May 2018

Is There a Digital Blue Ocean?

By Patrick T. Leary

Many organizations are looking to the internet to sell life insurance. They see the opportunities presented by today’s digital landscape as consumers research, shop and buy products online. As a result, organizations have built the capabilities to connect with online consumers. However, in the rush to join the e-commerce economy the life insurance industry has created a challenge—a marketplace where an increasing number of competitors fight over the current pool of online insurance shoppers.

LIMRA research shows that most insurance shoppers look to the internet to research life insurance, with a small but growing segment looking to buy there. But what is the current online experience? When someone begins his shopping process by Googling life insurance he is greeted with a wide array of sites, most of them promoting low-cost coverage. The digital marketplace includes not only well-established players but also new entrants. Manufacturers, distributors, aggregators and quoting sites all compete for attention. As a result, the online life insurance marketplace has become very crowded. But while many thought the internet would open new markets, it has yet to happen. Life insurance ownership remains flat. LIMRA research further shows that for the most part the online insurance buyer probably would have bought anyway. The internet is not creating new markets for life insurance. Supply is not creating demand. Currently, organizations fight for share within established markets and limited boundaries. How does a company stand out and create new opportunities in this environment?

In the book Blue Ocean Strategy, the authors W. Chan Kim and Renée Mauborgne outline an approach that organizations can take to differentiate themselves in a crowded, competitive landscape and create new markets referred to as “blue oceans.” The authors suggest pursuing value innovation—providing unique customer value through innovation in a cost-effective way. Instead of competing within existing boundaries, companies create new boundaries for themselves and their industry, thereby competing uncontested. Can such an approach work for an organization looking to create new online markets for life insurance?

The book presents several examples of companies that pursued value innovation and created new markets in industries thought to be mature. Yellowtail Wine, for example, discovered an untapped market of wine drinkers—people who liked the taste of wine but were intimidated by its cost, overwhelmed by the number of choices, and turned off by the high-brow image of the well-established wine market. Yellowtail stepped back, thought about the market differently, questioned assumed barriers, and created an offering that established a new blue ocean for the company—the mass market. Could someone competing in the online life insurance marketplace do the same? Much like the marketplace that Yellowtail questioned, the life insurance market shares a lack of understanding, a perceived high cost, overwhelming choice and an expressed desire for the product. (Although I concede that wine is probably a more expressed desire than life insurance!)

Organizations marketing life insurance online are looking at the digital offering as a blue ocean opportunity to open new markets. But given the realities of the current online landscape that hasn’t happened. Instead, the industry has very quickly created a “red ocean”—a rush to compete over an increasingly commoditized marketplace.

What must be done to truly create a blue ocean strategy? We need to ask certain questions about a product and its current place in the market:

  • What are the key elements of the product or service that customers value most? These are the attributes to be emphasized, reinforced and focused upon.
  • What attributes are not very important to customers that can be eliminated at either the company or industry level?
  • What can be reduced or done more cost-effectively?
  • What offering can then be created within this new framework?

Asking these questions about online life insurance allows companies to focus on value innovation—creating a new business model that opens new markets, maximizes customer value and drives profitable growth. They can then truly stand out in the online life insurance marketplace.

Is there a digital blue ocean waiting to be discovered for life insurance? Blue Ocean Strategy provides a framework for thinking about the online life insurance market differently, questioning assumed barriers and creating a new digital market for companies in the life insurance industry.

Patrick T. Leary, M.B.A., LLIF, is corporate vice president of distribution research at LIMRA. He can be contacted at