3 themes impacted by life insurance data #
I recently attended the LIMRA Annual meeting where the theme was around how the life insurance industry can succeed at ‘Championing the Promise—Realizing the Potential’. Three consistent themes emerged around the challenges faced by executives today:
- Companies are challenged to achieve profitable growth in an shrinking market where life premiums have grown less than 1% over the past 10 years—and annuities even less
- Insurers MUST exceed customer expectations that have been heightened by their daily online experiences with companies in other industries who provide accelerated, highly-personalized service
- Managing change in a traditionally risk averse industry demands new thinking AND risk taking to achieve results in a very dynamic environment
Over the course of my career I have seen remarkable evolution in the industry. The market place dynamics have changed significantly. The pace of change has accelerated, and the breadth/depth of those changes has expanded. There has been a fundamental shift—not just in the processes that govern the business—but also in the thinking that guides them.
Leadership of the sales process has shifted from insurer to consumer #
Early on in my career much of the interaction between insurer and consumer was carried out on paper by the “rules” of the insurance company. This interaction was slow and inefficient. Extracting value from data trapped in paper processes was (and for some insurers still is) very difficult. The insurance company led the interaction. The company mandated the process by which the customer would complete an app and engage with an agent or the home office. The insurer defined how long it would take to be issued an in-force policy—a time span measured in weeks or months. But the biggest change I’ve seen is in the mindset of the consumer.
Digital experiences and transactions are reshaping the very nature of commerce. The experiences customers are having when they one-click shop on Amazon or stream a movie on Netflix have heightened customer expectations. The old methods for completing forms, underwriting, issuing, and servicing a policy are no longer good enough. Customers want to be able to complete the process any way or any time that they choose—whether that’s by phone, paper, in person, on the web or through an app. The customer drives the interaction now.
‘Do-nothing’ is not a viable strategy anymore #
The demand for digital process puts pressure on insurers to innovate, to be more flexible and deepen their offerings. Which reveals another change that has occurred over the past few years. It used to be that ‘do-nothing’ was a viable option to approach business and new technologies. Cycles of innovation were “product” related.
Companies focused efforts to innovate around the insurance products they offered and the price points for those products rather than the channels of service or fundamental benefits of the insurance industry. Companies could ignore broader business- related developments—assuming that most were a fad that either wouldn’t last or wouldn’t impact business in an appreciable way.
The ‘do-nothing’ approach is not an answer any longer. Emerging pressure from born-digital insurtechs is eroding market share in a FLAT market. The relentless development, availability and accessibility of new technology is creating a demand for change. The ubiquity of new tech, coupled with customer expectations for real-time, data-driven digital experiences for the same or similar benefits has changed the game for all insurance companies.
Guy Kawasaki, in his talk, stated that insurers are in the financial security business. We can no longer look at ourselves as “insurers”. In China, a start-up is building a health insurance business based on crowd funding! A shift to higher levels of innovation is required to stay relevant and create the next curve for business growth.
The growing appetite for transformation #
The good news is in recent years a shift of thinking has occurred for many in our business, demonstrating the desire to change. There is a real appetite for embracing new solutions and transforming the way companies operate and interact with their clients. That appetite is being translated into increasing investment in technology and innovation around products, services, and delivery channels.
There is a growing understanding of the importance of data as the foundation for building superior customer experiences and achieving profitable growth. Insurance data is the fuel that powers digital transformation.
At UCT we add value to the insurance industry by helping companies more fully leverage their foundational data. In many cases that data already exists in their enterprise, buried in legacy policy administration systems and applications.
We help insurers by extracting, exposing, cleansing, transforming, and consolidating this data for many uses. Our most common projects pertain to core policy administration consolidation, data exposure and transformation for data mining and data warehousing. We give companies the ability to build their data foundation by simplifying their back-end or by aggregating their data across administrative environments.
