The COVID-19 pandemic has led life insurers to speed up their digital enhancements like mobile insurance shopping and accelerated or automated underwriting. Most insurance carriers are looking for ways to provide more services such as e-signatures, digital applications and online digital quoting.
In a study by LIMRA and McKinsey & Company, 74% of insurance carriers say they are likely to boost self-service, and many are moving to automated underwriting that often skips the medical exam. Respondents to the survey represented different areas of their companies including: information technology, digital and business strategy, sales and distribution, product lines and marketing. Ninety-six surveys were completed, representing 71 U.S. and Canadian companies.
About 9 in 10 insurance companies believe consumer expectations will demand these efforts continue once the pandemic is over, according to the study. While most companies were working on transforming their business operations through digital solutions, the pandemic hyper-accelerated many of these efforts. Companies are taking digital initiatives planned for 2025 or 2026 and moving them up to the 2021 or 2022 timeframe.
The areas where companies are increasing their digital investments over the next 12 months include:
- Virtual sales capabilities for agents and brokers (72%)
- Client decision support tools (64%)
- Digital applications (69%)
- E-delivery (63%)
- Underwriting (60%)
- Advisor/broker practice management tools (56%)
Many of the insurance companies’ platform modernizations include commercial off-the-shelf software solutions. Among these are in billing, 67%, underwriting, 66%, and compensation, 63%.
Face-to-face channels will continue to thrive, but they will become more digital in nature, as advisors use digital tools to seamlessly source, service and engage with clients.
Further work ahead
Last year, LL Global established its Emerging Technologies Executive Task Force and engaged North American life insurers and industry experts to gauge how the different emerging and available technologies might provide the greatest opportunity for efficiency and/or disruption within the life insurance industry.
The task force completed phase one activities and issued four research papers this year focused on three key technology areas:
- Data and Analytics: Including artificial intelligence and machine learning.
- Accelerated Digitization: Formerly known as Digital Transformation, but renamed to reflect COVID-19’s effect on digital programs across the industry.
- Platform Modernization: Seeking to identify industry benchmarks on age, health, and technological composition of insurance carriers’ systems, and provide best practices when dealing with modernization efforts.
As the world transitions to a post-pandemic environment, the task force identified three areas that life insurers will need to address:
- Transformation of talent strategies: Expanding the use of new technologies will require new skill sets. Whether re-training existing personnel or hiring new talent, life insurers will need to evaluate their human capital needs and deploy a long-term strategy to meet them.
- Greater cybersecurity defenses: Older legacy systems were not designed with current, sound cybersecurity principles at their core. For life insurers, data safety is intrinsic to their business operations and reputation. At a time when cyberattacks are occurring daily across all industries, life insurers need to dedicate resources to shore up their systems to protect their businesses’ and customers’ data.
- Continued review: As technology evolves, life insurers will need to look holistically at their enterprise and determine what the future business needs will be and how to securely and efficiently adopt the new technological tools that will position the organization for success.
