Why is insurtech important for life insurers?
It will come as no surprise to anyone that has recently tried to take out a life insurance policy that the life insurance industry is behind the rest of the wider sector on the uptake of new technology. When compared to non-life insurance, retail banking and consumer tech, life insurance ranks the lowest on the digitisation scale.
Some of this is down to the fact that life insurance is more laborious to underwrite than other types of insurance due to the amount of personal information that is required, in addition to potential in-person medical exams. This means that the insurance customer journey has traditionally been more complicated, requiring maximum effort on behalf of both the customer and life insurer.
However, as consumer expectations have developed in tandem with accelerating digital capabilities, life insurers need to evolve in order to keep up with this demand.
The pandemic has created an environment in which digital immediacy and instant gratification has become normalised, so much so that customers no longer accept slow and inconvenient processes. Adapting to these new customer expectations will require the widespread utilisation and adoption of insurtech, and the insurtech mentality, across the life insurance sector. Being able to provide a frictionless customer service is what makes insurtech so important to life insurers.
Life insurers need to be focused on improving the customer experience through new methods available including digital underwriting. The underwriting process is a core pain point for life insurers, with underwriters typically evaluating the decisions once all the information has been presented, rather than actively monitoring portfolios and looking ahead. However, digital underwriting is able to speed up underwriting process by leveraging data, technology and human capital.
The availability of alternative and predictive data is increasing, which facilitates more rapid adjustments to underwriting strategies, and allows underwriters to thrive in a forward-thinking world.
Looking ahead to the future, the past two years has seen the acceleration of digital underwriting as part of the insurtech revolution, which will permanently alter the landscape of the sector. In much the same way that fintech and regtech have altered the financial and regulatory sectors, insurtech is set to change the way life insurers approach their work. Cutting out manual processes will allow life insurers to look towards the future and spend more time on building strategies to maintain the evolution of the industry.
Life insurers are well advised to embrace these new technological developments, such as digital underwriting, to stay competitive, not only with each other, but with other players who might be eyeing up a life insurance entrance. Those who ignore these developments may end up being left behind.