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The digital life insurance myth

In a digital age, consumer expectations for more sophisticated digital experiences is rapidly increasing. Within the life insurance industry, however, the lag in digital adoption by life insurers generally has meant an inability to provide a pure digital life insurance offering.

It’s called the digital life insurance myth, where many ‘digital’ life insurance offerings today are simply existing offline products and processes replicated in electronic form. Is it any wonder that these products have failed to resonate with the Australian public?

To deliver a true digital life insurance offering, insurers need to rebuild their propositions from the ground up. To accomplish this, there are a number of key areas that need to be addressed.

Digital product disclosure
Digital product disclosure statements (PDS) have the potential to be so much more than electronic replicas of their paper equivalents. ASIC has acknowledged this with its release of RG 221 Facilitating digital financial services disclosures last year to support new digital disclosure innovations. For example, insurers can turn product disclosures into an engaging digital experience by incorporating videos, animations and interactivity. This would help customers better understand their life insurance products.

Digital communication for everything
For customers who purchase a life insurance product via a digital channel, it should be expected that all customer communications are also sent digitally rather than by post. Digital customer contact channels such as email, SMS, digital mailboxes, social media and push notifications via apps all need to be explored and made available to customers to accommodate differing customer preferences. Reviewing traditional communication points for relevance must also be a priority for those insurers with digital capabilities. For example, if a customer can readily access all of their policy information via a web portal or app, what purpose does a renewal notice and accompanying updated policy schedule serve?

Targeted product design
Life insurance products continue to be designed and targeted at the mass market, resulting in unnecessary complexity that hamper the understanding product terms. More targeted product development will not only remove complexity and simplify product offerings (without sacrificing their comprehensiveness), but also enable greater customer understanding and engagement.

Policy servicing online, anywhere, anytime
Consumers should be able to view and fully transact on their policies online, anywhere and at any time – be that simply updating their contact details, increasing their cover or submitting and monitoring their claim. With demand for more sophisticated digital experiences increasing, the requirement for customers to complete paper forms is fast becoming redundant.

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Leverage new data and analytics
In today’s highly digital world, consumers are becoming increasingly more comfortable with sharing their personal information online provided it serves a purpose. Already, we are seeing insurers use data from fitness devices but this is merely scratching the surface of possibility. Social media such as Facebook and LinkedIn contain feeds of data that could assist life insurers better engage customers at different life stages to review their cover for appropriateness. For example, a change in status to ‘married’ on Facebook or job change posted on LinkedIn could be a trigger to engage with the customer to increase cover by an inbuilt ‘future insurability’ benefit.

Digital advice will deliver growth
Consumers are now more educated than ever before and often prefer to research and purchase their own financial products. These customers need educational tools and digitally available advice to support them in the decision-making process. Simple blurbs about the different types of cover do little to assist customers or provide them with confidence during this process. Embracing new technologies and ways of thinking to engage with the coming generations of digital natives is the only way that life insurers will succeed in capturing this critically underinsured market. With recent reports indicating as few as 25 per cent of consumers are seeking financial advice, the potential rewards are many for those willing to commit to the digital revolution required to bring life insurance into the modern world.

Forward thinking life insurers who take the steps now to address these key areas will not only be delivering a true digital life insurance offering, but also ensuring customer satisfaction and ultimately, business success.


David Loader is product manager for life insurance for Bravura Solutions