How can life insurers make the most of predictive modelling

Like many industries, the life insurance sector is currently running in a state of rapid digitisation. Consumers have outgrown the traditional process of buying life insurance, which has proved both too complex and too time-consuming for the average consumer. The future of the industry lies in the emergence of predictive underwriting, which will completely overhaul the underwriting process and in doing so, transform the customer experience.

We live in a time when consumers can decide to buy something and then complete that purchase with the click of a button online. These same consumers also expect to be able to open a new bank account or apply for a loan with similar ease and speed. Due to this, expectation for immediate results has leaped ahead of the insurance industry’s capacity to deliver them, until now.

This is where predictive underwriting comes in. Predictive underwriting provides life insurers with instant underwriting results, which radically speeds up the customer journey. A process that has traditionally relied on laborious and sometimes invasive phone calls and medical examinations is now completely bypassed by the practical application of algorithms. Predictive underwriting introduces AI to this risk-based decision-making process, allowing insurers to determine relevant – and importantly, irrelevant – data points automatically. The underwriting process timeline stands to dramatically benefit from the adoption of predictive modelling across the life insurance industry.

Another important consideration is the cost-efficiency of adopting these streamlining processes. Automated processes require fewer resources to deliver the same, if not better, outcomes for consumers. Paper-based processes are eliminated in favour of straight through processing. Digital processes allow life insurers to decrease the amount of manual processing and ultimately the capacity this provides for human error, which can often end up costing precious allocations of the budget to rectify.

The time and budget saved by adopting predictive underwriting will allow life insurers to refocus much-needed attention into the continued development of technology to keep pace with the rapidly evolving demands of consumers. This also means increased time for life insurers to focus on long-term business strategies, all of which feed into enhancing the value-add of the product for the consumer. Making the most of predictive underwriting must involve life insurers adopting a forward-thinking mentality that makes space for continued innovation and evolution.

One of the greatest consequences of the widespread adoption of predictive underwriting is that it will leave life insurers with more time and budget to put into innovating new processes to ensure the continued evolution of the sector, all of which will ultimately enhance the customer experience. If life insurers capitalise on the opportunities that the adoption of predictive underwriting offers, it will recast the interaction between insurer and customer forever.