Life insurers are finding innovative, high-tech solutions to meet customer needs in 2023. Look at this year’s top trends to see how you can grow your market share this year as a forward-thinking carrier.
Life insurers have faced a number of challenges this year, but none of them have hindered the pace of the industry’s digital transformation. In fact, just the opposite is true: by 2025, investments in the IT sector should reach $271 billion, compared with $210 billion in 2021.
A volatile economy, soaring inflation, geopolitical turmoil and falling disposable income prompted insurers to enter the new year with an eye on progressive technology solutions. The main trends of 2023 revolve around faster personalization, smarter automation, and more efficient distribution. The trends that insurers should prioritize this year are as follows:
1. Enhanced digital experiences increase customer productivity and engagement: Insurers are developing sales forecasting tools that enable agents to get instant, data-driven customer insights to meet customer needs. We expect more insurers to choose digital tools that will improve the customer experience and deliver lifetime value for years to come. Insurers will offer agents greater access to real-time customer data and tools to improve policyholder retention. Insurers will use sales and customer interaction data to improve the efficiency of distribution and agency sales, resulting in increased revenue across the board.
2. Ecosystem partnerships pave the way for innovative value propositions: Artificial intelligence and seamless experience are the keys to future success in the insurance industry. Life insurers are teaming up with tech partners to offer AI-enabled financial tools to help clients plan and prepare for the future. Ecosystem partnerships help insurers build long-term relationships of trust with customers who both educate and promote the relevance of value-based life insurance.
3. Built-in insurance ensures availability at the right time and through the right channel: Insurers find new, younger customers at the right time and place by prioritizing life insurance cross-selling collaborations with easy-to-implement software integration at the point of sale. Embedded insurance helps operators close coverage gaps and create new revenue streams while lowering distribution costs, promoting innovative products and reducing underwriting risks..
4. Health as a Service initiatives deepen engagement: overwhelming 68% insurance clients report their interest in new wellness offers. Insurers are using AI-powered wellness tools to help customers track their fitness goals and create personalized wellness plans. Life insurers that use wellness as a service will better understand the needs of their customers, improve retention and reduce claims.
5. Insurers are moving to the cloud to improve efficiency: Almost everything happens in the cloud these days. In 2023, insurers are poised to move from legacy platforms to the cloud, where they will benefit from new audiences, better security, faster customer responses and lower maintenance costs. Moving to the cloud helps insurers automate operations, accelerate digital transformation, and provide a better customer experience.
6. Life insurers target millennials:Millennials represent a big opportunity for the life insurance industry. Nearly half of US millennials—or 34 million adults say they need more life insurance. Telecom operators are developing easy-to-use digital platforms targeted at this younger customer base. To meet the growing needs of millennials, life insurers will need to streamline the application process, sell more relevant products, remove barriers like home health screenings, and go digital.
7. Using real-time alternative data helps automate and simplify underwriting: Life insurers to watch in 2023 are leveraging alternative data sources that enable them to make quick and accurate decisions so they can issue policies instantly. Closer collaboration of operators with external data sources and increased investment in AI and real-time data tracking will improve the efficiency and accuracy of underwriting.
8. Insurers are making sustainability a strategic corporate priority: Life insurance companies demonstrate their commitment to sustainability through a wide range of environmental, social and governance (ESG) initiatives. This has become an important business practice because more policyholders are basing purchase decisions on business value than ever before. Your corporate sustainability strategy should include a commitment to ESG. This will help attract socially conscious talent, create a scalable operation, and maintain profits.
9. Microservices will improve the customer journey: Many life insurers are committed to end-to-end digital transformation. Microservices give insurers the flexibility to quickly and cost-effectively integrate new technologies. In 2023, insurers will be moving away from their monolithic architecture in favor of a microservices architecture so they can keep up with a growing customer base of tech-savvy do-it-yourselfers.
10. Modernization of the basic system will promote innovation: It can be difficult for insurers to upgrade their legacy systems, but it is the key to future success. To make the process more engaging, organizations are integrating new technologies on top of their legacy systems via APIs so they can stay ahead with new services and experiences. Modernizing the base system is the key to new digital and business opportunities. Using a hybrid approach or adopting low-code or no-code platforms are great options for carriers who can’t switch right away.
It’s no secret that digital technologies have firmly entered everyday life. Life insurers will keep this in mind this year as they continue to upgrade core systems, prioritize product innovation, and invest in next-generation technology to meet the needs of today’s consumers.
