A Bright Future for Modern Life Insurance Advisors and Consumers
For much of the last decade, the life insurance industry has been looking for ways to improve how advisors digitally connect with modern consumers. Carriers have been seeking new technologies, processes and people to help them achieve three objectives:
- improve the customer and advisor experience (better)
- accelerate the new business issue process (faster)
- reduce costs (cheaper)
COVID-19 brought sudden and, in some cases, dramatic changes to the global life insurance industry. Previously, the digital distribution debate had two distinct sides: the advisor channel vs. the self-serve digital channel. However, the pandemic has prompted leaders to view distribution differently. We know advisors add value and are necessary, with many consumers needing advice. Yet, digital capabilities are also more important than ever.
Life insurance companies have an immediate opportunity to transition to a hybrid digital model that will enable better, faster and cheaper sales.
Consumers want some form of human interaction during the buying process
The Value of an Advisor
Traditionally, in-person advice was coupled with a manual application and a lengthy, complex underwriting process. Issuing a fully underwritten policy often took weeks (and too often, months), creating frustration for advisors and clients alike.
Digital distribution and underwriting tools have evolved to enable consumers who prefer a “self-serve” model to secure coverage through a fully online experience. Yet, recent research by the Boston Consulting Group and LIMRA concludes that for most North Americans, a conversation with a financial professional remains central to the life insurance purchase process. As a result, most new sales are still completed face-to-face with an advisor.
COVID-19 forced insurance companies to reconsider the process for consumers who suddenly wanted a digital experience coupled with human advice. Leaders quickly began to think about meaningful ways to support advisors and consumers who were restricted from interacting in person.
Technology has played a significant role in supporting advisors since the pandemic began. The rapid deployment of new technologies has helped advisors engage prospects through video services, efficiently access account information and manage their book of business.
The Future is the Hybrid Sales Model
Instead of viewing digital insurance solutions as a replacement for financial professionals, we see technology as an enabler to enhance and potentially transform the sales model that was the norm pre-pandemic.
Good financial professionals know how to identify applicants’ needs and explain different policy options, thereby reinforcing applicants’ confidence in their decision. This is what makes a skilled financial professional so valuable.
To meet the expectations of modern consumers, good advice must be combined with dynamic, responsive digital underwriting. An underwriting tool that adjusts automatically as information is entered, makes decisions in real time without the need for medical exams, blood tests or fluid samples delivers a best-in-class experience for both the consumer and advisor.
Companies with first generation automated underwriting systems have been able to adapt their systems for use by agents, resulting in a clearer, more efficient sales process and agents getting paid quicker. Independent advisors will gravitate to these companies rather than those with opaque processes and less predictable outcomes, which leave advisors frustrated by not knowing if an application will have a decision the next day or next month.
With the sharp decline of face-to-face meetings and consumers’ acceptance of digital interactions, we believe the life insurance sales model will be forever changed. Many sales that were previously made face-to-face will now be made through a hybrid process, partly online and partly with the support of a financial professional, either in person or via a digital interaction.
Advisors utilize numerous tools and platforms to analyze customer needs and to make recommendations. To fully optimize the efficiency opportunities with these tools, together with company proprietary systems and tools, integration will become both an opportunity and a potential point of differentiation. Integration will, however, come with a host of challenges: priorities, distributor/advisor choices, channel strategies, and security to name a few.
We believe that the winning insurance companies will:
-
-
- Deepen their Commitments to a Digital Agenda. Technology will be deployed across the value chain, especially in support of hybrid distribution. Financial professionals will use more screens and less paper. Their productivity will increase as they devote more time to customers and less to administrative tasks.
- Empower Advisors to Embrace New Ways of Working. The “human touch” in life insurance will remain critical but will take a different form, with the realization that meetings need not take place in person. Hybrid sales and customer engagement models that involve a mix of digital and human interactions are here to stay.
- Adopt Fully Automated UW Systems. The use of modern underwriting technology will expand further, making the process faster and cheaper. Better access to and use of data should also enable better risk selection over time. The long-form paper insurance application and its PDF cousin will become a relic, and the industry will be better for it.
-
Key Takeaways
Our advice to leaders is:
-
-
- Use technology to support the modern advisor. Listen to your best advisors and work with them to help them sell more new business.
- Build your customer experience around your customer, including how they want to interact with their advisor.
- Learn from COVID-19 and be prepared for more changes.
-
