A new era for Australian life insurance
The age of the consumer is heralding a new era for the Australian life insurance industry. In the years ahead, the most successful providers will be those who free themselves from legacy thinking and proactively reshape their offerings to focus on customer experiences.
It’s been a bumpy ride for Australian life insurers. Several years of difficult market conditions, public debate about the role of commissions and advice in insurance and negative press around the practices of some providers have culminated in rapid regulatory change. With energies focused on the regulatory front and maintaining profitability, many providers have been slow to respond to the rising power of the consumer and the advent of mobile digital technologies. Collectively, these factors are fuelling significant disruption across the life insurance industry and it’s not surprising that many providers are struggling to identify a clear way forward.
One thing is certain, the traditional life insurance model that placed the provider in the driver’s seat must change. The best guiding principle for companies seeking to survive and thrive in the new era of life insurance is to proactively reshape their offerings and employ digital technologies to comprehensively meet the needs and expectations of their customers. In the age of the consumer, where the customer is king, savvy life insurers should consider the following emergent trends:
Modular product offerings
Today’s consumers demand greater choice and control. In the new era of life insurance, savvy providers will develop and deliver modular product offerings that enable customers to tailor their life insurance cover to their individual needs and also adjust this cover dynamically throughout their life as their circumstances change. By eliminating the need for new applications for each new product, the modular approach will enable providers to keep customers within their ecosystem and proactively identify upsell/cross-sell opportunities and increase retention. Products will be seamlessly linked across product lines and distribution channels for the benefit of the customer.
Aggregated holistic solutions
Consumers have an increasing appetite for their life insurance products to be integrated more closely with their other wealth and non-wealth products to create an aggregated holistic solution. In the new era, life insurers will develop the capability to source and provide for their customers, other products from third parties or specialist partners. They will serve as trusted providers who curate high-quality bundled offerings that include traditional life insurance products, as well as retirement income solutions, long-term care solutions, loyalty programs and discount partners. Not only will insurers financially protect their customers in the event of death or ill heath, but they will also enhance the everyday lives of their customers through advice on healthy lifestyles and access to health and lifestyle partner organisations.
Multiple service delivery options
Consumers are becoming increasingly self-reliant, doing much of their own product research via the internet or social media before approaching insurers or financial advisers to establish their cover. In response, providers will need to develop the capability to offer increased D2C and self-service options, as well as B2B2C-style advice that allows customers ‘to do it themselves’. As customers progress through their life stages, providers will enable them to easily transition from automated robo-advice tools for simple financial matters, to personalised “face to face” advice from a professional adviser for more complex financial decisions.
In the age of the consumer, it’s a given that providers will increasingly shift their products, services and engagement opportunities to digital technologies. The convenience and immediacy of these technologies will transform the underwriting process, enabling life insurers to meet customer expectations for applications to be assessed and policies issued in real-time. They will allow providers to better manage claims by providing a transparent view of the assessment process and to seamlessly connect with doctors and health alliance partners to provide valuable support to customers in their time of greatest need. This will enhance and maintain an ongoing customer relationship to foster brand affinity.
Digital capabilities will become more important as the new Life Insurance Framework (LIF) changes to life insurance commissions place greater pressure on providing adviser efficiencies and make it less attractive for independent financial advisers (IFAs) to service customers with lesser insurance needs. Savvy providers will employ digital technologies to capture and cost effectively service this market.
Consumer demand for increasingly personalised products and services will see life insurers increasingly employ analytics within the realm of customer service, engagement and retention. In addition, life insurers will extend the use of analytics to the underwriting process which, at its heart, is all about assessing risk. New data sources such as wearables, passive monitoring devices and shared social/location data, combined with improved analytics tools will deliver life insurers a much clearer picture of risk exposures. This emerging capability will allow providers to better manage business change elements, align actuarial practices and develop new techniques for measuring and managing risk. It will also be feasible to combine Artificial Intelligence (AI) with data and some providers are already applying this capability to managing fraudulent claims.
Keeping costs to the consumer down will be paramount in a competitive life insurance market. The use of Robotic Process Automation (RPA) will enable providers to reduce the cost to serve, deliver higher quality processing outcomes and redirect investment to activities that place the customer at the centre of their business. RPA will be deployed across all areas of policy issue and maintenance, human resources, finance and reporting.
Advances in medical technologies – from wearable health devices through to breakthroughs in genetic testing and personalised, predictive medicine – will assist consumers to improve their health as well as their life insurance cover. Data made available from these technologies will be used by life insurance companies to offer value adds that support better health, as well as better target and personalise insurance cover to a customer’s individual circumstances.
Modern administration solutions
Providers seeking to capitalise on the trends outlined above must first free themselves from legacy platforms and processes. Only modern enterprise architecture is comfortable with the high degree of uncertainty and change that comes with the age of the consumer. Agile, flexible and scalable, next generation technology enables innovation that in turn creates enduring competitive advantage. It provides the ability to develop and bring new products to market quickly and easily and/or partner with other innovative organisations to white-label their capability. It underpins mobile and digital capabilities that support real-time interactions in a highly personalised manner. It keeps cost to serve down by reducing operating costs and simplifying a business via straight-through processing and inbuilt workflows.
In the new era of life insurance, the most successful providers will be those who employ modern solutions to deliver product offerings focused on customer experiences. These offerings will afford customers far greater choice, control and personalisation, as well as the flexibility to change their choices as their individual life circumstances change. They will also delight customers by exceeding expectations and delivering on their promise when they are needed most.
David Loader is product manager for life insurance for Bravura Solutions
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