Other parts of this series:
- Life insurers face huge digital disruption despite their cautious approach to new technology
- Stable revenues and complex product offerings put the brakes on digital transformation in life insurance
- Smart life carriers are looking to digital technology to meet new challenges
- Digital Transformers are reshaping life insurance distribution
Many life insurers view the prospect of embracing digital technology with caution rather than great enthusiasm. Well established business models and strong revenue flows from stable pools of customers have often reinforced entrenched market perceptions and curtailed their appetite for innovation.
However, far-sighted life insurance providers are recognizing the potential of digital technology to help them respond to the major changes taking place in the industry. These Digital Transformers, as we call them, are also alert to the ability of digital technology to create lucrative new products and markets.
In my previous blog post I pointed out that emerging digital technology is enabling life insurers to reach large numbers of new customers across the internet – especially through mobile devices. The sophisticated collection and analysis of customer data allows these firms to develop and tailor products and services that meet individuals’ specific, and often changing, needs.
Furthermore, connected technologies such as the Internet of Things give life insurers the ability to dramatically enhance the quality of the customer experience – an important hook for retaining long-term customer relationships. They also enable carriers to extend their businesses into new markets such as risk prevention and real-time health care. These are some of the important trends identified in our recent Distribution and Agency Management Survey.
Our research also identified some further advantages of digital technologies that are enabling life insurers to transform their businesses to meet shifting market conditions.
Improving the effectiveness of agents – Life insurers are looking to improve the effectiveness of their agents by integrating them within omni-channel distribution networks and assigning them to specialist, high profit tasks. This allows them to capitalize on the efficiency and productivity improvements provided by digital technology while deploying skilled agents to provide customers with guidance and advice. Around 22 percent of the life insurers we canvassed identified refocusing sales agents to where they can add the greatest value as a high priority. Many are integrating agents with automated “robo-advisor” facilities that use artificial intelligence to answer customer queries.
Securing key partnerships – Strategic partnerships are essential in the digital economy. Life insurers looking to establish digital ecosystems, or deliver their products and services through the ecosystems of third-parties, are forging partnerships within and outside the insurance industry. The need for access to key digital technology and skills is also spurring carriers to partner with, and sometimes buy, niche start-ups. Around 14 percent of the life insurers we canvassed have already partnered with a company outside the insurance industry to broaden their products and services. A further 20 percent regard this as a high priority.
Enlisting aggregators – These distributors are becoming increasingly influential in the life insurance industry. Many carriers are promoting their products and services through aggregator platforms. As many as 25 percent of the life insurers we surveyed said they’ll be building a greater presence on aggregator sites during the next three years.
Life insurers are starting to recognize the enormous potential of digital technology to help them respond to the fundamental changes taking place in their industry. Increasing deployment of such technology will change dramatically the businesses of life insurers and the industry in which they operate.
For more information about digital transformation in the life insurance industry take a look at our Distribution & Agency Management Survey. I think you’ll find it very helpful.