Penn Mutual subsidiary “to be the leading provider of direct-to-consumer life insurance for the middle market with a high-touch, Amazon-like experience for our customers.”
To realize that, the insurer is reshaping itself largely as an insurtech startup. It views Ladder, Haven Life, Ethos and Fabric (whose policies Vantis issues) as its competition.
“We're becoming more of a data company than an old-fashioned underwriting company,” said Craig Simms, Vantis' senior vice president and chief marketing officer.
Velocity, the accelerated underwriting platform that launched in January, is the linchpin. The engine, built by reinsurance partner Hannover Re, is the centerpiece of a new omnichannel distribution strategy and customer-centric approach offering fully underwritten term and whole life.
“Velocity was the key, because you've got to be able to deliver a world-class experience to consumers or they're going to find somebody who will,” Caucci said. “If your experience isn't good, you have no shot.”
Vantis is betting on a new vision. A new leader. A new distribution strategy. And new products tailored to its new underwriting platform.
The transformation has reinvigorated the life insurer, based in the suburbs north of Hartford. However, time-tested blueprints are rare in operating direct-to-consumer distribution.
Relatively few insurers have successfully implemented the strategy, and there is a limited track record and little historical data for accelerated platforms, according to the Best's Special Report, DTC: Expanding Distribution and Seeking Opportunities, released in June.
“There haven't been a whole lot of truly successful direct-to-consumer companies,” said Michael Adams, senior financial analyst, AM Best.
Although direct channel market share has grown from 11% of policies written in 2000 to 23% in 2017, it accounts for only 7% of premium dollars. And just 44% of U.S. households own individual life coverage, tying a historic low, according to Limra.
“There are several of us out there, and we're all in the great unknown,” said Gail Lataille, Vantis' senior vice president, treasurer and chief financial officer. “What we don't know, we don't know. But we're learning.”
Penn Mutual is supportive of the pivot, Vantis executives say. But they realize they must deliver results.
“We have an urgency around what we're doing,” said Bruce Friedland, its senior vice president, chief actuary and chief product officer. “There's a lot of pressure to perform.
“We think we have a better opportunity because there aren't many companies doing this.”
The New Boss
Caucci had two weeks to decide his future.
He needed less than 30 minutes.
Penn Mutual had approached him last summer after Tedone announced his retirement, offering the chance to run Vantis. It gave him some time to consider it.
It wasn't necessary.
“The opportunity was a no-brainer for me,” said Caucci, who served 32 years with Penn Mutual, most recently as a senior vice president of product management, underwriting and advanced sales.
The upstate New York native arrived in Windsor in July 2018 and took over as CEO on Jan. 2.
Over the past seven months, Caucci has accelerated Vantis' evolution. He views direct-to-consumer distribution, ease of use and a clear message of what it and life insurance do for middle-market families as differentiators.
Vantis' small stature—$120.7 million in net premiums written in 2018, according to AM Best—may be an advantage in its transformation.
There's no agency force conflict. No massive legacy system issues. No battleship-sized operation to steer in a new direction.
“We're small enough and nimble enough that there's not as much baggage to overcome,” Caucci said.
Vantis' shift began under Tedone, who was CEO for 18 years. Then Penn Mutual acquired it in 2016 for $73.3 million, aiming to expand and diversify its affluent domestic life footprint into the middle market.
“The company had been thinking about what it was going to be,” said Lataille, in her 20th year with Vantis. “Changes were necessary. The Penn Mutual acquisition opened the door for us.”
Insurers have long focused on the affluent, whose needs are profitable enough to support an agency force. As a result, the middle market gets underserved.
Vantis offers simple products well-suited for the demographic and digital sales. And it is among the few insurers offering fully underwritten accelerated products, not just simplified issue policies.
“I haven't seen a whole lot of fully underwritten products yet,” Adams said. “A lot of companies are mentioning that they're looking into it or they're starting it.
“And they need to do that now in order to remain competitive.”
Vantis' access points include the web, a mobile application, a small team of licensed agents and an on-site call center—“the tools to meet the need of every customer,” said Scott Smith, its president and chief operating officer.
It is adding a whole life product and a single-premium deferred annuity, both designed for direct-to-consumer distribution.
“The products have to be simple and the process easier,” said Caucci, whose late father, Ray, was a minor-league baseball catcher in the Detroit Tigers organization for three seasons before becoming a chemical engineer.
“And if we can tell our story and not have people dread buying life insurance, that's going to be a game-changer for our industry.“
Vantis remains reliant on its bank distribution channel, making about 63% of its life sales through 150 financial institution partners such as TD Bank and Citizens Bank. It sells all of its annuity and single-pay life sales through them.
But banks have prioritized the sale of accumulation products over life insurance, and branch foot traffic has declined precipitously.
Just two more reasons to shift strategies. But its evolution extends beyond distribution.
The insurer is bolstering its talent with expertise in data analysis and digital marketing. It is encouraging experimentation, including frequently recalibrating its underwriting algorithm.
It is using data analytics to target consumers reaching trigger points, those life milestones such as a wedding, the birth of a child, a job change or a home purchase. Those periods are often when people think about protection for their families.
And Vantis' seasoned staff of about 85 employees now focuses on customers—both external and internal—not operations. Vantis has formed a Customer Experience Group that will monitor and guide consumers through the approval process and then continue meaningful engagement with them after a purchase.
The 77-year-old insurer, which earned upgrades from AM Best in April to its Financial Strength Rating (A+ (Superior)) and the Long-Term ICRs (aa-), is tracking how people are progressing through the process, including where they stop and what devices they use.
I haven’t seen a whole lot of fully-underwritten products yet. A lot of companies are mentioning that they’re looking into it or they’re starting it. And they need to do that now in order to remain competitive.
Of Death and Superheroes
The Grim Reaper sits on the table, scythe in hand, next to Simms.
“He is always the villain,” the chief marketing officer said.
The six-inch tall Grim Reaper doll is a menacing little metaphor. The company's new branding campaign frames those who buy life insurance as heroes—leveraging the superhero movie phenomenon—because they're protecting their families when a death occurs.
Vantis has featured the campaign on its website, social media and even on the Pandora streaming music service.
“In our advertising, we're saying in every story there's a hero, a villain and a guide,” said Simms, who has been with the insurer about 18 years. “Vantis is the guide. The person who buys is the hero.
“And you can become a real-life hero by buying life insurance because you're defeating one of the impacts that the Grim Reaper has—the financial impact on your household.”
Marketing is a crucial part of the new Vantis.
On a macro level, the life industry needs to tell its story. Stories of how coverage helped a family stay in its home when the primary earner passed away or how it helped fund a college education.
And Vantis needs to drive consumers to Velocity.
“We've got to build our brand,” Smith said. “The platform is there. The experience is built. Our product mix is well-positioned. The opportunity is laid out. But like any other new initiative, we need volume. We need word of mouth.”
Vantis' annual ad budget is “significantly less than a million dollars,” Simms said.
So it has to be creative. Hence the hero theme. And hence a few consumer surveys they conducted to ramp up mass media interest, such as the recent “What Would You Give Up For 10 Years More?”
NBC and CBS affiliates were among the outlets that picked it up. (Smokers, drinkers and fast-food eaters overwhelmingly stuck with their vices, by the way.)
“We have to do something different,” Simms said. “We have to stand out in the sea of life insurers who are primarily agent-based.
“On our website, we're trying to make life insurance easy and almost fun.”
Vantis has rolled out a number of marketing pathways to reach consumers. They range from partnerships with influential bloggers and podcast hosts to old-school direct mail.
It is monitoring which channels best drive traffic to the website, and ultimately, sales. It will continue to test those pathways through the summer.
Vantis has posted its hero campaign on Facebook and Instagram. It is using Google Ads, the tech giant's advertising platform, buying certain keywords and combinations so it gains prominent positions in search results.
“Those seem to be some of the most prolific and beneficial leads for us,” Simms said.
One of the more unique avenues is partnering with influencers—specifically parenting, personal finance and college finance blogs and podcasts. They personalize Vantis' products and services for their audiences.
Another vehicle is advertising on Pandora. The streaming service analyzes its audience, breaking down listeners into detailed profiles based on what genre they listen to, when they listen and other differentiators.
Vantis is even moving back into direct mail because consumers receive little of it now, and their email and social media accounts are inundated with pitches.
“You don't just want clicks and impressions,” Simms said. “You want sources of marketing that are leading to people moving through the application funnel.”
Evolve or Die
The framed, color photo hangs on the wall to the right of Smith's desk.
In it, farmers tend to tobacco plants growing under a white tent, also known as shade tobacco.
“Tobacco's in my blood,” he said. “My father grew up on a farm growing tobacco. I started working at 14 in the tobacco fields. All the kids growing up did that.”
Tucked along the Connecticut River, Tobacco Valley's rich soil has long been famous for producing the wrappers for some of the world's best cigars.
Raised in nearby Enfield, Smith has watched the industry decline. Only a few pockets of farms remain.
He realizes that could happen to Vantis, and even much of the life industry. Many consumers will no longer wait five weeks for an underwriting decision, undergo an invasive exam or tolerate aloof customer service.
Eliminating those obstacles is crucial to filling “a gaping hole” for middle-income families not served by advisers, Simms said.
“I cringe when I see articles about people who pass away, and their family sets up a GoFundMe,” Caucci said. “To me, that's a failure of our industry.
“These are the folks that need life insurance and are not really being served. That's who we're targeting.”
McKinsey &Company recently pegged the mass and middle markets as a $10 billion opportunity in new annual premiums. Insurers have been talking about making an aggressive push for years.
“They keep saying it, but the bottom line is it's not easy to do,” AM Best's Adams said. “It's expensive. The middle market has smaller face amount policies, and you're just not making the premiums to cover the cost of going in.”
Vantis says the answer is direct-to-consumer digital platforms and accelerated underwriting. The easier the buying experience gets, the better the odds of tapping that market.
“We think we can sell a meaningful amount, and we can make inroads with a fairly significant portion of the population that is either underinsured or uninsured,” Friedland said.
The company is adapting in an evolving market. The executive team knows what can happen to businesses that do not.
All they have to do is look across Old Day Hill Road.
“In its heyday, these were the richest tobacco fields in all of the U.S.,” Smith said. “Now a lot of it is sold off. There's not as much money to be made.”
New Platform Accelerates Vantis' Distribution Shift
The list of insurers that have abandoned the U.S. individual life market seems to grow each year.
MetLife. Hartford. Voya. TIAA. And Axa is in the process of gradually divesting itself.
The insurers that remain in the capital-intensive industry are evolving, betting on data analytics, customer service and automated platforms offering coverage without invasive medical exams.
“Accelerated underwriting is the buzzword in all the conversations that we have with life insurance companies,” said Kate Steffanelli, senior financial analyst for AM Best, “whether it's something they're implementing or it's on their radar as far as, 'We need to get there.'”
Vantis Life has joined the small but burgeoning group, repositioning itself with the development of its own accelerated engine, Velocity.
It sees a direct-to-consumer distribution strategy as an effective match for its middle-market customer base.
“Having Velocity in place eliminates two of the biggest obstacles that prevent people from buying life insurance: the invasiveness and the length of the underwriting process,” said Vantis chairman and CEO Ray Caucci. “The experience has to be great or folks won't come to you because there are enough things preventing them from buying life insurance.”
Consumers of all ages have long grown comfortable with buying products and services online—even insurance. Limra found 42% of millennials, 46% of Gen Xers and 41% of baby boomers research life insurance online and then purchase it digitally or via phone or mail.
Velocity harnesses consumer data through LexisNexis credit-based insurance scoring, Milliman's IntelliScript prescription database and motor vehicle records to underwrite in lieu of a medical exam and lab tests.
Eventually, electronic health records—which Caucci regards as still in their infancy as underwriting factors—and recent medical lab testing could become useable data points.
Unlike many direct-to-consumer insurers, Vantis issues whole life with face values up to $1 million for those age 55 and younger, as well as term and final expense coverage.
An upgraded website features tools such as a customer dashboard, a needs calculator and a chat box for those seeking additional information. And its new online portal and mobile app, Life Hero, offer policy information and status updates as well as provide financial, health and fitness content and resources.
In the fourth quarter, customers will be able to make payments, update beneficiaries and connect their mobile devices, track their fitness data, compete in wellness challenges and earn points and rewards.
“We're trying to meet the need of that individual using hand-held devices as part of the Velocity experience,” said Scott Smith, Vantis' president and chief operating officer.
Many applicants can receive an offer in a few minutes. For those with only minor health issues, it might take a few days. The industry average for approval is three to five weeks.
Vantis will introduce a direct-to-consumer, single-premium deferred annuity with a five- or seven-year interest rate guarantee in the third quarter. It can be purchased with a return of premium or market value adjustment feature.
And a direct-to-consumer whole life product will be offered on the Velocity platform later this year. Additional riders include return of premium, terminal/critical/chronic illness, charitable giving and spousal and children riders.
Velocity has been a success, Vantis says. But the company continues to work to drive people to it—and to complete the application process.
“The key is we're going to get data on why people stopped,” Caucci said. “And then we're going to figure out how to make the process better.”