As members of the millennial generation move into their 30s and the average life insurance customer is becoming more and more tech-savvy, insurance companies are forced to invest heavily in digital transformation and offer personalized services on the market. The challenge is how to avoid the common pitfalls on this journey of modernization. From carriers’ culture and change management to product innovation initiatives, here are some trends on the life insurance landscape.
The ‘Amazon Effect’
Whether we like it or not, retail markets were forever disrupted by the rise of the e-commerce industry and digital marketplaces such as Amazon or Netflix. By constantly tracking customer habits and monitoring shopping patterns, these e-commerce businesses deliver personalized products for millions of people.
Insurance carriers could learn a lesson from this and get closer to their customers’ needs by introducing a customer-centric approach. Since today’s customer expects fast and relevant services from any provider, it is time for insurers to ask themselves what they know about their customers, and what they can predict from their customers’ behavior.
More Data For A Better Service
Different generations have distinct attitudes when it comes to sharing their personal data. In general, millennials and Generation Z are willing to give more information in return for better service. As LIMRA reported in June 2020 that only 34% of millennials in the U.S. own individual life policies, catering to the needs of that generation can be the engine of growth for life insurers.
Despite the regulatory challenges and the complexities of underwriting, insurers have a lot of customer data on their hands, which could be used to drive the customization of products to better meet customer needs. While these custom offers provide value for customers, companies need to make sure that the data is used in a way that is transparent and comfortable for any policyholder. In this sense, market regulations will need to translate and understand new technologies that will contribute to these personalized offers.
Create Digital Native Products
According to a recent report in Forbes started just before the pandemic, online life insurance sales increased by more than 30% for providers with speedy apps that used data/algorithm-driven underwriting. At the same time, agent-driven sales are in decline, due to the lack of physical contact opportunities and emerging digital solutions.
An obvious reaction to these trends could be to target direct to consumer channels with new, digital native products, easing the dependency on traditional forms of underwriting. When reality around us is moving in this cadence, carriers have to navigate the market based on data-driven decisions and real-time insights.
By leveraging the capabilities of a no-code platform, insurers can develop and launch new products quickly, automate any process across the entire customer lifecycle, and enable partners to distribute their products via pre-defined APIs. With the enabled self-service functionalities that a platform like this can provide, applicants can see whether they are qualified and then purchase a policy in a matter of minutes, instead of going through manual, paper-bound processes.
Dissolve Cultural Barriers In Life Insurance
We all know that life insurers have long-standing ways of doing business. Even though culture and change management within a big organization can be a hurdle, it is necessary to make use of the increased availability of data.
Machine learning and artificial intelligence are only tools. By applying these digital tools, insurers will have insights, but the question is what they will do with those insights and how they will process the data. Do they create agent dashboards? Will they have mobile applications where they can share information with their policyholders? Will their case underwriters trust this new system?
Overall, insurers gearing up with innovation initiatives need to understand that technology is not a silver bullet on its own. Software development and data analyst talent will only drive growth in the business if they are backed up with industry expertise and an organization that is willing to embrace new perspectives.
There is a tremendous opportunity to increase life insurance sales in today’s market. The key is creating digital native life insurance products, leveraging technology to redefine the customer journey, and embracing an innovative perspective in a direct-to-consumer market.
Barbara Péterfi is content marketing manager at Innoveo. Barbara may be contacted at [email protected].