In 2021, premium volume for life insurance policies grew by one-fifth in comparison with 2020 – clearly, demand has soared post-pandemic. However, demand does not necessarily equal supply, and life insurers will need to adapt if they expect to keep up and scale their offerings.
Assaf Henkin believes that in order to remain relevant and competitive, insurers must be able to make policies accessible as a hybrid offering: both online and in-person.
As the chief operating officer and president of life insurtech Sproutt, Henkin knows the key to thriving in this brave new world is a customer-first approach, and here in this article for The Fintech Times, he discusses why the most successful insurers will no doubt have a product that is available wherever and whenever customers want it – at the click of a button or the shake of a hand:
Across numerous industries, consumer preferences are shifting in favour of instant, convenient, seamless services. This is particularly evident within the life insurance space: in a recent survey of independent insurance agents and brokers, 96 per cent of respondents said their customers are looking for more digital tools than they were pre-pandemic. And in the wake of the pandemic, 88 per cent of independent agents agreed that customers expect processes to be automated.
Another factor forcing insurance professionals to rethink their strategy is the heightened demand for life insurance. In 2021 alone, premium volume for life insurance policies grew by 20 per cent in comparison with 2020. But even before the pandemic, insurers were struggling to get relevant policies into the hands of customers, which contributed to the ‘needs gap’ whereby 41 million Americans needed but lacked life insurance.
While it’s clear approaching customers with a purely analogue mindset is no longer sustainable, using a purely digital approach is not viable either – insurance can be an overwhelming, complex undertaking, and some customers require the handholding that only an agent can provide. In order to be able to fully satisfy consumer demands, insurers need to take a hybrid approach: neither digital options nor in-person interactions can be neglected.
Embracing digitalisation coming out of the pandemic
Investments in insurtechs reached $5.8billion in 2019. Since the pandemic began, that number has skyrocketed to a whopping $13.4billion, due largely to the push for unique tools that pandemic-borne digitisation necessitated.
These digital tools (developed by the startups of the Insurtech 1.0 wave) are able to take analogue processes that were once clunky and inefficient – travelling to and from an insurance office to meet with an agent, setting up meetings to review a policy in person, or even just waiting on hold to speak with a company rep – and make them much more streamlined and accessible to consumers. One example of this is accelerated underwriting, which eliminates many of the analogue interactions when signing up for a policy. In a survey conducted by LIMRA, 74 per cent of insurance companies indicated that accelerated underwriting – which is generally powered by digital self-service tools – has reduced wait times for policies.
In fact, consumers’ desire to go digital is rising across the entire enterprise space: the pandemic has caused 68 per cent of customers to have higher expectations of enterprise digital offerings (including insurers).
Speed is another important factor when considering the benefits of virtual tools. Across the insurtech space, customers are increasingly able to sign up for policies quickly, sometimes letting them forgo medical checks and (in keeping with a practice that some in the medical community are adopting) even skipping stressful parts of the sign-up process like disclosing weight.
Does tech’s rise mean agents’ demise?
In a word: No.
While approaching customers exclusively using the ‘traditional’ method is no longer sensible, the industry does not need to abandon that approach entirely. To satisfy consumers’ demands, insurers should take a hybrid approach.
A recent McKinsey survey of German insurance customers found that 84 per cent of respondents use digital options along the customer journey, but 55 per cent wouldn’t buy an insurance policy online. Indeed, most respondents reported preferring multiple options.
Clearly, a conflict is at play: People are drawn to the lower prices that technology makes possible, but also the human element of customer service that a trusted agent provides on such an important, personal (and often confusing) purchase. In fact, 80 per cent of customers want personalisation from their insurance providers.
In sum, digital offerings don’t replace agents; rather, they should be leveraged to help agents offer the best service and do what they do best: meet customers face to face and present relevant, tailored policies. After all, digitalisation may give us better tools in the market, but insurance remains a ‘people’ business.