Insurance: Sold, Not Bought, in the Digital World

For years, the life insurance industry’s prevailing maxim was that insurance is sold, not bought. Insurers have relied on large, agent-based distribution channels (captive and independent) to do the selling. Their role was to identify new prospects, cultivate the need for insurance, develop the financial plan to achieve those needs, identify the insurance products to include in the plan, facilitate the underwriting process to assess the risk, and deliver and service the policies that are part of the plan.

Insurance companies arm agents with financial planning technology that provides marketing material, needs analysis tools, sales illustrations, application preparation, and plan/portfolio management. The agent explains the components of a client’s needs and strategies to address those needs related to income protection, college planning, and retirement. The agent also educates the client on complex whole life or universal life products that include features and guarantees that can change over time based on economic conditions.

The average age of an agent is over 59.5. As the older agents retire, insurers will have to attract and retain younger agents. The expectations of new agents will drive additional investment in digital capabilities across the marketing and sales process. Insurers will also work to enhance the digital presence of corporate websites to engage customers directly online.

The tools that insurers will need to support these changes will replace the role agents have traditionally played in selling life insurance. They will employ a host of digital capabilities across the sales process to replicate an agent’s activities or assist new agents with the art of “selling” life insurance.

• Client Prospecting. Insurers will develop user-centric websites optimized for mobile devices and feature tools to guide prospects to the most applicable product. They will use social media and third-party data to identify and engage with customers on their terms. They will use data analytics, enhanced with AI, to identify customers by their characteristics and online activity and tailor marketing to them.
• Needs Analysis. Insurers will exploit natural language processing and cognitive learning to facilitate the fact-finding process to ascertain specific prospect needs conversationally. They will interact with customer relationship management (CRM) systems and social media to supplement that information. They will incorporate robust financial planning models in their websites to allow prospects to review options and strategies visually in a way that demystifies the recommendations.
• Illustrations. Insurers will integrate illustration solutions seamlessly with upstream sales processes and downstream electronic application and underwriting systems. These solutions will provide a rich, intuitive experience that offers pre-built options and allows the exploration of what-if scenarios. These solutions will need to be configurable and allow for developing and tweaking products at “digital speed.”
• Underwriting. Digital underwriting capabilities focus on improving the efficiency and speed of acquiring new business. Insurers will incorporate predictive analytics and automated underwriting capabilities and move to new underwriting approaches to eliminate the need for fluids and use alternative data to underwrite. They will develop solutions that emphasize straight-through processing to shorten the time to underwrite and provide greater jet issue penetration.
• Delivery and Service. Once approved for coverage, insurers will enhance their engagement with customers. In the past, agents would deliver the policy and provide ongoing service for the customer. In the digital world, the insurer will implement agent and customer portals that allow agents and customers to define their preferred engagement models. These portals will provide robust self-service capabilities with flexibility in defining their preferences for interactions and correspondence. Using data analytics and social media, they will provide proactive outreach at predefined times and based on specific life events, focusing on customer behavior and value modeling. They will provide an ability for customers to track and revise their needs and policy performance and offer strategies to address gaps and shortfalls.

The objective of these digital enhancements is to change the customer experience for purchasing life insurance dramatically—to make it more of a buying experience than one of being sold to while retaining the value-add services that an agent delivers in the sale.

For an in-depth look at these topics, consider Novarica’s Insurer Client and Council Member Virtual Panels, as well as recent research on trends in life insurance, insights from young agents, an overview of third-party data, and digital, data, and core capabilities for life/annuities insurers.