24 Jan Digitization in Life Insurance
Digital transformation has brought about numerous benefits to industries across wide verticals. The last few years have completely changed the way we hail taxis, book hotels and watch movies.
Insurance industry has not been quick to embrace the digital revolution. The rate of digital transformation in the insurance sector is relatively low compared to other industries and the rate of digital maturity is even less when it comes to the life insurance digital transformation.
Digital transformation in life insurance industry is still in the beginning stage.
Why Life Insurance Must Adapt Digitalization
Life insurance products have not changed much since their inception in the 1960s.
McKinsey had published a research – “Harnessing the power of digital in life insurance”, which indicates that the market penetration of life insurance has been declining for the last 30 years and the annual sales of new life insurance policies have declined from about 17 million contract in the 1980’s to less than 10 million today.
Impact of Cultural and Economic Shifts in Life Insurance Marketing
The global economic situation has changed a lot in the last 40 years. During the 1970s and 80s father was the sole earner in married households with children. To be exact, only 25% of households were dual income during that time (according to Pew Research Center). This situation has changed by 2012, as 60 percent of households possessed dual income. This has affected the traditional sole earner income policies.
A research by IBM found that job security and financial uncertainty is the top fiscal concern among youth of 18-35 age group, more than supporting their family or buying a house. Young consumers see only a little gain in insuring to support their family in the event of their death and are more worried about being able to reach their economic potential.
Changing the Old Life Insurance Business Models
Life insurance is still relying on the old fashioned broker to client interactions to sell policies. This involves a lot of face to face communications and paper works, that could be a turn down for most prospects. Digitizing the enrollment and marketing process can speed up the procurement process.
Modern consumers are accustomed to speed, transparency and convenience regardless of the channel they use or product they purchase. Insurance customers are no different.
Digital transformation in life insurance will help insurers to acquire new customers. Every month there are more than one million Google searches for terms related to Life insurance. Websites of top ten life insurance providers get more than 7 million total visits a month. All this points to the fact that there is a considerable online interest for life insurance. It is interesting that more than 70 percent of customers looking for life insurance policies begin their information gathering process online, but only a third of them completes a purchase online. This is due to the fact that most interested consumers are not able to efficiently evaluate and purchase policies online.
Earlier IBM had conducted research to find out the reason behind the decline of the life insurance market. In their survey, 40% of the respondents said that they are more likely to subscribe to a policy if they knew more about the product and if the enrollment process was easier and faster.
Cost, lack of clarity regarding the benefits of coverage and process was the major turnoff for life insurance prospects. Also, this survey shed some light on the customer profiles who are more likely to choose a life insurance policy. While a good percentage of respondents were ready mtop purchase if the process was easier, the ideal prospects seems to be the ones who have young dependents (>25) and unemployed spouses.
How Life Insurance Can Gain New Customers Through Digital Transformation?
Life insurance landscape has changed so much that today the most successful insurers are those who excels in developing personalized products and services that meet the changed consumer needs and preferences. Life insurance products can be made flexible in many innovative ways to make them attractive and useful to the modern consumers
Let’s begin with risk coverage policies under life insurance. For years, insurers are providing customers with these 3 limited options term life, whole life and universal life insurance. Risk coverage policies can be personalized to be more aligned with the current life stage and risk appetite of the customers.
Delivering personalized insurance products means reaching the potential customers at the right time with targeted messaging and offers which encourage them to make the buying decision. With the availability of large volumes of customer data and highly intelligent analytical tools insurers can now run hundreds of personalized campaigns to improve procurement and cross sellings.
Personalized pricing can be quoted to insurance prospects based on their behaviours, usage patterns and loss-mitigation requirements.
To be able to deliver such personalised offering and engage with customers during critical moments, life insurance agencies must invest in several technologies.
- There should be a data capturing and analytical tool to flag events and changes in customers’ lives.
- There must be a customer interaction system which is able to identify the touchpoints and interact with customers with the right messaging.
- There must be a product development system that develops personalized offerings based on customer behaviour, usage patterns, life events and preferences.
Increasing the Efficiency of Agents via Insurance agent/broker applications
Life insurance agencies largely depend on agents and their skills for acquiring new customers. An insurance agent management system is the ideal solution to increase company’s profitability, controlling costs and acquiring new customers in today’s competitive market.
A typical insurance agent management software assists the agents to track policies, their commissions, provides reporting tools, provision to manage clients and schedule meetings, one touch access to all the policy information and it even provides the insurer the ability to analyse the performance of agents. Increasing the efficiency of life insurance agents will directly translate to increased customer acquisition.
Some of the key features of an insurance agent management system are the following.
- Automated renewal reminders
- Sales reminders
- Policy administration
- Quotation sharing and auto saving
- Premium policy calculators
- Customer database & insights
- Payment management
- Saving policy documents
- Customized reports
- Track of commissions
Insurtech startups are leveraging on some or all of these capabilities and slowly establishing their place in the industry, but they don’t have the access to a strong distribution network as incumbents. One of the crucial elements in acquiring customers through digital channels is to reach them at the moment of decision. When do customers actually think about taking a life insurance policy? What are all the life events and behavioural patterns that indicate they are thinking about a policy? What are the products most desired by the customer segment with a similar set of attributes? Insurtechs that can leverage on technology to capture these critical information and reach the customers when they are most willing to take a policy, have the power to capture the life insurance market.
Download Digital Insurance Brochure for Detailed Features
To achieve complete digital transformation in the insurance industry you need a technology partner to guide you through the technology landscape and to help you choose the right strategy. Nuvento’s digital insurance services are a portfolio of services that helps to enhance the operational efficiency of core insurance processes such as finance, procurement, broker management, and customer support while reducing costs and boosting customer as well as employee satisfaction. We are not just a tech company, we know the insurance domain so well that our technology solutions cover all the day to day business processes and analytical needs of life insurance, P&C Insurance and auto insurance.
Download Our Brochure to Understand the Key Features and Offerings of Our Insurance Digital Transformation service.
View Complete Infographics on Life Insurance Market Trends in the United States
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