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  • How digital innovation is reinventing the life insurance industry
  • June 4, 2015
  • How digital innovation is reinventing the insurance industryBy Emily Miller

    It’s no secret that digital innovation is reinventing the insurance industry. By effectively leveraging digital innovation, life insurance companies can now reduce customer service costs while simultaneously increasing both customer satisfaction and retention.

    Ernst & Young’s (E&Y) recent Global Digital Survey highlights how digital innovation can improve and reinvent the life insurance industry.

    Like most companies, insurance companies must adjust their strategies and business models to stay current with the fast pace environment. Failing to adapt risks losing business to competition and providing less than superior service to existing customers.

    Insurance companies now have the tools to increase the quality of customer interactions and deepen customer relationships.

    In E&Y’s recent survey, the following aspect of the life insurance industry could be enhanced with the help of digital innovation:

    Better understanding of target audience

    Not all online user experience improvements require significant infrastructure investments. An initial low-cost step could be to gain an understanding of what customers want and use most frequently and make that information readily accessible.

    Often, getting the basics of design and messaging right can be just as important as understanding user needs. Legible fonts, clear language, effective layout, efficient use of space and ease of navigation results in a more streamlined online experience.

    Responsive design across multiple devices

    Customers expect the same intuitive and streamlined experience from their insurance carrier’s website as they do from their favorite app, search engine or online retailer.

    One guiding principle of digital innovation is responsive design, wherein user interfaces are designed to adapt to the size and characteristics of a device’s screen. This optimization of user experiences across device types lets companies prioritize content and services that are relevant to customers at the moment they need them.

    For example, users can view bills or pay premiums on the go using a smartphone, and they can enjoy a broader spectrum of capabilities viewing the same website on a desktop browser.

    Electronic signature

    E-signature technology can greatly expedite and simplify processes that require customers to sign a form or application. Digital signatures also saves costs in postage, paper handing and storage, as no physical copy is required.

    In addition, e-signature technology has also transformed fraud detection and legal discovery by providing a digital trail and capturing and bronzing identity markers.

    Simplify policy issuance

    Digital technology can transform and simplify policy issuance by harnessing e-delivery methods to transmit all policy documentation, endorsements and disclosures.

    Data analytics can provide targeted messaging to the customer. Engine technology and electronic content repositories ensure that only the latest revisions and editions of forms and artifacts are used.

    Wearable technology to upgrade underwriting process

    Life insurance companies could leverage data compiled from wearable technology, such as smart watchers or fitness trackers, to better detect a customer’s physical health.

    Carriers could move away from broader historical rate models and integrate user-specific data to develop more accurate underwriting models and potentially customized premiums.

    For example, the AIA Group Limited in Asia has begun offering its customers a wellness program called Vitality, which provides rewards points or premium discounts for improving behaviors, such as quitting smoking, increasing physical activity and adopting healthy eating habits.

    Convenient billing and payment system

    Life insurance companies made progress over a decade ago by adding online options to pay via credit card or by direct deposit, but they haven’t been adopted as much as expected. Many companies still send physical check, which isn’t the best practice for payments in other industries.

    Customers increasingly expect more streamlined payments capabilities using their credit cards and mobile devices.

    Reduce policy lapse rates

    With the traditional policy deliver approach, late premium payment notices were sent out via postal mail indicating payments should be sent immediately.

    An intermediate digital capability may be an email to the client with a link to log into his or her account and a make payment online.

    An even more advanced process could evolve a QR code to a mobile URL that can open a link, for customers that have accepted e-delivery. A text with a link to open the corresponding app on the device facilitates the payment with as few taps as possible.

    Self-service functionality

    Self-service functionalities can switch customers from higher-cost channels such as phone centers and in-person meetings with advisers. Ideally, self-service transactions would be available across mobile and handheld platforms with special attention paid to whether the transaction lends itself to completion on smaller devices.

    Enabling shortcuts, hotkeys, QR codes and optical character recognition would help streamline the mobile experience even more.

    The biggest takeaway from E&Y’s survey is that carriers must accept that customer expectations for digital interactions are changing and they must respond by developing strategies that keep pace. From adaptive design and cross-device portability to data analytics and payment innovations, insurance companies have a range of digital tools available to increase the quality of client interactions, deepen customer relationships and drive operational efficiencies across the insurance value chain.

    Transitioning to the digital world also requires carriers to rethink their product offerings, with an eye towards simplification, flexibility and transparency to drive growth and enable retention.

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