Donna Jermer is a Marketing SVP for iptiQ Americas by Swiss Re and acting Director of Marketing for Lumico Life Insurance.


In a counterintuitive twist, technology can go a long way toward humanizing the life insurance industry.

Just follow that logic for a moment. Insurtech has long been a factor in the sector, but arguably never more so than during the Covid-19 pandemic. With lockdowns and social distancing, life insurance companies have been forced to reach out to customers by alternative means. They’ve been encouraged to tailor communications that suit present realities and digitize unwieldy underwriting processes. On top of that, many have automated data processing via artificial intelligence and machine learning.

I’ve heard people say that the insurance industry as a whole has seen five years’ worth of digital acceleration amid this healthcare crisis and have seen tangible proof of the makeover as well: Insurtech firms raised $2.5 billion in funding during the third quarter of 2020, an increase of 63% over the second quarter, according to Willis Towers Watson research (via Insurance Journal).

The trend in the direction of hyper-personalization, as Deloitte calls it, will likely continue. Offerings should be customized to the individual in the interest of meeting their special needs.

It comes not a moment too soon for the life insurance industry. According to the St. Louis Fed, “life insurance ownership has declined markedly over the past 30 years.” In 2016, there was an estimated $25 trillion gap between the coverage Americans held and what might be needed to cover expenses in the event of a loved one’s death, according to research my company conducted.

And yes, clunky processes on the part of insurers likely contributed to this shortfall. Consider something as simple as getting a physical examination, which is often required to purchase a policy. In 2018, LIMRA research covered in my company’s report found that over 50% of respondents indicated that they would be more likely to purchase if they could skip this invasive step.

There’s also a matter of the data insurers have accumulated on customers and what they are able to do with it. As Srikant Venkatesh, a strategic client executive at Mumbai-based Tata Consultancy Services, told ThinkAdvisor, these companies tend to be “data rich and information poor.” 

An insurtech infusion could address both of these problems, as it would provide the tools to analyze existing data while also collecting new information. Additionally, as Deloitte explains, it could make predictive modeling possible, which would expedite the application and underwriting processes. This could lead to customized products (i.e., it would likely eliminate the need for things like physicals, in most cases). It could also improve efficiency, result in more affordable coverage and decrease costs for the insurers themselves.

So, again, there’s the personalization of the industry — be customer-centric, and in the end, you’ll benefit all concerned.

While I’ve seen insurtechs gaining greater traction recently, the trend is not new. In 2010, a German company known as Friendsurance launched a peer-to-peer model designed to make the process of searching for and purchasing policies more customer-friendly. A similar model has been adopted in the U.S. by insurance company Lemonade.

Momentum continued to gather from there, as reflected in CB Insights research (registration required) showing that global investment in insurtech, which stood at $348 million in 2012, had reached $4.15 billion six years later.

There is no going back now. Nor should there be. A July 2020 McKinsey piece honed in on the underwriting/onboarding process when it described the following best practices for those life insurance firms that are still getting up to speed technology-wise:

• Evaluate the entire operation: This includes stepping back and examining the entire customer experience — which is where personalization can come into play.

• Make sure everyone’s in step: This includes shattering silos and coordinating every phase of the operation, from underwriting to actuarial work and from risk to compliance departments.

• Trust the process: Digital transformation takes time, so that needs to be understood up front. There will be missteps. Mid-course corrections will be required. It is a matter of keeping the faith and maintaining momentum.

• Maintain short-term goals: There is value in getting immediate wins in that they demonstrate to shareholders and customers alike that you are headed in the right direction.

There is more to come. McKinsey envisions a day in the not-too-distant future where insurance follows a pay-as-you-live model. That is, your life insurance premiums could be determined by the lifestyle you maintain, as tracked by various wearable devices. Is your blood pressure trending up? Then so too will those premiums. Are you training for a marathon? Then your premiums will hit a downslope.

Internally, marketing and communications leaders need to continue to bang the drum for digital transformation, making it clear that this is what consumers want, and indeed, what they already have in other sectors. They can order virtually anything they want through their phones, up to and including their groceries; why should insurance be any different? 

I believe it’s vital to build a culture that ties compensation to customer outcomes (NPS and CX journey scores) and create a marketing/UX “center of excellence.” The industry often falls into the trap of creating cultures focused on tech and operations — with an emphasis on driving these functions with meeting dates and revenue goals. There should also be an emphasis on operationalizing consumer focus (or centricity).

A marketing/UX “center of excellence” should apply discipline to customer experience and the idea of delivering consistently with design thinking and experimentation approaches; executing on user research, behavioral tracking and reporting; building advanced analytics/big data capabilities; and applying measurements and learnings based on those capabilities. The center of excellence enables marketers and UX experts to incorporate human-centered design and empathy into product offerings and build solutions for customers that are transparent and easy to understand. Moreover, they can use their learnings to pivot based on customers’ needs.

Personalization is needed and expected, and insurtech illustrates how the industry can accomplish that. I know it sounds strange: The machines will bring us closer together? Absolutely. And I think that will continue to be the case going forward.

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