Insurtech exec speaks out on industry's need for modernization and long-term lessons to be gleaned from the pandemic
Aside from triggering a great outpouring of demand for life insurance, the coronavirus crisis has forced the industry to confront a truth it’s denied for decades: companies need to update the technological infrastructure underpinning their quoting and illustration processes.
That’s what’s happening from the vantage point of Matt Essick, chief marketing officer at Ensight. An insurtech platform provider with a strong claim to leadership in the U.S. permanent life insurance space, the company also offers support for term life insurance products and annuities, and is expanding to accommodate long-term care products as well.
“Life insurance is probably 10 years behind property and casualty products when it comes to being presented and marketed to the consumer in an interactive, digital manner,” Essick said.
Fallen by the wayside
While the life industry has been strongly focused on upgrading internal policy administration systems, he said it has fallen by the wayside with respect to how it does sales and marketing. The quoting process, for example, has remained largely entrenched in its traditionally complex form; illustrations have remained similarly challenging for agents and consumers alike, given continued reliance on materials that can run anywhere from 20 to 45 pages long in PDF form.
“That’s really where the focus is shifting today,” Essick said. “Everybody’s recognizing that if a carrier doesn’t provide a modern sales experience, that’s going to impact its ability to grow and service its clients.”
The move toward digital has been ongoing for a long time, spurred by multiple factors including the need to match consumer expectations set by banking and personal-finance apps, along with newer advisors’ angst with what they see as carriers’ and distributors’ obsolete and non-intuitive technology. A regulatory push to make annuities and life products part of the fiduciary picture, which compels agents to design plans around client needs and seek products to satisfy them, has also been a significant tailwind south of the border.
A digital acceleration
But the coronavirus crisis is forcing companies to adapt by upping their digital sales capabilities. With government-sanctioned lockdowns in place across the States, Zoom meetings are practically the only game in town. Demand for life insurance has also surged, with numbers echoing the period after the 1918 Spanish influenza outbreak.
To service that demand, carriers and distributors alike have flocked to Ensight. Aside from enabling interactive visualizations that make illustrations much easier to communicate and understand, the insurtech platform offers an intelligent, reflexive question system that vastly streamlines and simplifies the traditionally cumbersome quoting process.
“In ten weeks flat, we’ve seen the kind of massive behaviour change that the industry had been trying to make progress on over the last couple of years,” Essick said. “We’ve had hundreds of agents coming onto our webinars for training, and in April alone we did over 30,000 remote sales presentations supporting the U.S life distribution community.”
And while most old legacy platforms weren’t designed to provide data on the transactions and interactions that flow through them, Ensight has the analytics capability to collect that information. That means aside from providing auditability around what’s happening, the platform also enables insights into trends within a company’s distribution footprint so that they can make smarter decisions that can help both advisors and consumers.
Learning from the crisis
Life insurers’ need for data right now, however, extends well beyond product sales and distribution. As Essick noted, the COVID-19 outbreak has proven to be a once-in-a-century black swan event, which has created a lot of new risks that carriers now need to underwrite. As information around mortality risk remains in a state of flux, numerous insurers have decided to halt issuances to individuals over 70 years old, as well as those who are positive for putative mortality indicators such as diabetes.
“They also have to pay attention to the prospects of a vaccine being developed, the possibility of the virus mutating, and possible tail impacts of COVID-19, particularly for those who’ve been infected,” he said. “Claims data are another important area; with over 40 million unemployed in the U.S., there’s been a huge focus on carriers meeting their promises and being able to fulfill the income-replacement needs of their policyholders and beneficiaries.”
Given all the open questions, operational challenges, and new information they have to deal with, coupled with their potentially vital role in an economic recovery, life insurers certainly face a difficult short-term outlook. But as Essick noted, we’re talking about an industry rooted in long-term focus, and the coronavirus isn’t going to stop that.
“I think there’s a heightened perception that this won’t be the last pandemic we’ll be dealing with,” Essick said. “The question for carriers, ultimately, is ‘What can you learn from this?’ So they’ll be looking at the situation holistically, and using all the information they can to determine how they should generally underwrite and manage in the middle of a pandemic.”