The COVID plunge to digital life insurance

Grandma is buying groceries online. The kids are home half the week doing school on video calls, and parents now know words like "synchronous learning." Some are cobbling together employment with a new mix of digitally-enabled gigs while others are working from home in an entirely virtual work environment. Going to the doctor now often means a video call.     

COVID-19 has radically changed our personal lives, pushing us all more deeply into the digital world. Not surprisingly, the same thing is happening to life insurance companies. To be sure, the North American industry has been tiptoeing into digitally-delivered products and services for a while. Now it's a full-on plunge into digital insurance, and all of us are working to figure out what that means and how to adapt.   

As a reinsurer, we want to understand and relate to both end consumers and the people running the companies that serve them. Here's what leaders of life insurance companies in the US and Canada tell us are the biggest problems they face, followed with a look at how Swiss Re is stepping up to explore new solutions that will help them address these obstacles and opportunities head-on.

Four COVID-19 challenges impacting life insurers 

In-person sales. With lockdown measures and social distancing, in-person sales are challenging. Carriers and brokers are scrambling to enable their sales teams to sell via video conferencing and screen sharing capabilities. Lots of questions remain as to whether sales will revert to in-person after the COVID crisis passes. Carriers observe that advisors no longer fear that they might be replaced by technology but recognize they can be more efficient with digital tools.

Complicated protection products. There's nothing like a global pandemic to get people thinking more about their own mortality. However, middle market consumers in particular are anxious and worried about their financial stability. According to a LIMRA monthly survey, April and May sales were weak, although by July, carriers were seeing an encouraging rebound in the sale of term and whole life products. Among companies still experiencing business declines, six out of 10 cited pandemic impacts such as loss of face-to-face contact as a contributing factor.  Meanwhile, Swiss Re is observing a growing interest among distributors to sell simple products using new digital channels, which creates strong potential to help close the protection gap for middle- and lower-income individuals.   

Para-meds. A global pandemic is not a good time to be visiting people's houses to check their height, weight, or to take blood and urine samples.  Many carriers had invested in accelerated underwriting programs prior to COVID-19, but the vast majority have guidelines that allow only up to 60% of applications to be accelerated. The remaining customers still require full underwriting due to the carrier's accelerated underwriting eligibility rules, the customer's health conditions, or other risk factors that require further review by human underwriters. COVID did push many of these carriers to expand their age and amount guidelines to enable them to cover more individuals. However, experience is showing that this approach hasn't resulted in a large increase in sales, and it potentially hinders program effectiveness. As a result, most carriers are also looking to use alternative data sources within their AUW and fully underwritten programs. For a full review of these approaches, check out this Post COVID-19 Underwriting Playbook.     

Paper. Life insurers have historically used a lot of paper. Insurers have seen that younger customers and agents are more willing to go digital, so the trend toward paperless has been focused on these segments in recent years. COVID-19 appears to be accelerating this trend as companies surveyed by Swiss Re have seen an 18% uptick in policyholders signing up for their online portals. In the COVID environment, providing policyholders with paperless processes and digital tools is no longer just about efficiency; it's now also a necessary way to show customer care and maintain operational relevance. 

Exploring digital solutions together

Swiss Re is likewise evolving our solutions strategy to meet the changing needs of our clients. New digital distribution for existing and new products, new data for underwriting, and new digital services for policyholders are three key areas we are exploring with our partners and carriers to address COVID challenges with digital insurance value propositions. 

New digital distribution for existing and new products

Swiss Re recognizes that insurance carriers are interested in selling to customers in new ways through technology and tapping into underserved markets. To assist our carrier clients with these goals, we are partnering with new, digitally-enabled distributors and insurtechs by providing them with our expertise in product development, pricing, and underwriting, and connecting them with our carrier clients. These partnerships enable business growth for our carrier clients and leverage new innovations in the distribution space.    

New data sources for underwriting

Drawing on extensive experience, Swiss Re continues to respond to the evolving underwriting needs of carriers that are looking for ways to responsibly incorporate new data sources into their accelerated underwriting programs. The landscape of new vendors and data sources is rapidly evolving, and it takes time and resources to remain current. In addition, the industry is moving towards a more individualized underwriting experience that determines what additional information is needed based on the information already available. In response, Swiss Re is stepping up efforts to help carriers to navigate this growing complexity and determine what data sources and programs are right for them.

New digital services for policyholders

Swiss Re sees the growing policyholder demand for digital services as an opportunity to work with carriers to evaluate policyholders' current behaviors, such as signing up for automatic payments and adding helpful content to companies' online platforms. While some clients have customer autopayment for premiums, others do not have this capability. In this instance, we are also encouraging companies to consider their online platform offerings. Swiss Re also supports clients with customer communications, using behavioral economics to enhance adoption of digital services that also help to improve persistency.

Plunge into digital insurance with us

Our imperative  for the Solutions team at Swiss Re is to understand our clients' needs and help them to address their challenges head-on so that together, we can work to close the USD 25 trillion and USD 1.06 trillion protection gaps in the US and Canada, respectively. We are also ready and able to work with insurtechs, distributors, and other companies looking to provide digital insurance solutions to their customers. To learn more about how we can assist you as you take the plunge into digital insurance, please contact us.

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