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The Transformative Power of Data within the Life Insurance Industry

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Recently, I had the privilege to speak along with a number of insurtech thought leaders on a panel at the Covrtech Partner Innovation event in Miami. The conversation, which focused on Transforming the Advisor and Client Experience, opened dialogue on data trends, on use cases in underwriting and marketing, as well as on the broader macro forces shaping the future of life insurance and underwriting.

Below are some of my key takeaways from that discussion.

Using data to enhance the customer experience in the life insurance industry

The life industry has room for improvement. For the end consumer, the buying process and post-purchase experience is fraught with friction between buyer and seller. For instance, a gap often exists between consumer expectations and the actual product received. A consumer moving through the medical underwriting process may expect to be rated as preferred only to be offered standard because of health factors. This type of experience causes drag on prospect conversion and opportunities for future customer interactions. In our industry the barriers to buying are irrefutably higher than in other industries, whose focus has squarely shifted (due in part to customer demand) to higher levels of convenience, service, and shared value.

Data and decision science are powerful assets and tools for improving the life insurance experience. When used at the right points within the value chain and at the right customer touch points, data and analytics remove friction and elevate the experience and social value of our offering at large.  

To this end, our industry is undergoing a paradigm shift that asks, “How can we deliver an experience that is just as good, if not better, than that of the FAANG companies (Facebook, Amazon, Apple, Netflix, and Google)?” What we know about service and value within other industries is that data and analytics underpin the experience and accordingly form a central pillar to our shift.

Transformative Power of Data_Covrtech-largerWhat’s interesting is that the data used to improve our offerings does not have to be highly varied. New, alternative data sets can be systematically re-used at different points in the value chain to improve the customer experience. Consider marketing and underwriting. When robust and correctly modeled, data can accelerate the underwriting process. In some cases, it can remove the need for medical underwriting altogether because its models and underlying data can predict mortality and morbidity. For our underwriting clients, we see significant segmentation and lift when using new data sources for specific underwriting purposes.

From a marketing or pre-authorization perspective, the same data can be aggregated and used permissibly to find a product-applicant fit; to smooth the customer journey from the top of the marketing funnel to the point of product selection; and as discussed, to create a natural, consistent bridge into the post-authorization or underwriting phase of the experience.

Life insurance underwriting in the next 5 years.  What will normal look like?

Modern medical underwriting has been around since the late seventeenth century when Lloyd’s of London was born out of the back of a coffee shop. It’s natural that every industry goes through periods of evolution and revolution. So we’ve seen a long arc of evolution in underwriting over the past few hundred years, but because of new data, technologies and methods, we’ve now entered a period of rapid disruption and revolution.

We should expect that over the next three to five years, we’ll continue to see flux and change. Consumer preferences will continue to shift; new technologies and data will become available; and new regulations will be introduced. All these factors will shape how we underwrite.

As a variety of new fields and technologies enter into the insurance conversation – for example, genomics and machine learning – Transformative Power of Data_Covrtech-smallwe’ll need to consider how they’ll potentially play a role in the “new normal” of the underwriting practice. While stasis in the practice will be hard to come by in the near future, we’ll certainly continue to see the development of:

  • Seamless services: Friction will be removed from the entire insurance process, including underwriting. End consumers  have grown accustomed to expecting a seamless experience, and we as an industry need to respond or watch as adjacent competitors move into the market.    
  • Value reciprocity: As expectations rise and our operations change to meet them, our existing and potential customers will expect a higher value in return if we are asking them to furnish us with their highly valuable data. We need to model this value into our offerings and think deeply about how we can match offerings to the perceived value of the inputs used to deliver them.
  • Data stewardship: As implied by value reciprocity and the seamless experience, consumers will demand responsible stewardship of their data. They will want to know how and when their information will be used, stored, and discarded. Transparency and security are paramount, and we must continue to respond to these demands as we explore new values. 

Data and analytics present a significant opportunity for the life insurance industry to reimagine the profession’s future and redefine the experience provided to consumers and advisors. Special thanks to Covrtech for the opportunity to discuss these forces and to connect with peers and influencers within the insurance and finance community. I look forward to playing an active part in this transformation and witnessing the industry respond to and evolve with these trends. 

 

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Written by: Noah Krusell

Noah Krusell is an execution manager within RGAX's Data & Analytics team. Noah oversees the development and commercialization of decision analytics products to the life insurance market. In addition to his role at RGAX, Noah is an adjunct professor of global integrated strategy at Washington University in St. Louis, where he teaches students how to combine market and nonmarket strategy to deliver innovative and sustainable businesses and products. Previously, before joining RGAX, Noah was senior vice president at evolve24, a smart decisioning company.