How Life Insurance Carriers Can Thrive in the Digital Age

 

Life insurance is a contract between you and an insurance company that promises to pay a sum of money to your beneficiaries when you die. Life insurance can provide financial security and peace of mind for your loved ones, especially if you are the main breadwinner or have significant debts. But life insurance is not just a one-time transaction. It is a dynamic and evolving industry that faces many challenges and opportunities in the digital age.

Digital technologies have transformed the way we communicate, shop, work, and play. They have also changed the way we think about and manage our risks. Consumers today have more choices, more information, and more expectations than ever before. They want personalized, convenient, and transparent experiences from their life insurance providers. They also want to access and use their life insurance products and services through digital channels that suit their preferences and lifestyles.

At the same time, new entrants and competitors are disrupting the traditional life insurance models with innovative offerings and immersive digital experiences. These include tech giants, insurtech startups, online platforms, and alternative providers that leverage data, analytics, artificial intelligence, blockchain, and other emerging technologies to create value for customers and stakeholders.

How can life insurance carriers adapt and thrive in this fast-changing and competitive environment? How can they leverage digital technologies to transform their products and services? How can they prepare for the future of digitalization? In this article, we will explore these questions and provide some insights and recommendations for life insurance carriers to seize the digital opportunity and create value for their customers and stakeholders.

How Digital Disruption is Changing Consumer Expectations and Behaviors

Consumers today are increasingly using digital channels to research, evaluate, purchase, and service life insurance products. According to a 2020 report by LIMRA and Life Happens, 58% of consumers said they were more likely to buy life insurance online because of COVID-19. Moreover, 36% of consumers said they would prefer to buy life insurance online without any human interaction.

Consumers are also demanding more personalized, convenient, and transparent experiences from their life insurance providers. They want to receive tailored recommendations based on their needs, goals, preferences, and risk profiles. They want to compare prices and features across different providers and platforms. They want to complete their transactions quickly and easily without any hassle or paperwork. They want to access their policy information and benefits anytime, anywhere, and on any device. They want to receive timely updates and feedback on their claims and queries.

In addition, consumers are exposed to new entrants and competitors that are disrupting the traditional life insurance models with innovative offerings and immersive digital experiences. These include:

• Tech giants: Companies like Amazon, Google, Facebook, Apple, Alibaba, Tencent, etc., that have huge customer bases, data capabilities, brand recognition, and trust. They can offer life insurance products or services directly or indirectly through their platforms or partnerships.
• Insurtech startups: Companies that use technology to offer new or improved life insurance products or services. They can offer lower prices, faster processes, better customer service, or niche solutions that cater to specific segments or needs.
• Online platforms: Companies that operate online marketplaces or aggregators that allow consumers to compare and buy life insurance products from multiple providers. They can offer convenience, transparency, choice, and unbiased advice.
• Alternative providers: Companies that offer non-traditional or unconventional life insurance products or services. They can offer peer-to-peer insurance, microinsurance, parametric insurance, usage-based insurance, etc., that appeal to underserved or untapped markets.

These new entrants and competitors pose a serious threat to the incumbent life insurance carriers that rely on traditional distribution channels (such as agents or brokers), products (such as term or whole life), and processes (such as underwriting or claims). They can erode their market share, revenue, profitability, and customer loyalty.

How Life Insurance Carriers Can Adapt and Thrive in the Digital Age

To survive and succeed in the digital age, life insurance carriers need to embrace digitalization and transform their business models, operations, and culture. They need to leverage more predictive analytics and marketing to identify and reach out to consumers at the right time with the right message. They need to increase their digital capabilities across the purchasing life cycle to provide a more streamlined and satisfying customer journey. They need to activate their agents to provide holistic advice and guidance in a digitally enabled ecosystem.

First, life insurance carriers need to leverage more predictive analytics and marketing to identify and reach out to consumers at the right time with the right message. Predictive analytics is the use of data, statistical algorithms, and machine learning techniques to identify the likelihood of future outcomes based on historical data. Predictive analytics can help life insurance carriers to segment their customers, understand their needs, preferences, behaviors, and risks, and tailor their offerings and communications accordingly. Predictive analytics can also help life insurance carriers to generate leads, optimize pricing, reduce fraud, and improve retention.

For example, life insurance carriers can use predictive analytics to identify consumers who are likely to need or buy life insurance based on their life events (such as marriage, childbirth, home purchase, etc.), online activities (such as searches, clicks, reviews, etc.), or social media posts (such as photos, comments, likes, etc.). They can then use targeted marketing campaigns (such as emails, ads, texts, etc.) to reach out to these consumers with personalized messages that highlight the benefits and value of life insurance. They can also use predictive analytics to determine the optimal timing and frequency of their communications to increase the conversion rate and customer satisfaction.

Second, life insurance carriers need to increase their digital capabilities across the purchasing life cycle to provide a more streamlined and satisfying customer journey. The purchasing life cycle consists of four stages: research, evaluation, purchase, and postpurchase servicing. Life insurance carriers need to offer digital solutions that enhance the customer experience at each stage.

For example, life insurance carriers can offer online tools (such as calculators, quizzes, videos, etc.) that help consumers to research and learn about life insurance products and options. They can offer online platforms (such as websites, apps, chatbots, etc.) that allow consumers to evaluate and compare different life insurance products and providers. They can offer online processes (such as e-signatures, e-payments, e-delivery, etc.) that enable consumers to purchase life insurance products quickly and easily without any paperwork or physical interaction. They can offer online services (such as portals, dashboards, notifications, etc.) that allow consumers to access and manage their policy information and benefits anytime, anywhere, and on any device.

Third, life insurance carriers need to activate their agents to provide holistic advice and guidance in a digitally enabled ecosystem. Agents are still an important distribution channel for life insurance products, especially for complex or high-value policies that require human interaction and trust. However, agents need to adapt to the changing consumer expectations and behaviors in the digital age. They need to use digital tools and platforms to enhance their productivity, efficiency, and effectiveness. They need to provide holistic advice and guidance that cover not only life insurance products, but also other financial products and services that meet the customers’ needs and goals. They need to collaborate with other stakeholders in the life insurance ecosystem, such as insurers, insurtechs, online platforms, alternative providers, etc., to create value for customers and stakeholders.

For example, agents can use digital tools and platforms to generate leads, schedule appointments, conduct meetings, present proposals, close sales, and follow up with customers. They can use digital tools and platforms to access real-time data, analytics, and insights that help them to understand their customers better, tailor their offerings more effectively, and optimize their pricing more accurately. They can use digital tools and platforms to communicate with customers through multiple channels (such as phone calls, emails, texts, video calls, social media messages, etc.) and provide timely updates and feedback on their claims and queries. They can provide holistic advice and guidance that cover not only life insurance products but also other financial products and services that meet the customers’ needs and goals. For instance, they can advise customers on how to save for retirement, invest for growth, protect against risks, plan for estate transfer, etc. They can collaborate with other stakeholders in the life insurance ecosystem such as insurers insurtechs online platforms alternative providers etc. to create value for customers and stakeholders. For instance they can partner with insurtechs to offer innovative solutions such as peer-to-peer insurance microinsurance parametric insurance usage-based insurance etc. They can refer customers to online platforms that allow them to compare and buy life insurance products from multiple providers. They can work with alternative providers that offer non-traditional or unconventional life insurance products or services.

How Digital Technologies are Transforming Life Insurance Products and Services

Digital technologies are enabling new ways of assessing pricing and managing risks in life insurance. They are also creating new opportunities for product innovation and differentiation in life insurance. They are also enhancing customer engagement and loyalty in life insurance.

First digital technologies are enabling new ways of assessing pricing and managing risks in life insurance. Traditionally life insurance underwriting relies on manual processes that involve collecting medical records conducting physical exams, asking health and lifestyle questions, and applying actuarial tables and mortality rates. This process can be time-consuming, costly, inaccurate, and intrusive for both insurers and customers.

Digital technologies can streamline and improve this process by using data, analytics, artificial intelligence, blockchain, and other emerging technologies to collect, analyze, and verify information about customers’ health and risk profiles. For example:

• Data: Insurers can use data from various sources, such as wearable devices, electronic health records, social media posts, online activities, etc., to gain more insights into customers’ health and behavior patterns.
• Analytics: Insurers can use analytics to process and interpret the data, identify patterns and trends, and generate risk scores and recommendations.
• Artificial intelligence: Insurers can use artificial intelligence to automate and optimize the underwriting process, such as by using natural language processing to extract information from unstructured data sources, or by using machine learning to improve the accuracy and efficiency of risk assessment and pricing models.
• Blockchain: Insurers can use blockchain to create secure and transparent records of customers’ data and transactions, such as by using smart contracts to execute policy terms and conditions, or by using distributed ledger technology to share and verify data across multiple parties.

By using digital technologies to assess, price, and manage risks in life insurance, insurers can offer faster, cheaper, more accurate, and more personalized products and services to customers. They can also reduce fraud, errors, and disputes in the underwriting process.

Second digital technologies are creating new opportunities for product innovation and differentiation in life insurance. Traditionally, life insurance products are standardized, rigid, and complex. They offer limited flexibility, customization, and transparency to customers. They also have high barriers to entry, exit, and switching for customers.

Digital technologies can enable new ways of designing, delivering, and consuming life insurance products that are more flexible, customizable, and transparent to customers. They can also lower the barriers to entry, exit, and switching for customers. For example:

• Flexible: Insurers can offer life insurance products that allow customers to adjust their coverage amount, premium rate, or policy term according to their changing needs, goals, or circumstances. They can also offer life insurance products that combine different types of coverage, such as term, whole, or universal life, or that offer additional benefits or features, such as riders, cash value, or dividends.
• Customizable: Insurers can offer life insurance products that are tailored to customers’ specific needs, preferences, or risk profiles. They can also offer life insurance products that cater to niche segments or markets, such as millennials, women, seniors, etc., or that address specific issues or challenges, such as chronic diseases, climate change, cybersecurity, etc.
• Transparent: Insurers can offer life insurance products that provide clear and simple information about their terms and conditions, benefits and costs, and performance and outcomes. They can also offer life insurance products that use gamification or behavioral economics techniques to motivate and reward customers for their actions or choices.

By using digital technologies to innovate and differentiate their life insurance products, insurers can create more value and satisfaction for customers. They can also attract and retain more customers in a competitive market.

Third digital technologies are enhancing customer engagement and loyalty in life insurance. Traditionally life insurance products are low-engagement low-frequency and low-emotion products. They have limited interaction touchpoints or feedback loops with customers. They also have low customer satisfaction retention or advocacy rates.

Digital technologies can create new ways of engaging connecting and communicating with customers in life insurance. They can also increase customer satisfaction retention or advocacy rates in life insurance. For example:

• Engaging: Insurers can use digital technologies to create more interaction touchpoints or feedback loops with customers such as by sending personalized messages reminders notifications etc. They can also use digital technologies to provide more value-added services or solutions to customers such as by offering wellness programs financial planning tools risk management advice etc.
• Connecting: Insurers can use digital technologies to create more emotional bonds or relationships with customers such as by using storytelling humor empathy etc. They can also use digital technologies to create more social connections or communities among customers such as by facilitating peer-to-peer sharing learning support etc.
• Communicating: Insurers can use digital technologies to create more transparent and responsive communication channels with customers such as by using chatbots voice assistants video calls etc. They can also use digital technologies to create more personalized and relevant communication content with customers such as by using data analytics artificial intelligence etc.

By using digital technologies to enhance customer engagement and loyalty in life insurance, insurers can improve customer satisfaction, retention, and advocacy rates. They can also increase customer lifetime value and profitability.

How Life Insurance Carriers Can Prepare for the Future of Digitalization

The digital age presents many challenges and uncertainties for the life insurance industry. The pace and scope of digital change is unprecedented and unpredictable. The customer expectations and behaviors are diverse and dynamic. The competitive landscape is complex and crowded. The regulatory environment is evolving and demanding.

How can life insurance carriers prepare for the future of digitalization? How can they stay ahead of the curve and create a competitive advantage? Here are some key success factors and best practices for life insurance carriers to embrace digitalization and create value for their customers and stakeholders.

• Vision: Life insurance carriers need to have a clear and compelling vision of their digital transformation. They need to define their digital goals, strategies, and priorities. They need to align their digital vision with their business vision, mission, and values.
• Leadership: Life insurance carriers need to have strong and committed leadership that drives and supports their digital transformation. They need to have a dedicated digital team or unit that oversees and coordinates their digital initiatives. They need to have a culture of innovation, experimentation, and learning that fosters their digital capabilities.
• Customer: Life insurance carriers need to have a customer-centric approach to their digital transformation. They need to understand their customers’ needs, preferences, behaviors, and risks. They need to design their digital products and services around their customers’ pain points, jobs to be done, or moments of truth. They need to measure their digital performance based on their customers’ feedback, satisfaction, or loyalty.
• Technology: Life insurance carriers need to have a technology-enabled approach to their digital transformation. They need to invest in the latest and best digital technologies that suit their business needs and goals. They need to integrate their digital technologies with their existing systems and processes. They need to ensure their digital technologies are secure, reliable, and scalable.
• Partnership: Life insurance carriers need to have a partnership-oriented approach to their digital transformation. They need to collaborate with other stakeholders in the life insurance ecosystem, such as insurers, insurtechs, online platforms, alternative providers, regulators, etc. They need to leverage the strengths, resources, and networks of their partners. They need to create win-win outcomes for their partners.

The future of life insurance in the digital age is bright and exciting. Digital technologies offer tremendous opportunities for life insurance carriers to transform their products and services, enhance their customer experience, and create value for their customers and stakeholders. However, digital technologies also pose significant challenges and threats for life insurance carriers that fail to adapt or innovate.

Life insurance carriers need to act now and act fast to embrace digitalization and seize the digital opportunity. They need to leverage more predictive analytics and marketing, increase their digital capabilities, activate their agents, innovate and differentiate their products and services, and prepare for the future of digitalization. They need to become more agile, responsive, and customer-centric in the digital age.

Are you ready for the future of life insurance in the digital age? If not, don’t worry. We are here to help you. Contact us today and let us guide you through your digital transformation journey.