Advances in technology and regulation has played a major role in transforming the Life Insurance Industry over the past several years. Insurers have had to adapt with new rules and constantly shifting cost models.
In this ever-changing environment, it’s difficult to pinpoint a “best practice” scenario and even harder to follow one. This is why customers still see over-complicated and badly designed processes when it comes to taking up life insurance.
Both technology and regulation play an integral role for almost all insurance company operations. These factors change how insurers market their products and roll-out strategies.
The trend of disruption which it brings, is likely to continue.
Here are a few trends to watch in 2017 which can give you a head start in helping you convert more Life Insurance customers:
Need for advanced data and analytics capabilities
In response to the 2008 financial crisis, the insurance sector has experienced a vast increase in regulation. Many of the new requirements affect the capital, risk management and governance, of an organisation.
This new regulatory framework requires data models to be flexible. This need will continue to increase in 2017 as insurers prepare to keep up with new changes.
Technology solutions will need to cater for forecasting, stress-testing as well as regulatory scenario planning in preparation for an uncertain future.
It’s important for your business to keep abreast of regulatory changes and what’s to come in the future. If the pace of new regulation over the recent years is anything to go by, your plans to grow may be halted by something you not even aware of.
Data analytics can also help insurance carriers plan key decisions based on the analysis of collected data. For example, data gathered from smart wearable health devices enable insurers to observe the activity of the policy holiday. The insurer is then able to offer discounted premiums and other incentives based on the customers’ healthy activities.
The omni-channel agent
Although Life Insurance Agents have proven they are still relevant. Agents need to adapt to the reality that consumers are moving online at a rapid pace.
McKinsey reports that “more than 80 percent of shoppers now touch a digital channel at least once throughout their shopping journey”. In the same report, McKinsey stated that, “satisfied customers are 80 percent more likely to renew their policies than unsatisfied customers.”
Consumers are also looking towards cutting out the middle man. Looking to buy insurance products direct from the insurance carrier.
Younger demographics of buyers, like Millennials and Gen X, do not always see the value of human involvement when buying life insurance.
Now is the time where Insurers will need to innovate to market the benefits of an agent, or stand the risk of fading out. Refocusing the role of an agent where they can provide most value and incentivizing agents for this change. Improving personalized customer engagement and communications. Using agents to foster stronger relationships with existing policy holders and improving customer loyalty.
Chatbots are changing the customer support world and insurance automation. Through cutting edge computer programs using Artificial Intelligence to simulate human conversation. Chatbots function as robotic customer service representatives.
Chatbots promise an engaging way to assist existing customers and it also saves up time for customer support staff. It puts the customer in control – which is what they want.
Gartner predicts that by 2020, customers will be managing 85% of their relationship with an enterprise with no contact with a human.
If you want to capitalize on this phenomenon to free up time for your agents in the field selling new policies, here are a few tips:
- Make your chatbot more human – give them a name.
- Engage customers with dynamic conversations – writing skills and storytelling is going to become important in these kinds of actions. It will be a good idea to team up with some tech writers to assist.
- Keep the conversation going – think about the user flow of the conversation.
Chatbots can also ease broker relationship management. A recent example is Insurer LV’s insurance broker division, who implemented Nuance Nina virtual assistant. The virtual assistant allows communication with its broker partners. The bots allow brokers to self-serve, by receiving help on a wide range of tasks like answering questions and uploading or downloading information. The bots help increase the consultant’s productivity by allowing them to concentrate on more complex queries.
Artificial Intelligence (AI)
Emerging technologies such as artificial intelligence and machine learning provide for an environment of intelligent automation. Automation and AI can provide insurers with more advanced processing capabilities and can also lower costs through streamlined operations.
Artificial intelligence may also be able to assist insurers with fraud detection. As data from a greater number of sources used for analysis due to improve data processing and self-learning capabilities.
This trend is already in play. Japanese firm Fukoku Mutual Life Insurance replacing human workers with machines. According to Fukoku, using an artificial intelligence system to calculate payouts to policyholders will increase productivity by 30% and see a return on its investment in less than two years.
The important factor to consider using AI is how do you create an AI interaction which is comfortable and reliable for the user?
Cost reduction vs compliance demands
In 2017 Insures will most likely see some competition from new market entrants including online providers. In many countries, there will also be more rules on capital and solvency. Insurers will be seeking ways to shore up margins and will need to identify all opportunities to save and allocate their capital to generate the highest possible returns.
Insurers will have a tough task this year as they will have to balance their compliance needs with the requirement to maximize returns, maintain resources and generate higher margins.
While the cost of compliance may seem high with no direct benefit, the cost of non-compliance with regulation can be disastrous for any firm.
Consumer behaviour is profoundly impacted by digital communication capabilities and marketing.
Insurers have generally not been on the forefront of this trend, so will have to adjust by adopting a multi-channel strategy.
The banking sector for example, has done extremely well in adopting digital tools, so Insurers will have to play catch-up in 2017. There will also be new tech-startup players like the digital-first, peer-to-peer insurer Lemonade, which launched in Sept. 2016.
Insurers will need to become more agile and collaborative going forward, in order to survive and thrive in the digital age.
Why does it pay to go digital?
Digitalization also allows for a better user experience. In 2017, it’s forseen that these factors will play a role in improving that experience:
- It’s all about creating an engaging and happy experience for the client, which is why there should be a focus on designing the UX for emotions.
- Animations should be used to upgrade the existing minimalistic user interfaces.
- Social influence including little details like Facebook likes and Tweets make a huge impact.
- Designers will increasingly look for different ways to simplify a lot of information.
Value Added Services
Value-added services are often used by Insurers as a means for competitive differentiation. Helping to build deeper relationships with it’s customers.
The technology advancements in mobile devices and data analytics make it possible for insurers to provide customers with a range of value-added services.
The possibilities are endless in this regard. Anything from home monitoring, roadside assistance to concierge services and extended life cover being offered.
Insurers will be able to lower their claims costs. Through proactive risk mitigation and may also achieve competitive differentiation.
It’s important to note that as these value-added services are generally monetized, it will be important to plan an optimal range of services.
2017 is certainly the year for Insurers to play catch up.
- All of the above trends are expanding the possibilities and revolutionizing the Insurance industry
- Firms who embrace this change and move toward more agile, collaborative operations will be successful in the months and years which lie ahead.
- Customer-centric thinking needs to be at the core of business strategies, as more consumers look to get rewarded and improve overall engagement.