Over the past fourteen months, too many families have experienced first-hand the deficiencies in America’s life insurance industry. While there are many companies offering a wide range of affordable life insurance policies, tens of millions of breadwinners are nonetheless going without. Before COVID-19, the gap was only growing.
There are many reasons for this, including the realities of America’s healthcare system and health insurance. Americans are simply spending far too much on staying alive to think about planning for after their deaths. However, as the pandemic has forced people and businesses to find digital ways of doing things, it is becoming increasingly clear that inefficient processes are much of the problem.
Throughout the pandemic, the life insurance industry has been innovating more than ever before. Insurtech has gone from being a buzzword to a measurable reality. Where innovation has passed, new policies follow. And while there are other reasons more people may be picking up life insurance policies than before – including a deadly virus – the fact is that companies adapting to insurtech are succeeding where others fail.
But how exactly is Insurtech revolutionizing the life insurance industry? Is this necessarily a good thing?
Streamlining insurance
Insurance is a confusing industry, even for those who are part of it. Yet people are expected to take up insurance policies based on their limited understanding of what they need. The differences between the types of life insurance, according to The Insurance Bulletin, cannot be overlooked. An individual looking for the right cover has a lot of work to do if they are to reach the right conclusion.
Insurtech has taken the confusion out of life insurance and made it easy for people to find what they need. Instead of trying to match the information with the policies available, good insurtech does the work for them.
While this may make some wary of the possibility that consumers will make decisions with less information, the opposite is reality. The consumer gets an in-depth idea of the information they need to know, rather than a vague understanding of the industry as a whole.
But good insurtech goes beyond algorithms which rely on the client’s input.
Life insurance and big data
Big data is nothing new in the insurance industry. Long before the internet existed, the concept of insurance worked according to a big picture scale. Back then, the numbers were far more speculative. Today, big data tells insurance companies everything they need to know in order to sell policies.
And yet, many companies have failed to utilize big data to its full potential, using it as the basis for marketing campaigns rather than customizing the experience for customers. Big data has indeed been used to calculate premiums and project profits, but today it can do much more. In 2021, big data gives companies the ability to cater to every single individual on a very personal scale.
The best insurtech today is therefore not just making use of a streamlined process. It seeks out far more data than the client actively provides. It creates personalized products and premiums. And, ironically, it makes clients feel more seen, as if their insurer has a personal relationship with them.
Practical benefits
The benefits of insurtech therefore do not begin and end at information gathering. Insurtech makes everything from signing up to medical exams to processing payments less of a burden on the client. For example, it is now possible to get a life insurance policy without an invasive medical exam. At the same time, this does not increase the risk for the insurer.
It seems likely that in the not-too-distant future, insurtech will solidify the relationship between insurer and insured, giving the client more of a personal stake in their policy. This has already been implemented in the health insurance industries of some countries, where gamification of exercise and healthy eating has been used to lower premiums and provide rewards.
If the idea that insurance companies will monitor a client’s health and use it against them scares you, it is because you are thinking of it on an individual level. The increased personalization of insurance brings down the cost of insurance for just about everyone, as companies are more aware of exactly how much risk they are taking on and provide ways to minimize it.
The life insurance industry has long been overdue for a change. Millions of uninsured people can potentially leave their loved ones destitute, simply because they did not know where to start with life insurance. Insurtech is making the process easier for consumers while providing insurers with all the information they need to decrease risk and increase profits.
