This week, online lender SoFi formally expanded into life insurance in partnership with Protective Life. The announcement comes after Haven Life said it would offer term-life-insurance policies of up to $1M online without a medical exam for qualified users and one month after Ladder Life raised $14M for its digital term life insurance product in partnership with Fidelity Security.
We chatted with Andrea Blankmeyer, who leads SoFi’s product development for insurance, on the thought process for entering life insurance, cross-sell opportunities and future SoFi insurance products. The Q&A has been abbreviated and condensed.
When did SoFi decide on entering insurance?
SoFi’s always planned to expand beyond credit products into the other side of our customer’s balance sheet thinking about asset and wealth managemant as well as risk management. So insurance has always been part of the long-term roadmap for SoFi. More tactically, last summer was when we started to have more intensive discussions internally around what is it that SoFi really wants to do in insurance. In the latter part of 2015, we had a conversation around which part of insurance we wanted to go into first. Did life insurance make sense? Did we want to go into P&C? Homeowners is a very reasonable product to include in our product set given our mortgage book. So we spent a lot of time noodling on both where we wanted to start in terms of product and, second, what business model we wanted to pursue.
How did SoFi eventually decide on life?
As we spent time analyzing product innovation and how people buy across P&C and life, we felt that life was probably the most antiquated in terms of how people currently buy insurance. It’s a product that is typically sold very heavily, it’s broker-dependent, there’s not much direct-to-consumer, despite the fact that a fair amount of data and analytics exists especially at the reinsurer level today to properly assess the risk of a younger cohort. We saw the penetration of life insurance into our core customer base go down over time and built a thesis and a hypothesis that it has less to do with the fact that they don’t need the product and more to do with how the product is being sold and delivered them.
We went out in the latter part of 2015 and early 2016 to a number of carriers and reinsurers about the product we were hoping to bring to market. Protective came out as the partner we wanted to work with and committed the resources and institutional capital behind getting it done in a very fast timeline, we really got started in Q2’16 in setting the wheels in motion.
On cross-selling into SoFi’s existing customers
We think from a direct cross-sell into our customer base perspective, there’s a lot we can do with our data. We know who are homeowners, we know who are newly becoming homeowners, we get informed by our members when they’re undergoing a life or family event. Over time the investment we’ve made in building out our community outreach efforts means, I think, when we go to them and recommend new products into them they know it’s coming from a source they trust.
On putting marketing dollars toward its insurance product
We are intending to do some moderate marketing efforts (around the Protective SoFi product). We haven’t really turned on anything yet and probably won’t for a little while as we watch the demand we’re getting organically from our customer base. So far, we’ve sold more policies in the first 48 hours since launch than Haven Life did in Q1 this year and we’re seeing high open rates on our emails that have gone out to a small subset of our customer base so far today.
On SoFi’s future in insurance
We absolutely want to build out more products – go deeper into life on the permanent side and extend into P&C as well. It’s a little early for us on the product roadmap around (P&C) and the methods by which we will go out and build and launch the products, but we’re very excited about the space and opportunity.
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