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As the life & annuity insurance industry continues to evolve, carriers need to grapple with a widening assortment of challenges. The life insurance industry is at an inflection point, and carriers must adapt to grow and thrive.
In general, the life insurance industry is still bogged down by legacy technology platforms and an aging workforce. The overall share of wallet from a consumer investment perspective is decreasing for the life insurance industry as more and more people invest in other forms of retirement and alternative investments. Yet at the same time, there is an enormous gap between those who need life insurance and those who have it. Additionally, consumer needs are continuously changing. The traditional boundaries between mortality risk, health, wellness, and financial well-being seem to be blurring more and more as newer technology capabilities continue to evolve.
The opportunity for insurers to leverage industry data, advanced analytics and machine learning continue to create newer and more efficient underwriting models, risk management models and service models. The market is continuing to demand simpler easy to understand products, which may drive some modernization and standardization of an industry that has thrived on product innovation. And consumers will increasingly continue to demand personalization based on their life and life stage needs.
What’s more, the newer innovations in wellness, wearables and engagement will continue to both transform and enable this industry. The untapped insurance gap and multi-trillion-dollar opportunity in the mid-market is ripe for simpler standard products, very nimble distribution and digital service models. In addition, insurance organizations must have an architecture capable of catering to four generations of customers simultaneously.
To attract and retain customers, many companies are investing in digital, both within their existing brands and through new ventures. However, the life insurance industry has to re-think and reimagine itself on how it approaches the market. They need to focus on their core technology, and continuously leverage the evolving technology ecosystem and innovation. An ecosystem approach to their technology solution will help insurers be more nimble and agile in how they react to the ever-changing needs of the market, be able to leverage innovations and better meet the needs of both their distributors and their customers.
The market continues to be dominated by the leading top tier insurers. The small and mid-sized insurers will continue to go through a lot of consolidation. And, there are many investors with capital looking to get into this business but may not necessarily have the insurance domain experience or the technology platforms. For new entrants and entrepreneurs looking to set up greenfield operations, it’s important to leverage white-label solutions to get into this marketplace quickly. These white label solutions can also deliver important benefits to insurers of all sizes and help insurers innovate, learn, and fail fast in what may not work.
DIY vs. White Label
In the past, carriers have tried their best to develop their own solutions internally to solve business problems and meet their current or future challenges, with varying amounts of success. Customized, proprietary solutions can help insurers differentiate, and creating solutions in-house can give insurers complete control over the development process. However, the process can be expensive, high-risk, time-consuming and potentially frustrating.
White label solutions have several benefits for insurers over a “do-it-yourself” approach. They can help carriers avoid the learning curve since these solutions are typically tried and tested, with all the kinks worked out. These white label solutions save large integration costs and bring an industry ecosystem with many base capabilities already functional. Additionally, while in-house developed solutions may be expensive to develop and might take a long time to build and deploy, white label solutions tend to get up and running quickly so carriers can get products to market quickly and meet the ever-changing consumer demands. The risk of trying such solutions can be low as insurers can do a quick new product launch or convert a small block as a quick proof of concept (POC). White labeled ecosystems available in the cloud, can help with quicker deployments and faster scale without the need for large capital investments.
It’s important to note that just one distribution channel won’t be sufficient in meeting the diverse customer needs across four generations and preferences of the broad market. Instead, insurers need to take a multi-distribution and multi-channel approach that absolutely must include direct-to-consumer and digital self-service options. Without these capabilities, life insurers can run the risk of losing business to carriers that allow current and potential customers to access and change policyholder information, apply for coverage and perform other tasks in a way that meets their specific needs.
White labeled options can help life insurers create their solution, enabling them to tap into newer market segments and reach new customers. Insurance carriers need to be operationally agile, data-centric and laser focused on the customer experience to better meet policyholders’ needs and to capitalize on current and future insurance industry opportunities.