Capgemini: 10 life insurance trends to watch
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Life insurers are finding innovative, tech-forward solutions to meet customer needs in 2023. Look at this year’s top trends to see how you can gain market share this year as a forward-thinking carrier.
Life insurers are facing a litany of challenges this year, but none have hindered the pace of digital transformation in the industry. In fact, just the opposite is true — sector IT investments are due to reach $271 billion by 2025, up from $210 billion in 2021.
A volatile economy, the sharp rise of inflation, geopolitical disruption and the fall of disposable income have urged insurers to march into the new year with their sights set on progressive, tech-forward solutions. The top trends in 2023 revolve around speedier personalization, smarter automation and more efficient distribution. These trends that insurers should be prioritizing this year are as follows:
1. Advanced digital capabilities increase productivity, customer engagement: Insurers are developing predictive sales tools that empower agents with instant, data-driven customer insights to meet client needs. We expect more insurers to opt for digital tools that improve the customer experience and drive lifetime value for years to come. Insurers will offer agents more access to real-time customer data and tools to increase policyholder retention. Insurers will use sales and engagement activities data to improve distribution and agent sales performance, resulting in higher revenues across the board.
2. Ecosystem partnerships offer path to innovative value propositions: Artificial Intelligence and a seamless experience are key to future success in the insurance industry. Life insurers are teaming up with tech-driven counterparts to offer AI-enabled financial tools that help customers plan and prepare for the future. Ecosystem partnerships help insurers build long-term, trusting client relationships that both educate on and promote the relevancy of life insurance in a value-driven way.
3. Embedded insurance offers right-time, right-channel accessibility: Insurers are reaching new, younger customers at the right time and place by prioritizing collaborations to cross-sell life insurance through easy-to-implement software integrations at the point of sale. Embedded insurance helps carriers bridge coverage gaps and generates new revenue streams while lowering distribution costs, promoting product innovation and reducing underwriting risks.
4. Wellness-as-a-service initiatives deepen engagement: An overwhelming 68% of insurance customers report interest in new wellness offerings. Insurers are using AI-enabled wellness tools to help customers track their fitness goals and create personalized wellness plans. Life insurers that embrace wellness-as-a-service will develop a deeper understanding of their clients’ needs, improve retention and reduce claims.
5. Insurers move to the cloud to drive operational excellence: Almost everything happens in the cloud these days. In 2023, insurers are ready to migrate from legacy platforms to the cloud, where they’ll benefit from new audiences, better security, improved customer responsiveness and reduced maintenance costs. Moving to the cloud helps insurers automate operations, accelerates digital transformation and provides customers with a more seamless experience.
6. Life insurers are targeting Millennials:Millennials represent a major opportunity for the life insurance industry. Almost half of U.S. Millennials — or 34 million adults — say they need more life insurance. Carriers are developing easy to use digital platforms catered to this younger customer base. To meet the growing needs of millennials, life insurers will have to simplify the application process, market more relevant products, remove barriers like the at-home medical exam and go digital.
7. Real-time use of alternate data helps automate, streamline underwriting: The life insurers to watch in 2023 are embracing alternate data sources that allow them to make swift, accurate decisions so they can issue policies instantaneously. More carrier collaborations with external data sources and greater investment in AI and real-time data tracking will maximize underwriting efficiency and accuracy.
8. Insurers make sustainability a strategic corporate priority: Life insurance carriers are demonstrating a commitment to sustainability through a broad range of environmental, social and governance (ESG) initiatives. This has become an essential business practice because more policyholders base purchasing decisions on business values than ever before. Your corporate sustainability strategy should include a commitment to ESG. It will help attract socially conscious talent, create a scalable operation and uphold profits.
9. Microservices will improve the customer journey: Many life insurers seek comprehensive digital transformation. Microservices give insurers flexibility to integrate new technology quickly and cost-effectively. In 2023, insurers will leave their monolithic architecture behind in favor of microservices architecture so they can keep pace with the growing customer base of tech-savvy do-it-yourselfers.
10. Core system modernization will power innovation: It can be daunting for insurers to tackle modernizing their legacy systems but doing so is key to future success. To make the process more palatable, organizations are integrating new tech on top of their legacy systems via APIs so they can stay ahead with new services and experiences. Core system modernization is key to new digital capabilities and business opportunities. Taking a hybrid approach or adopting low-code or no-code platforms are great options for carriers that can’t make the switch all at once.
It’s no secret that digital experiences have woven their way into everyday life. Life insurers will keep this top of mind this year as they continue to modernize core systems, prioritize product innovation and invest in next-generation technologies to meet the demands of today’s consumers.