Life insurance companies have been the last to arrive in the digital era. Well, it’s better late than never. New and emerging technologies have succeeded in bringing the industry back to life. Life insurance isn’t a dying business. Far from it. Most people understand that a basic life insurance policy is necessary at all life stages. Consumers, such as Millennials and Generation Z, are shopping for life insurance, especially now, in the context of the coronavirus outbreak. There hasn’t been any decline in sales. Nevertheless, the industry needed some revamping.
Technological advances have radically changed the way that life insurance companies do business and we expect growth. The improvement includes a multilateral approach centered on strategy, software, and technology capabilities. Insurance technology is poised to mature even more in 2020. As far as customers are concerned, they expect and even demand a seamless experience, whether online or offline, from insurance providers. If you’re curious to know more about the innovation occurring in the life insurance sector, please continue reading.
1. Wearable tech
These days, there’s a computer in almost anything that goes on the body. Electronic devices such as smartwatches and fitness trackers have become an integral part of our lives. Apple, Google, and Samsung are teaming up to develop smart devices meant to make our lives easier while keeping us secure in the process. Wearable technology, as well as the Internet of Things, is deployed in the life insurance sector to obtain non-traditional health data. Insurers are able to get insights into what problems people have and offer custom policy quotes. What is more, they can ensure a higher level of interaction, not to mention improve life expectancies.
Wearable gadgets could possibly boost the insurability of people suffering from chronic conditions and improve the longevity of insurance customers. Health-monitoring wearable devices provide information regarding activity levels, BMI, blood pressure, etc. It’s up to insurance companies to discern the metrics captured by the gadgets and attempt to interpret the data. The variety of wearables all report data under different metrics, therefore making things harder. Of course, insurance companies will offer incentives to customers agreeing to such monitoring.
2. Drones
The life insurance sector leverages drones for improved data collection. It’s a good thing considering that the standards for data collection are expected to change by the end of the decade. Aircraft that carry no human pilot or passenger can be remotely controlled and deployed to obtain data for better risk management and assist with preventative maintenance. As a rule, the images and other data are integrated with technologies such as artificial intelligence to calculate the costs. Although drones tend to be used in the non-life and liability segments, there are applications for life insurance as well.
Insurers have to develop, maintain, and service their own drones if they wish to get their hands on valuable information. Drones can be classified as business tools because they help organizations cope with the changing markets and secure a competitive position. The importance of drones and aerial images has been acknowledged by the vast majority of insurance companies, which have increased the use of aircraft for inspections and other purposes. For instance, they can improve their expertise when it comes to pricing policies. Drones will go a long way toward making the system more efficient.
3. Automated financial planning with little or no human supervision
The way insurance companies interact with consumers has changed. Very few are selling the old-fashioned way, that is, broker to the customer. Customers are empowered to make their own decisions and become active participants in the process. Owing to AI-powered digital advisors, people can find policies to match their needs. The robo-advisors automate and optimize the process and the great thing of all is that they don’t necessarily require human supervision. They deliver relevant assistance by collecting data about the customer and processing that information through an algorithm. Millennials, in particular, prefer these services to in-person advisors.
According to the high-level group of experts from Life Ant, the human touch will continue to be an important part of the insurance transaction. Traditional advisors are capable of managing the emotional component of life insurance – in other words, anything that goes beyond policies, premiums, risks, assets, and so on. They can help people make rational decisions and build relationships in different ways. It’s not the time or the place for the robo-advisor versus in-person advisor debate. The only thing that matters right now is the fact that customers can experience a high level of personalization and insurers can offer an unmatched service.
4. Smart contracts on blockchain
Technology allows for the creation of smart contracts between the insured and the insurer. Blockchain is viewed as the perfect environment for smart contracts because it saves time and headaches. The decentralized system exists between the permitted parties, so there is no third-party standing in between the two making a transaction and affirming the terms and conditions in the contract. It’s a transparent, secure way of managing life insurance transactions. As opposed to physical contracts, smart contracts can monitor insurance claims made to the organization and hold both parties accountable.
Blockchain, which can be public or private, will play a crucial role in the future of the life insurance sector. This groundbreaking technology drives collaboration and enables automatic data interchange among the participants. It brings about advantages in terms of efficiency, cost savings, and fraud mitigation. Soon, the regular insurance policy will be replaced by a digital version. Life insurance may be an old industry, yet entrepreneurs are constantly seeking to optimize it. As far as smart contracts are concerned, there’s no point in questioning the real uses or doubting that there will be widespread adoption.
All things considered, it’s clear to see that the life insurance sector is ready for the digital spotlight. Innovation through new technologies is an important driver of positive change and insurers don’t hesitate to leverage innovation to strengthen their businesses. Technology adoption is becoming widespread, which proves that insurance companies don’t have limited budgets for innovation.
