BY PAUL FORD
If the past year has taught us anything, it is that most people are resilient and able to adapt to new situations and challenges. All across the world people are talking about a new normal and trying to find ways that the changes of the past year can be adapted for good. Technology has started to play an even more major role in almost every aspect of life. We are just now determining which technologies we want to keep and which ones it would be better to delete. In the insurance industry, the past year has shown us how neglecting beneficial technology and upgrades can lead to issues and obsolesce. The industry needs to change and adapt, like the American workforce has been able to.
According to the Pew Research Center, at the beginning of 2020 approximately 20% of Americans worked from home at least one day a week. By the middle of the year, more than half were working from home and now, more than a year later, 70% of Americans are still working from home. As an end result, businesses are now reconsidering ways of operating as many employees report that they are more productive while working from home and reluctant to return to a long daily commute to a crowded office space.
We are just now determining which technologies we want to keep and which ones it would be better to delete. In the insurance industry, the past year has shown us how neglecting beneficial technology and upgrades can lead to issues and obsolesce. The industry needs to change and adapt, like the American workforce has been able to.
Every facet of life has changed. Take entertainment for example. People binge watch television shows, options for streaming services have increased, virtual concerts and virtual visits to museums are common now, as are holding Zoom parties with family and friends. All this translates into families and friends — society as a whole — having new ways to communicate and connect.
The coronavirus pandemic has forced us to change the way we live, work, shop, interact and play. From remote learning to attending events online, telemedicine to video conferencing, many experts say the digital adoption we’ve experienced since March 2020 is equal to five years of digital gains. And while it would be wonderful to interact in person, attend a live concert and meet colleagues at conferences, now is the time to take stock of the digital gains we’ve made over the past year. We are moving toward the dire necessity to improve and incorporate these digital gains into our lives, which allow us more freedom over our daily schedules, more profit in our pockets and more time to spend with our loved ones.
Nowhere is the companies have not had much competition, which created a culture of non-innovation. Most of them operated with a “if it’s not broken, why fix it?” mentality. Not only has this resulted in outdated and unneeded products, and an alienation and bad loyalty scores from the majority of the population, but it also meant that, for many companies, business came to a screeching halt in March 2020. The shutdowns had many negative consequences for consumers and agents — some immediate and some forthcoming.
When life locked down and medical establishments that were open were filled to maximum capacity, people who wanted life insurance policies could not go to the doctor’s office to get the required medical exams. They could not go to the lab to get the tests they needed nor did the lab have time to process previously existing tests. This resulted in a backlog of people waiting to get insurance — in some cases, in excess of three months just to get information about which policy they qualified for.
Since people put off preventative care and elective surgery during the height of the pandemic, once people felt more comfortable going out into the public, inexorably it led to a resurgence of office visits and outpatient surgery. This caused a flood of claims to come in at the same time, with many companies lacking the technology to process them quickly.
The coronavirus pandemic will have lasting consequences in the insurance industry. In the future, unknown factors in mortuary tables will result in more policies and products that do not fit consumers’ lifestyles or needs.
Agents also suffered during the lock down as they started to lose their means of support. Agents who relied on face-to-face selling suddenly found themselves stuck at home with no clear way to communicate with their clients and no plan forthcoming from their companies. This caused a negative effect on their earnings and livelihood and resulted in lower profits for the industry overall. The domino ›effect was in full swing at these legacy insurance companies.
The current insurance industry system is not sustainable
Consumers want and expect digital ease in their daily lives when researching and purchasing products— especially from the comfort of their own homes. According to a Rock Health and Stanford Center for Digital Health report, over the past year, the rate of consumer adoption for live video telemedicine, wearable ownership and digital health metric tracking grew by more than 10percentage points.
Consumers now expect technology to be an integral part of their healthcare experience. A PwC survey found that 41% of respondents said they were likely to switch insurance providers due to that company’s lack of digital capabilities and 53% said they were likely to use digital channels to contact their insurers in the next 90 days.
According to a Munich RE report, 50% of consumers are more likely to purchase an offer that appears quickly. The message is clear: Adopt and incorporate digital technology into the insurance buying and selling model or face obsolescence.
Agents and consumers may be reluctant and unwilling to embrace new technology but if we provide consistent messaging and education and clear concise instruction, they will learn quickly and realize the benefit.
Using technology to make purchasing and researching a product easier doesn’t just make sense but in the case of insurance policies, technology can also be used to create better, more relevant products as well as ones to reach substantially larger new markets.
With the right technology, potential policyholders don’t have to spend hours answering questions and visiting doctor’s offices and then weeks, or months, waiting to find out what they qualify for. Insurtech uses deeper levels of data and can calculate more than 4,000 data points in minutes to calculate risk and create technology- enabled products that protect consumers and insurers.
New Spectrum Life Insurance is an example of a digitally improved insurance offering — one that uses advanced technology to create a product that is more accessible to consumers and increases agents’ selling potential. Typically, life insurance companies use seven categories to determine what type of life insurance a person qualifies for. If you have a pre-existing condition such as diabetes or high blood pressure, you might be disqualified or only qualify for a very expensive, very limited policy. Insurtech can help insurers and reinsurers develop, design and distribute bespoke insurance products that match client’s needs, increase a company’s bottom line and give agents policies that personally match a client’s lifestyle, increasing their potential selling power.
As with any new innovation, there are challenges. Innovations in the industry have been sporadic up to this point and brokers have struggled to discern where the value is and what they can gain from adopting new technologies. Data can and should be used to help processes and product offerings become smarter. Agents and consumers may be reluctant and unwilling to embrace new technology but if we provide consistent messaging and education and clear concise instruction, they will learn quickly and realize the benefit.
By adopting insurance technology into their daily work routine, insurance brokers and financial planners will be able to save themselves and their clients valuable hours in the day.
By adopting insurance technology into their daily work routine, insurance brokers and financial planners will be able to save themselves and their clients valuable hours in the day. For example, the interview to start the process to qualify for life insurance can take several hours to complete with consumers becoming frustrated as they have to answer the same questions over and over. But digital offerings use technology to reduce the application process from hours to an average of 20 minutes. At the end of the process, the consumer receives information about a wide variety of policies that are customized to fit his or her life and situation. Not only does this benefit the consumers, but agents are able to be more responsive, have a wider breadth of products to offer their clients and have the ability to earn more money while providing stellar customer service. It is a continual beneficial circle that can reap rewards for all involved.
Agents will also benefit because they have a whole new potential audience of clients to reach out to. When policies and products are based on real data and digitally analyzed information, we are able to create products to reach groups that have never been served before — younger and older age groups, those with pre-existing conditions — people who have shied away from the industry because they did not think it had anything to offer them or even wanted to help them.
With the use of insurtech, we can now serve more than 60% of the American population that has never had the chance to consider life insurance before.
The digital revolution has happened. People are ready for a change and it is up to us to lead the way with innovative solutions and products. If you don’t, consumers will find someone who will.
PAUL FORD is co-founder and CEO of Traffk, an innovative insurance underwriting and distribution platform designed to build and launch modern insurance products and brands that scale. Ford has used his expertise in insurance and AI to create solutions to the problems of inefficient, assumption-based underwriting and slow processing in the insurance industry.
Traffk works with agents as partners, providing them with the digital tools to work with an efficient sales process and engage consumers with a fast, accurate process for insurance policies.
More info here: https://www.traffk.com