The life insurance industry has been slower to digitise than other segments, but as more sales are completed online, insurers will have to invest in modernising the customer journey. US-based insurtech Ethos, with a recent valuation exceeding $2bn, is set to revolutionise the way life insurance is sold thanks to its mobile-first platform, which leverages machine learning. US insurtechs are set to follow the same path.
GlobalData’s 2020 Financial Services Consumer Survey indicates that US consumers are quite willing to buy insurance online, with 24.1% indicating that they would prefer to purchase their next insurance product (all types of insurance) online using a PC or a laptop. This proportion rises to 41% when considering those who favour using a mobile device.
Buying life insurance products, such as term or whole-of-life assurance, can be notably burdensome and often requires medical examinations. Many customers must wait weeks before a decision is made on their applications. Now, imagine a seamless experience enabling prospective customers to apply online – or via a mobile device – whereby medicals are normally replaced by a few simple health questions and decisions are available in a few minutes. The onboarding process can be cut down from several weeks to minutes, while keeping customers happier. This is essentially the proposition of insurtechs targeting the life insurance market. Ethos automates and simplifies the underwriting process. But there are others like Ethos, including Ladder, Fabric, and Bestow.
Additionally, the COVID-19 pandemic has made the digital channel more relevant than ever, with more consumers making online purchases than before. And more consumers will be tempted to purchase insurance online, including life policies. More so, COVID-19 will shape consumer experience as more individuals get used to using digital technology across industries, and they will become increasingly expectant of frictionless processes.
Adoption of advanced technologies to simplify processes and eliminate customer friction is the way forward. Indeed, insurers are already ramping up investment. According to our 2020 Tech Trends Survey, 66% of insurance businesses worldwide are currently investing in automation. In North America, this trend is far more notable, with all insurance businesses cited being in the process of doing so. In an industry that is ripe for innovation, insurtechs are excelling in providing digital-centric experiences. This puts Ethos a step ahead of other players, particularly given that it has recently secured $200m in funding.
As digitisation continues to shape customers’ attitudes and purchasing behaviours, life insurers will increasingly be forced to rethink how to cater to customer preferences, simplify processes, and remove customer friction if they want to remain competitive.