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In This List

Life insurance easing into technology deep end

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Life insurance easing into technology deep end

Momentum is gathering in the life insurance industry to change how companies relate to customers and handle claims using technology that most insurers will have to either contract out or acquire.

Life companies have lagged their property and casualty counterparts when it comes to adopting technology, largely because P&C companies sell highly commoditized products that consumers must have, according to Aite researcher Samantha Chow.

Lately, however, data and analytics, online distribution, artificial intelligence and accelerated underwriting have seeped into life insurance business models, and a transformation has taken hold, Chow said in an interview.

A Deloitte insurance outlook report released in December noted that life carriers have been experimenting with new sources of data and analytics "to improve consumer experience, streamline the sales process, and engage with policyholders more often, rather than only at renewal." The report highlighted how John Hancock deployed information gathered from fitness trackers to change the way it markets and prices policies.

One emerging theme is the use of artificial intelligence and machine learning to monitor customers who call or log in to websites to develop a more holistic and less transactional service to customers, Aite's Chow said. Companies are able to present life policies to customers who contact them to ask about their annuities, cross-sell annuities to those renewing life policies, or showcase wealth management to those who did not know their carriers offered it, she said.

"Engagement isn't just in terms of health and wellness, but also in the form of AI and analytics to monitor and understand your clients, what they're doing, what's the next best offer, what's the next best action," Chow said.

Prudential Financial Inc. has started using analytics and machine learning to streamline its customer experience. One of the goals is to break down the silos through which the insurer typically fielded customer inquiries, said Roger Putnam, who was hired in June as head of customer service. Gone is the goal of "call avoidance," or doing what it takes to keep policyholders from phoning, Putnam said in an interview.

Prudential Financial is now modeling a 360-degree view of their customers to figure out products it could offer based on their phone conversations, online interactions and other data points that will be at the ready when they ask about something such as withdrawing from a 401(k), Putnam said. The company is also modeling out methods to simplify and accelerate payments for death claims, a process that has traditionally been "friction laden," he said.

Prudential Financial's $2.35 billion agreement to buy insurtech startup Assurance IQ is expected to bring quality and savings to the front end of the customer experience, which is selling policies, analysts said.

While it might be ideal for life insurers to build tech-enabled, holistic customer experience platforms on their own, most will likely do as Prudential Financial did and use acquisitions and partnerships to gain that capability, Aite's Chow said. Carriers could build their own technology platforms, but that would be a waste of time and resources for most insurers, she added

In recent months, Verisk Analytics Inc. announced agreements that will expand its insurance presence. The company is teaming up with PartnerRe Ltd. to provide voice analytics and AI to underwriting by using customer interactions to flag risks for things like tobacco use. Verisk also announced a deal to acquire FAST, a technology company whose software helps companies accelerate underwriting and claims.

The Deloitte report credits the industry for a "good start" in adopting technology but implores the sector to do more in leveraging data being gathered from wearables and analytics, especially as a way to make inroads in the underserved middle- and low-income populations.

"Life, health and retirement product providers may consider converging their vast resources of consumer data for seamless, more cost-effective targeting and servicing" in those segments, according to the report's authors.