The future of life insurance

Technology is making us impatient. Most of us now use the Internet to find information or buy something, and in most cases we find what we want with little effort. Yet when it comes to buying insurance, consumers encounter several barriers. Behavioural economists tell us that people prefer not to think when making a purchase, whereas buying insurance requires a lot of thought. Insurers generally force customers to face difficult questions and choices. As a result, customers delay their insurance purchase until another time or even worse, never.The often arduous online application process causes many to drop out and seek human advice (if they can’t put off the purchase). This leads to a low rate of web conversions. Consequently, many insurers conclude that the online channel doesn't work for their products. The truth, however, is that people want to buy everything online, including insurance. Consumers may just be put off by the current one-size-fits-all approach to selling insurance.Customising the online experience can help attract more customers online. A lot of data about customers is available to insurers - what they like, the products they buy and how they prefer to buy something. The best websites use hundreds of data points and algorithms to personalise our online shopping experience without us realising it.For example, Google knows what you are searching for, based on your location, the context of the request, and what other similar people have queried - in addition to other data items. Apart from the basic search algorithm that helps determine your custom search results, Google has at least 20 visible algorithms running. However, we take this level of personalization for granted until we step into a traditional insurance journey.Like Google, insurers have access to powerful data on their customers and using it in smart algorithms can help create a seamless online experience. The User Interface (UI) on PCs and mobile devices could be designed to be personalised by using the data to determine these items:

• The best product to offer the customer
• The value of the sale to the business, and the likelihood of it happening
• The best channel to interact with the potential buyer
• Appropriate marketing messages to display

Why aren’t most insurers using data to create personalised customer journeys? One reason is the variety of technical requirements and skills needed including: A database that integrates all the information, system skills to process the data in real-time (quote data, as well as other internal and external data), analytical skills to gain insight, website coding and system capability to run the models, and the ability to monitor the impact and enable the models learn from past experience. Finally, creating a personalised customer experience requires a savvy marketing team that can quickly point out the issues about the brand.Since traditional insurers are generally busy with improving products and services for the existing customer base or stuck with legacy processes and systems, smaller companies today tend to be better at coming up with personalising products. InsurTechs are providing some of the industry’s most innovative and radical solutions - and generating sales from it.Overhauling internal infrastructure takes time; incumbents need to collaborate with niche companies to help them create products and services that challenge InsurTechs. Niche companies provide the analytical services to personalise the quote process and the systems to deliver these insights in real time. They can help incumbents by delivering these processes and providing in-house technical skills. Many insurers are investing in these companies or buying their products to get a lead on their competitors. Gen Re is partnering with Optalitix, and with other tech companies, to help clients visualise innovation and explore different solutions.For more information, see AI for insurance.Dani Katz