3 Opportunities For Life Insurers To Win Amid Digital Disruption
Many of the processes currently in place have remained unchanged for decades. But new delivery models are demonstrating their value.
The multibillion-dollar life insurance/annuities industry is just beginning its path to digital transformation. It has a long way to go: Many of the processes currently in place have remained unchanged for decades. According to IDC analyst Sabitha Majukumar, most life insurance enrollments are still completed offline through an agent, with less than 10% of policies being completed entirely online.
But new delivery models are demonstrating their value. According to 2017 research conducted by Bain, carriers that interacted with customers across multiple channels received a higher 58% Net Promoter Score (NPS) than those who offered only in-person or by phone.
The same study found NPS was 25% higher for life insurers who took a higher-touch approach with customers in any channel, as defined by having had an interaction in the past 12 months. This is extremely relevant to insurers, as 34% of life insurance is sold through aggregators, according to Accenture. That poses a pressing need for carriers to differentiate themselves by building loyalty through consistent interactions and seamless experience, not just price.
In addition, consumer behaviors are changing. A benchmark analysis of 10 different life insurers’ websites between March 2017 and July 2018 using Adobe Analytics data found a significant increase in visit growth (11%), as well as a 15% decrease in bounce rate, which suggests that not only are individuals navigating more to these sites, but they are also engaging more with the content. When it comes to mobile, this trend is even more pronounced, with a 150% increase in time spent on mobile life insurance sites over the same period. This underscores the need to create seamless digital customer experiences as well as build loyalty among customers.
These trends, in turn, point to three opportunity areas that insurers must invest in to evolve their digital experiences: customer journey, data enablement, and digital foundation.
Opportunity 1: Invest In The End-to-End Customer Journey
The current life insurance application process is daunting. According to Gartner analyst Kimberly Harris-Ferrante, the end-to-end application process can take eight weeks or more and is highly dependent on referrals and word-of-mouth. It is also people-driven, as it starts with a series of interviews between the adviser and prospect in which customers lay out information to determine insurability. This information is then aggregated by the adviser for the customer to review and subsequently undergo a medical exam and underwriting.
Three major issues stand out about this process. First, it is slow. The handoffs between the various parties involved can be cumbersome and time-consuming. Second, as the adviser identifies prospects from word-of-mouth, it is understandably difficult to emulate this process with a larger set of individuals due to the limitations of human-driven processes. Third, customers do not drive the process, so they have limited opportunity to engage with insurers on their own terms.
These limitations point to the need to create a hybrid delivery model, which has been pioneered by a major U.S. insurer and is outlined in the figure below. This hybrid process has three distinct advantages. First, customers enter their own information digitally. They own the process, can transact how they want, and are not dependent on an adviser. Next, advisers have significantly more time available for reaching out to prospects as well as servicing existing clients because they are not inundated with manual data collection. Third, this process provides the multichannel engagement that customers are seeking; it enables them to engage with the digital platform while working with an adviser for servicing, which increases the overall number of touch points that can be allocated to a single customer. Such a model retains the personalized nature of the existing customer-advisor process, while evolving to meet changing customer expectations.
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Opportunity 2: Establish Processes And Capabilities To Collect Customer Data
According to Business Insider Intelligence, 80% of insurance customers cannot name their insurers. This statistic is staggering, as it points to the extreme difficulty associated with collecting actionable data about customers with such limited touch points.
Insurers must invest in platforms that enable them to quickly collect, analyze, and act on customer data. This feedback loop should be leveraged across the customer lifecycle, with a primary emphasis on acquiring and authenticating known and unknown customers through innovative awareness techniques as well as lookalike modeling.
A second important area of focus for insurers is the “ecosystem” concept. Insurance is, by nature, transactional, so consumers tend to disassociate from their insurers. An ecosystem with tangential, valuable services can help bridge this gap. Insurer Haven Life did this by offering services, such as online safe deposit boxes and digital wills to policyholders through Haven Life Plus, which are related to life insurance but provide additional value to their customers that can be improved and iterated. These investments must be made quickly to support the move toward real-time data analysis and automation in the future. With a robust data enablement program, these innovations can become the norm, not the exception.
Opportunity 3: Invest In A Strong Digital Foundation To Support Experience
According to a survey performed by Adobe, 25% of top-performing organizations have a highly integrated, cloud-based stack vs. 9% of mainstream organizations. (CMO.com is owned by Adobe.) This finding points to the need for insurers to build and evolve to an “experience business.” Doing so rests on three key pillars: data, delivery, and content.
These pillars are the foundation of creating seamless customer experiences, and they must be fully integrated and strive toward automation. These capabilities have the power to support digital experiences that can turn the tide for the life insurance industry:
In conclusion, life insurers should incorporate these learnings to aim toward a future in which they truly understand their customers, can learn and adapt in real time, and can even predict the content and services that their customers would find valuable to deliver a truly seamless end-to-end experience.