Report: Under-Insurance Costing Life Insurers $70B Annually

By John Hilton

Just 26 percent of the total coverage needed for life insurance is currently met, according to a new report, resulting in $70 billion in lost premiums for the industry.

The report found that insurance companies are missing out on an average of $785 in annual life insurance premium payments per person who requires insurance coverage in the U.S. Atidot, a technology company providing AI, big data, and predictive analytics tools to life insurers, released its report today.

"Policyholders are generally unaware that they are underinsured, and the onus must be on the insurance industry to remedy that," said Dror Katzav, CEO of Atidot.

New solutions enable insurers to harness data efficiently and know when to contact clients to update their coverage and prevent lapses. The key is “touchpoints” at crucial times in a policyholder’s life, Katzav told InsuranceNewsNet.

“Often people don’t even realize that there is a gap because they purchased something,” he explained. “But your life is not going to be the same five years later, or 20 years later.”

State-By-State Numbers

The report analyzes the levels of insurance on a state-by-state basis, uncovering the rate of under-insurance for individual states and the U.S. as a whole. West Virginia recorded the highest level of under-insurance with an average of 85 percent, while Oklahoma, the least under-insured state, still recorded a staggering 51 percent.

The ability to “microsegment” is something that would benefit insurance companies, Katzav said.

“Even in Manhattan there are places where this side of the street does not look anything like the other side of the street,” he said. “Being able to provide insurance solutions for the other side of the street as well as this side of the street might not be something that modern insurance companies can do.”

Companies are forfeiting enormous profit potential and placing their most valuable asset, a loyal customer base, at risk by failing to capitalize on the data they possess, Atidot concluded. The failure to strategically interact with their clients comes at a substantial cost for insurers and customers alike.

In 2019, insurers should be making better use of the data they possess, Katzav stressed.

“What we’re surprised to see is that many of the companies are not monetizing this data properly,” he added. “From 80 to 90 percent of the data are not being monetized because it’s used just for administrative purposes or not even used at all.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.