From an influx of novel technologies to growing consumer interest in financial wellness, major market shifts and consumer trends are poised to reshape the life insurance landscape for years to come.
The last ten years have been transformational for the global life insurance landscape, both in terms of growth potential (new digital technologies, emerging markets, the rise of AI and data availability) and challenges (industry disruptors, regulatory issues, underfunded retirement plans, the COVID-19 crisis). But today, changing customer demand, technological innovations and economic trends are combining to create a wealth of new opportunities within industry, especially for those insurers willing to embrace change and adapt their products and services accordingly.
With the global pandemic reminding the world about the importance of protecting beneficiaries in the event of mortality, and life insurance playing a central role in the Financial Wellness movement, it’s no wonder a recent McKinsey report on the future of life insurance proclaimed customer demand for life insurance products to be at an all-time high. Thanks to the proliferation of data, devices and connected technologies now on the market, many insurers are already at work creating tailored experiences for their customers, especially as there’s evidence of a growing willingness among customers to exchange their data for such personalized services.
And as consumers are willing to share more (the same 2020 McKinsey report indicated that 6 out of 10 global consumers would exchange personal details with their insurers in order to receive discounts and/or benefits), innovations in underwriting and data protection that address personalization are likely to follow suit, with a shift in the coming years toward prevention-based products that use predictive analytics versus more traditional risk assessment-driven services. Continuous underwriting would be one such example, where data is used to determine risk and create personalized policy terms and pricing in real-time, with an emphasis on automation and digitization of processes.
Alongside increased customer demand for personalization on the product-side, there is also much momentum (both from industry disruptors and incumbents) to create more streamlined, transparent customer experiences for life insurance products. Ladder was an early entrant in this field, introducing its technology-driven approach that greatly simplified the customer experience for its term life product, using a quick, online application, instant approval, and transparent, personalized pricing. Life insurance platform Amplify has also put streamlined customer experience at the center of its product strategy, allowing prospective customers to select from a range of plans and pricing options based on their unique priorities and budgets. Omnichannel engagement, APIs and other data-driven microservices will further allow for increased simplification, automation and optimization of the customer experience in the years ahead.
Changes to the workforce are also coming, with manual processes increasingly phased out in favor of digitization and automation. Chatbots, digital apps and other automated touchpoints will help improve service with less hassle. Customer-facing roles will still be of critical importance, but the type of work being done by those agents is likely to change, with more emphasis on high-value interactions over repetitive, administrative functions. To respond to these changing demands on their workforce, insurers must be willing and able to address and prioritize skills gaps among their employees, especially those with customer-facing positions.
As the pace of innovation within the industry continues to accelerate, life insurers must be willing to apply technology to update, streamline and customize their processes and offerings, even while navigating today’s rocky and uncertain economic recovery. Doing so will help ensure profitability while future-proofing their business, with better products offerings, better pricing options, and better overall protection for customers.