There’s no business like the life insurance business!

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We’ve all heard this oft-repeated cliché – life insurance carriers are laggards when it comes to disruption compared to their P&C counterparts. The reason, more often than not, is the long-term nature of the life insurance business.

Ironically enough, this itself provides an opportunity for the insurance carriers to engage with their customers and be their partners throughout the various life-changing events that will eventually affect their insurance coverages.

While the traditional business models are here to stay, it’s just as important to look at disruptive business models underpinned primarily by product innovation and simplification. Artificial intelligence and machine learning will be the levers that will enable this. For instance, by using facial recognition and the underlying machine learning models, it is now not only possible to estimate age and gender but also detect the probability of smoking, which, in the long run, can do away with expensive nicotine tests. With the changing demographics of the prospective insureds, life insurance carriers will have to develop newer and innovative customer engagement models.

Our analysis of the Top 10 Trends in Life Insurance: 2019, provides an overview of the leading technology trends that are enabling carriers to innovatively meet today’s critical life insurance challenges and opportunities. In our view, insurance carriers can play a key role in identifying the needs and developing the products that can augment or complement their current coverages. Product simplification, along with new distribution channels, can both pave the way for differentiating customer experience and provide insurance coverage for newer and emerging risks. As per the findings of the World Insurance Report 2019, customers feel exposed to emerging risks due to a perceived gap in coverage of existing insurance products. However, insurers’ product pipelines are not aligned with customers’ growing concerns about emerging risks. There are a few insurers who have taken the plunge at launching products that try to cover these gaps. For example, Manulife was the first insurer in Canada to offer individual life insurance policies of up to $2 million to those who test HIV positive.[1]

Today’s customer is looking for ease and agility while not compromising on the quality of the experience. This means that the underwriting processes will need to be accelerated in a manner that minimizes adverse risk selection. Massmutual has launched LifeRisk 360, a digital initiative that uses cutting-edge data science techniques to create the first individual mortality risk scoring system of its kind for the life insurance industry.[2] The objective of this platform is to further reduce the underwriting decision time and improve the mortality risk selection.

It is pertinent to note that insurance carriers have an excellent opportunity to assess the impact of the emerging risks which can be offset by creating simplified insurance products while further easing the underwriting processes and bringing efficiencies.

According to the WIR 2019, the insurer of the future will be required to play a holistic role much beyond the current role of being a payer. In order to play the role of a partner to the end customer in the truest sense, life insurance carriers need to look at long-term contracts as a remarkable opportunity to connect with their customers at the right time. This will help the insurance carriers gradually become the customer’s lifestyle coach and move into the preventer role. This will effectively develop into a clear win strategy for both the carrier and the customer. Download your copy of the World Insurance Report 2019 to explore how the 3P (partner/preventer/payer) customer engagement model can help insurers participate more closely in their customers’ risk journeys.

To have a discussion on the topic, feel free to get in touch with me on social media.

[1] The Globe and Mail, “Manulife to become first Canadian insurer to offer HIV life coverage,” Jacqueline Nelson, April 22, 2016, https://www.theglobeandmail.com/report-on-business/manulife-to-become-first-canadian-insurer-to-offer-hiv-life-coverage/article29716676/.

[2] MassMutual website, “MassMutual Set to Launch LifeRisk 360 Digital Initiative,” October 4, 2017, https://www.massmutual.com/about-us/news-and-press-releases/press-releases/2017/10/04/14/29/massmutual-set-to-launch-liferisk360-digital-initiative, accessed May 2019.

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