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Insurance is a soft, intangible offering. Carriers don’t actually sell a physical product, but insurance organizations, particularly in the life and annuity sectors, sell a promise that insureds will be there to cover the risk and needs of their loved ones when they are gone or when they retire and they need financial freedom. Technology is the enabler, and our product in many ways is our technology, so it’s essential for insurers to have the right platform.
Here are some ways that technology can help annuity providers:
Carriers must think more innovatively in today’s dynamic marketplace, where interest rates, market conditions, regulations and the needs and expectations of end customers are constantly changing. Carriers need more innovative thinking around products and more agile thinking, and they must be open to experimentation that will enable them to launch a variety of products. Not all products are going to be successful, but carriers can move forward with the ones that work, and expand on selling those products through larger distributions in the marketplaces. Carriers can just convert the products that did not work into closed blocks so they don’t have to deal with them. In the past, insurance companies would come up with a new product every 12 to 18 months. Sometimes the product had complex and unique benefits and riders. Some became blockbusters and some did not. Today, the needs of the marketplace are so dynamic that carriers need to have an experimentation platform. What worked last year might not work this year. An experimentation and innovative product launch platform has become very important.
- Improve customer engagement, for end-clients and distribution partners.
The experience we have is bound by legacy technology, legacy tools and legacy thinking. Expectations of both the end customers and distribution are changing. Carriers are no longer competing with the next insurance company. Now, they’re competing with the best and brightest startups and with companies like Google and others who are masters of creating and continuously innovating the next generation customer engagement. These companies are creating a unified omni-channel customer experience by leveraging digital technologies, including social media or mobile technologies, and innovating at the same time.
It’s essential that distribution has the right tools and technology. Distributors must have access to reliable and timely information so they know the status of their cases at all times. Distributors also need to have the right information at their fingertips so they can work with customers and close sales of appropriate products as quickly as possible.
Whether customers choose to go online to do research, work with a distributor or call into a contact center, they must have a continuous, unified, omni-channel experience. Carriers can optimize their call centers to be more efficient, but it’s much more effective to provide self-service capabilities, which enhance customer engagement and improve the customer experience in addition to optimizing the cost. Social media and mobile technologies can help carriers accomplish this.
- Meet regulatory mandates.
Many people think that the new administration will ease up on regulations, or some may disappear altogether. However, regulations are only going to get tougher. No one has a crystal ball but carriers have to be very innovative and create an agile architecture in order to comply with regulations. Carriers must have the right tools and technology that enable them to sell the right products to the right people. For instance, the DOL fiduciary rule says that advisors have a fiduciary responsibility and carriers want to make sure they are giving appropriate advice. We are working on robo-advisor capabilities, not to replace advisors but to augment their abilities to drive consistency in decision making and compliance. In my mind, they’re very much complementary functions.
- Exploit data analytics.
If there’s one thing our industry has, it’s a lot of data. And although we have so much, we only use about 10 to 20 percent of the data available in our enterprises so we’re not exploiting around 80 percent of the data we have. The big data, including social media data, is rich and enables carriers to derive additional valuable insights that can help them create next-generation service models and future products.
Carriers’ success is highly dependent on how good they are at exploiting data analytics. Carriers need to understand their market segments and the product features best suited to those market segments, and then gear product development and service models toward the needs of the specific market segments and customers. Carriers can learn many lessons and get a lot of insights from data. They can learn from their own experience, but when they work with an outside providers that have the capability to look at data across the industry, insurers are able to learn from the experience of other carriers as well. Carriers can learn from data and create some predictive modeling around it. This capability will be table stakes for future market and client needs.
- Create agility with a future-proof platform.
Many carriers are stuck with legacy systems through internal growth and through M&A. It’s common for an insurer to have at least 10 administration platforms within each line of business. Their legacy systems are decades old and are holding them back. In order to future-proof their businesses, carriers need to create a partner ecosystem and find an innovative and cost-effective strategic platform partner to help them launch products faster, better and cheaper and help service them with a next-generation service model. By leveraging the expertise of partners with an innovative platform, carriers can concentrate on their core strengths of product manufacturing, risk management and underwriting. Other industries have gone this route, but insurance—particularly life and annuity insurers—are lagging behind. With the right partner ecosystem, carriers can create the right agility for themselves in the marketplace, enabling them to exploit newer markets.