Innovation and advances in digital technology are happening all around us. And while much of the innovation in the life insurance industry thus far has taken place on the back-end, i.e., improved processing and information gathering, the front end of life insurance still looks very much the same as it always has.
Unfortunately, the consumer market has dramatically changed. We are now looking at Millennials being the largest population group, finally surpassing Baby Boomers in 2016 according to a Pew Research Center Study.
Why is this critical for the life insurance industry?
First, although there may not be a clear-cut definition for Millennials, the consensus seems to be the age group of 18 – 34 year olds, which puts them on the edge and moving into the prime life insurance demographic.
And, second, when surveyed, Millennials show a high level of concern for financial issues, including worrying about life insurance to protect their dependents.
However, Millennials do business differently than their predecessors. And this is vitally important for the insurance industry as well.
Millennials are predominantly digital-centric. They use technology in most aspects of their lives in order to make their lives more convenient. They are much more prone to purchase online or use online services, including for their banking and investment needs. And they are not as adverse as other groups at providing personal information with online businesses as part of the shopping or purchasing process.
Some of this behavior also spills over into the Gen X and Baby Boomer groups as technology becomes more integrated into our every day lives.
This digital-centric behavior requires change on the part of life insurance companies, agents and brokers. The life insurance industry needs to stop thinking simply in terms of process and start thinking in terms of customer experience.
There is no doubt that process and processing time impacts the customer experience. But so do data and the use of it.
For example, according to a Worldwide Fitness Trends survey by the American College of Sports Medicine, wearable technology topped the list for 2017. That includes smart watches, mart watches, GPS trackers, step counters, heart-rate monitors, and anything else that can be worn to monitor fitness.
This type of information could be used – and is being used by some insurance companies – to improve policy and underwriting decisions, which in turn improves speed and efficiency. It can also help eliminate other time-consuming and offline steps in the life insurance process, such as taking a medical exam.
By integrating data and technology intelligently, insurers will be better able to understand their customers and will be better able to provide a more tailored experience and solution for the customer’s life insurance needs. This can also lead to a more expanded relationship and experience in keeping with the experience of other online services that consumers have embraced, such as the fast and simple purchasing process of an Amazon or Zappos, with preferences learning leading to recommendations and new selling opportunities beyond the core product purchased.
If the traditional insurance providers don’t start improving and implementing their digital presence, there are smaller, start up companies looking for opportunities. One such company is California-based Ladder. They recently launched an instant life insurance service via online and mobile devices. Their target market is the younger, working consumer starting a family who has less time to wade through a lengthy process than many other demographic groups. It is also important to note that Ladder is backed by some big names in the insurance industry: Hannover Re, the third largest reinsurance company in the world, and Fidelity Security Life Insurance, which specializes in custom products for niche markets. Instead of attempting to redirect and change their business models, Hannover Re and Fidelity Security have partnered with a company already moving in this new direction.
And it’s only the beginning.
For quite a while now, we’ve been watching this trend toward greater integration of digital technology into the consumer’s every day life. We also saw the disruptive influence technology was having on traditional business models as well. It’s why we built our LegacyShield platform and services for both the digital-centric consumer, and the agent, broker or financial advisor. For the consumer, LegacyShield offers a safe, secure way to preserve his or her legacy for the future. For the industry insider, it is a cost-effective, compatible way to offer an expanded business model and value-added client service.
Either way, we’ve looked to the future and realized it’s now.