The life insurance industry has been on the cusp of a revolution for a decade. In 2019, insurers are facing more pressure than ever to reinvent their businesses. With stagnant sales, increased regulations and competition, and ever-evolving customer expectations, maintaining a competitive edge requires the willingness to take advantage of the latest technology trends.
Here is where we see the biggest changes taking place—and the biggest possible points of advantage for industry leaders:
Insurance buyers have been marching in lockstep for years. The traditional insurance purchasing process is confusing, convoluted, difficult, and takes forever. Customers want an easier, less painful experience.
Just three years ago, LIMRA found 4 out of every 10 consumers felt intimidated by the life insurance application process. In 2018, 67% of respondents said an out-of-date website prevented them from doing business with an agent or advisor. The fact is, customer experience throughout the life insurance process has not kept up with the transformations taking place in the lives of customers as a whole.
This year, it’s all about the experience—the customer experience. Along with surface changes to the look and feel of customer interfaces, leading carriers and distributors are investing in making the entire process more simplified and efficient.
In a world where customers can apply for a mortgage on their phones and financial apps offer advice on real-time spending using geolocation, customers are looking for an Uber-like experience where they are the center of the sales process rather than the products.
Companies willing to go deeper and tackle the disparate and siloed business processes that are the underlying drivers of customer dissatisfaction will have a significant competitive edge going into the next decade. That includes innovations such as:
In an industry that bases everything on data, from underwriting, pricing and rating to forms and claims handling, data integrity is critical.
The rise of the digital revolution has provided a number of new and exciting opportunities to create comprehensive profiles of customers for more accurate policy selection and pricing. Nontraditional public data sources like Fitbits or even social media accounts, however, bring with them a host of concerns over not only security but also data integrity.
New York was the first state to release guidelines around the use of social media and other nontraditional sources earlier this year, but they likely won’t be the last. Expect to see regulators across the country taking a closer look at data-collection practices and industry leaders scrambling to soothe customers concerned with lack of transparency and algorithm bias.
Although less flashy but arguably more troubling, traditionally siloed data entry is an ongoing challenge for agents and carriers. Errors in data entry across the sales cycle are still a significant drain on sales team and agent productivity leading to costly not-in-good-order issues. Not only do NIGOs cost a company 3 to 4 times what a properly submitted document costs, but they increase the risk of customer abandonment as the process drags on.
Industry leaders are looking to invest in end-to-end technologies that centralize the data collection process, and which let sales teams enter once and use it anywhere else in the sale cycle, securely and accurately. More accurate data also means more accurate business intelligence and we expect to see carriers and distributors shrewdly mining sales platform databases for insights on everything from sales statistics and trends to usage analytics.
Fully-integrated AI is still a long way off, but large carriers are definitely dipping their toes in the technology, mostly behind the scenes.
While industry insiders all include it as a trend to watch in 2019, customers are unsure they’re ready for the role artificial intelligence could play in life insurance. In a 2018 survey, 62% of respondents said they were uncomfortable with the idea of using AI in their insurance buying experience. Customer reticence, however, may be attributed to an incomplete understanding of how exactly AI would be used securely rather than a genuine resistance to the technology and the resulting improvements.
Blockchain, like AI, is on the far horizon and may take a little longer to get traction but is set to make significant changes to the industry by 2030.
Life insurance giants John Hancock and MetLife are both involved in blockchain-inspired experiments leveraging distributed ledgers and non-repudiation capabilities to speed customer onboarding and business process automation. Additionally, several big players in Asia are already launching blockchain-enabled platforms, including a bancassurance platform that shares policy data and digital documents between the insurer and the bank distributors.
A colleague of mine often uses the phrase “there are two things people hate: change and the way things are now.” There is always risk in implementing new systems and programs, but in 2019 and forward there is a real risk of stagnation for companies unwilling to make the necessary advances to better serve agents and customers.
Processes and solutions that may have made sense in 2005 or prior are decades outdated as technology has advanced in ways we had not considered just 10 to 15 years ago, and tired legacy systems from the 90’s are still strangling operations and sales teams. Some executives are clinging to those decades-old investments, hoping for a bigger ROI.
Visionary executives, on the other hand, are already seeing that investing in new systems and enhancing their processes now can be far more cost-effective and will lead to a real competitive edge in the marketplace in the very near future.
The widespread digitization and automation of life insurance and annuities sales are reaching a tipping point. We expect to see the fear of being left behind to overcome the fear of change for many carriers and distributors in 2019.
By Doug Massey, EVP, Sales and Relationship Management, Insurance Technologies