(Image credit: vperemencom.)

For years, the majority of insurance companies have taken measures to improve and enhance engagement with their customers, agents and distributors. Consumers have expressed an interest in more frequent engagement from their insurance provider or agent beyond the initial buying experience and billing. However, some carriers continued to lag in their engagement capabilities, even before the pandemic.

COVID-19 has turned the world upside down, and when we come out of it, we will not be back to where we were originally. Instead, we will arrive at some sort of a new normal, in which consumers and companies will work and behave differently. With shelter-in-place restrictions that have locked down the nation, consumers are forced to rely on remote communication to stay in touch with friends and family and to conduct business of all types. Some version of the current situation will persist for the foreseeable future until health officials deem the situation under control and consumers feel confident leaving their homes again. Businesses that don’t have a plan in place to serve the remote consumer are struggling and will fall behind.

Remote contact center and digital self-service capabilities have never been more important for life insurance organizations. In fact, only those that can remotely support consumers for new sales and service will survive, and even thrive, through this crisis. Companies that lack digital capabilities and can only support a face-to-face sales model are already facing enormous challenges.

A hierarchy of needs is emerging from this crisis, and insurers must address a set of priorities to continue to grow in the emerging new normal. First and foremost, carriers must service existing clients to maintain operations and avoid reputational harm. Once digital operations are in place, establishing transactional capabilities to generate new products through the crisis is critical. Last but not least, carriers must transition their sales and customer engagement processes to a fully digital and contactless sale through digital engagement models at every step of the customer journey.

Supporting Customers Remotely

The insurance industry sometimes confuses digital with direct-to-consumer and still struggles with the distinction between being a distributor-supported channel and a direct-to-consumer channel. While they overlap somewhat, the direct-to-consumer channel did not succeed in some cases because it did not include a good operational support model. Products are often still too complex for someone to close a sale directly on a digital app. Today, many insurers that are successful in the direct-to-consumer model are leveraging call centers to close the sale. It’s still a human-aided sale but the process leverages digital and simplified straight-through capabilities. Insurers that are doing remarkably well during this crisis have in place a digital-assisted sales model for distributors to help them sell high-end policies to consumers.

The remote consumer model coming out of the pandemic requires a fully thought-through, digital customer engagement strategy. It must be built on a platform that is highly interactive to facilitate multi-way collaboration. The collaboration has to happen between the distributors, the client and the insurance company on the platform. There is also a critical need for insurers to engage with consumers so policyholders know their carrier is always there, staying in touch and providing guidance to deal with the fear and uncertainty of difficult situations like the pandemic.

In the past, insurers struggled with the right frequency of customer interactions. They could contact insureds solely on financial matters or they could delve deeper into supporting policyholders’ lives. Increasingly, carriers are taking a broader view of their responsibility to not only provide protection but also support a lifestyle that reduces risk.

And for good reason.

There is a direct relationship between physical health and finances. Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall, for instance. Good financial health improves physical health. At the same time, research has found that Americans are attracted to life insurance offerings that include interactive health and wellness content, gamification and rewards for a healthy lifestyle.

Clear Winners and Losers

There will be very clear winners and losers when the pandemic is over. The winners will be the insurers that had or quickly established a digital origination platform and the ability to underwrite high-value policies without requiring a paramedical exam. Those companies are actively selling policies during the pandemic as consumer fear mounts and the need for life insurance has increased. The insurers that lack digital capabilities, conversely, have been caught in a bad situation with no way to underwrite and distribute their products in a remote environment.

Insurers that don’t manage this pandemic right risk damaging their business and operating models, which could stunt their growth. They – like all of us – are also facing the uncertainty of market risk. The need to spring into action and evolve an insurer’s digital capabilities quickly is urgent.

The good news is that it’s not too late for the companies lacking sound digital capabilities to turn around their situation. The first step to quickly upgrade their customer and advisor experience to a digital model. In the interim, they can put a wrapper around their back-end platforms, but eventually, they’ll need a digital back-end platform in order to make the business model efficient and flexible. Although insurers can do this in steps, the key is getting a model up and running as quickly as possible.

Insurers that don’t take action will miss out on the opportunities the pandemic situation uniquely presents for this industry. And that’s a risk that insurance organizations can’t afford to take.

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