Powering new business models for life insurers through digital transformation

Powering new business models for life insurers through digital transformation

A life insurance buying spree fueled by the COVID-19 pandemic has ended, with sales activity falling back nearly to pre-pandemic levels, according to new data from two industry research firms. Applications for life insurance policies fell 6.5% year to date through mid-August, compared with the same period in 2021.

In light of these events, life insurers are taking a fresh look at new avenues for powering growth and exploring new business models — what if life insurers, which typically rely on intermediaries and agents for their distribution, established a direct relationship with the end consumer to acquire them? In an industry that doesn’t provide much opportunity for interactions with customers, what if they found a route to increased customer engagement that identified new ways of helping the customer and driving brand loyalty? And finally, how can they keep up with evolving expectations of millennials around when and where to engage, a cohort where only 34% own a life insurance policy?

While facing these challenges and opportunities, life insurers are embracing digital transformation initiatives as a critical enabler to power this next wave of growth. McKinsey has estimated that a 50% uplift in digitally enabled sales through investments in best–in-class digital marketing capabilities.

The Digital Strategy Group at Adobe, a team that partners with customers on their customer experience strategy to achieve their business goals, has identified three key themes to assess digital maturity and execution readiness.

1. Enhancing customer engagement and interaction data — shift from traditional products to holistic solutions and value-added services

Traditionally, insurers interacted with customers only sporadically, at the policy purchasing, policy renewal, and claim filing stages. Advisors have relatively few touchpoints with their clients — perhaps only once a year during an annual policy review. Expanding into wellness and goal-based planning or financial wellness as value-added services allows carriers to enhance customer interaction points, gather associated data, and build a data-based understanding of their needs.

For example, John Hancock Vitality, a life insurance program taps into a network of partners to reward healthy habits and offer wellness tools and resources. This lets them engage with customers on a regular basis, which can be especially key in times of crisis, like the pandemic, because it allows for a deeper understanding of the challenges customers face and how the company can alleviate them. The information collected makes it easier to direct Vitality customers toward traditional John Hancock products, such as retirement plans.

2. D2C acquisition at scale — achieve high growth and build simple products

The second challenge the industry is solving for is the issue of intermediaries between the carrier issuing the policy and the policyholder or customer. Carriers such as MetLife and Prudential are embarking on building this direct relationship with the customer through paid media or affinity partners to supplement their existing distribution network.

The starting point here is high growth, high margin, and simple products that can be sold end-to-end digitally. MetLife is focusing on pet insurance (acquired), which is expected to grow at double-digit rates CAGR compared to just 3–4% for traditional insurance products. Over time, by bringing together their customer profiles from this D2C distribution channel with profiles from traditional lines of business, MetLife can enhance their understanding of each customer’s product preferences, budget, spending habits, and more. Ultimately, this can translate into higher precision and tailored outreach around each individual’s needs.

3. Activating personalization — deliver omnichannel advice during moments that matter

Finally, when carriers develop holistic offerings and a direct relationship with the customer, they can deliver greater personalization and identify key moments that matter for their policyholders across multiple channels. Identifying and acting on these key moments requires an ability to capture “intent” data and stitch pseudonymous identities for event-based triggers. Being able to offer products to prospects or customers at key life moments has been shown to have the highest correlation with increasing sales and driving cross-sell, upsell, and retention by reinforcing the product value proposition aligned to the customer intent and need.

For example, Prudential is looking to deliver an omnichannel advisor experience for their team of 3,000 advisors who switch seamlessly among physical, digital, and hybrid channels — engaging with customers when and where they choose to be engaged. The digital experience is delivered as part of their assurance IQ platform (acquisition).

These are the key questions to think about:

Case study — transforming the customer experience at a global carrier with digital capabilities

The journey is different for each carrier. But focusing on building out a common set of foundational digital marketing capabilities will be crucial to any life insurer that wants to consider these extensions to their value propositions.

A large global carrier undertook a similar transformation and decided to pilot an initial set of MVP capabilities to accelerate growth for its retail advisory business by offering retirement solutions over a digital hybrid platform. The goal is to engage with customers on ideal retirement lifestyle with advice on how to manage money, benefits, and protection most efficiently. This life-stage focused solution requires digital capabilities around being able to identify and segment customer personas around their demographics and lifestyle needs, and then being able to personalize their initial experience on the landing page, based on their segmentation.

A/B testing for different audience segments led to higher performance of their digital sales channels. Further, personalizing offerings and home page experience based on life stage led to higher quality leads being qualified for advisor outreach. With a customer data platform (CDP), the carrier can identify their prospects needs based on first- and third-party behavioral signals and orchestrate a personalized journey with advisor touchpoints for them.

For example, if a customer navigates the site and is interested in inflation (first-party data) or their income has changed (third-party data) a message is triggered to the advisor around how messaging needs to be “inflation-friendly” and how to protect their retirement in a down year. AI-powered automation of leads allowed them to activate seven customer nurture flows that nudge customers to interact with advisors for retirement planning.

To learn more about how Adobe is helping life insurers and other organizations in the financial services and insurance industry, check out our industry solutions page.

Suhas brings extensive experience driving digital transformation, both as an external advisor to industry executives and as an operator in corporate environments — particularly in insurance. Most recently, he was at MetLife, leading global digital strategy and transformation teams, under the mandate of the chief digital officer. Prior to that, Suhas spent seven years at EY, advising global financial services clients.

Can Etili also contributed to this article.