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
Life insurers have often been cautious when deploying digital technology. Many have long benefited from stable, secure markets and strong revenue flows from well-established pools of customers. They’ve tended to view change with little enthusiasm. However, shifting market conditions are likely to accelerate digital transformation in the life insurance industry.
In my previous blog post I pointed out that rising customer attrition is forcing many carriers to hunt for new business. A large proportion of life insurance customers are Baby Boomers moving close to retirement, and sales to younger people, Millennials and Generation Xs, have been disappointing throughout much of the world. Life insurance providers are increasingly targeting high-wealth individuals in an effort to bolster revenue and maintain margins. But competition is this sector is substantial and likely to increase.
Digital technology offers life insurance providers the opportunity to transform their businesses to meet the changing demands of the industry. It also has the potential to help carriers create new products and establish new markets that will provide substantial future income.
Our recent Distribution and Agency Marketing Survey shows that some far-sighted life insurers around the world are recognizing how digital technology can transform businesses and the markets in which they operate. They’re investing heavily in emerging technology. Their objectives vary. But our research reveals some key trends.
Reaching new customers – Digital services, delivered across the internet and often tailored for mobile devices, are enabling life insurers to reach large numbers of new customers. Many of them are young tech-savvy individuals, as well as middle-income earners, who were often neglected by carriers’ traditional channels. As many as 65 percent of the life insurers we canvassed intend using social media to generate new sales leads during the next three years. And just under 60 percent intend improving the conversion of digital leads into sales by bolstering their contact centers.
Delivering new products – Sophisticated collection and analysis of customer data allows insurers to develop and tailor products and services that meet individuals’ specific, and often changing, needs. Emerging digital technologies such as the Internet of Things allow life insurers to not only provide more personalized services. They can also extend their businesses to include, for example, new risk management and prevention services as well as real-time health and wellness programs. Of the life insurers we surveyed, 20 percent said they’ll introduce products based on the Internet of Things during the next three years.
Heightening customer experience – Providing captivating and rewarding digital experiences is the key to securing strong and lasting ties with customers in the digital age. Life insurers are recognizing that they need to forge strong online relationships that enable customers to access the information and services they require at any time and from anywhere. This contrasts strongly with the infrequent engagements of the past. More than 40 percent of the life insurance providers we surveyed acknowledge that they need to improve the overall quality of their customer experience. To achieve this, 38 percent of them plan to raise the level of personalization of their customer experience, while 36 percent intend interacting with customers more frequently.
Life insurers that recognize the benefits and potential of new technology are setting the pace in the digital transformation of the industry. They’ll be well placed to capitalize on the rising demand for new products and services. And they’ll have a head-start in securing a foothold in potentially lucrative new markets.
In my next blog post I’ll discuss some more of the new business opportunities digital technology is creating for life insurers. Until then, have a look at our Distribution & Agency Management Survey. I think you’ll find it contains plenty of useful information.