How InsurTechs and Real-Time Decisioning Breathed New Life into Life Insurance

Now empowered by real-time data and automated processes, the customer journey from quote to policy issuance has been significantly streamlined, with far more diverse offerings.

(Image credit: NordWood Themes/Unsplash.)

The Life insurance industry, once notorious for cumbersome onboarding processes, is in the midst of a transformation. Two accelerants—technology and the pandemic—helped push the sector towards many crucial changes. Now empowered by real-time data and automated processes, the customer journey from quote to policy issuance has been significantly streamlined, with far more diverse offerings.

The Rise of InsurTechs

InsurTech companies have played a crucial role in this process, spurred by a long list of pain points facing the industry.

Due to enormous customer bases and manual exchanges of medical records for the purpose of risk assessment, obtaining life insurance policies has traditionally been a slow and cumbersome process for policyholders. Such procedures were often long and tedious, especially when medical exams had to be scheduled. The industry was in dire need of a breath of fresh air, but insurers had no way of facilitating that—until recently.

With advances in data analytics and digital health technologies, carriers now have more access to accurate and comprehensive medical histories via electronic health records (EHRs), comprehensive Rx histories, and data-sharing agreements with healthcare providers. Much of this data is available to underwriters almost instantly.  This allows many life insurance policies to be approved online almost in real-time, leveraging what is known as straight-through-processing: utilizing real-time data during the application process to channel applicants through specified avenues of questions, enabling insurers to streamline underwriting and risk assessment while personalizing life insurance policies.

InsurTechs have bolstered these enhanced capabilities even further with the use of AI, machine learning, and big data analytics—tech stacks used to streamline claims processing and customer service.

The Game of Life

These new technologies have also enabled new types of services, chipping away at the long-held perception of life insurance as a “buy-once-and-forget policy.” For example, insurers are using smart wearable technologies as tools to extract valuable real-time insights and incentivize healthier lifestyles amongst policyholders via elements of game design.

This gamification introduces challenges, rewards, and competition, into wellness initiatives. This enables insurers to create interactive apps or platforms that allow policyholders to set fitness goals, compete with friends or peers, and earn virtual rewards for achieving milestones.

Gamified wellness programs are being utilized amongst InsurTechs, such as YuLife, that reward policyholders for engaging in healthy behaviors and producing positive results. International health insurer, Aetna, for example, observed a 50 percent surge in healthy behaviors among their clients using such strategies.

One outcome of the life insurance sector’s restructured approach towards risk mitigation and customer engagement is the promoted use of smart wearables, and the trend shows no signs of slowing down.

For instance, the use of smartwatches in the digital health market is projected to reach approximately 230 million people in 2028. Such wearables provide a continuous stream of granular data on various metrics such as physical activity, heart rate, and sleep patterns, among others. Leveraging this data to gamify life insurance enables insurers to personalize the user experience with interactive apps or platforms that encourage policyholders to set fitness goals, compete with peers, and earn virtual rewards for achieving milestones.

With the help of such wearables, insurers can expedite underwriting policies that more accurately reflect one’s risk profile. As a result, insurers are able to offer personalized incentives and tailored coverage options—two factors that help foster customer loyalty, referrals, and strong relationships between insurers and policyholders.

A Breath of Fresh Air

Now that digital health technologies can utilize real-time data for increased straight-through-processing, policyholders are experiencing quicker, more personalized service from the time they receive a quote until they have an in-force policy—oftentimes in just a matter of minutes!

Wearables and gamified use cases are also helping change the perception of life insurance from a necessary but forgettable evil to a memorable asset for promoting healthier lifestyles, presenting insurers with new opportunities for growth and active customer engagement.

As insurers and InsurTechs continue to adapt and innovate, they are poised to emerge even stronger and more resilient in the post-pandemic, big-data era.

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Jason Kozlowski // Jason Kozlowski is Manager of New Business & Product Strategy, Sapiens International. Kozlowski has more than 20 years of experience assessing client business needs, determining strategic solutions, developing plans of execution, evaluating market direction and aligning Sapiens solutions to market and customer needs.

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