Foresters applies predictive analytics, new engagement platform

August 10, 2022 6:30 AM

Foresters Financial headquarters, North York, Ontario, Canada

Digital Insurance spoke with Matt Berman, president of Foresters Financial U.S., a life insurance and financial services company with a 150-year history operating under a fraternal structure organized around the goal of maintaining wellness. Foresters has about 1 million members in North America. Berman joined Foresters five years ago after serving in executive roles at AXA. He's found that the fraternal organization structure lends itself to technology innovations that would not otherwise be possible in other forms of companies. In September 2021, Foresters partnered with Dacadoo, a Swiss technology company focused on health and wellbeing applications that line up with Foresters' goals, to build the Foresters Go platform for members.

In previous roles with other organizations, what aspects of technology did they do well and what aspects were more difficult?

Matt Berman, president, Foresters Financial Life Insurance U.S.

The property and casualty business adopted the discipline of predictive [data] analytics very early, much sooner than the life and savings business did. Today it's a staple in the industry. Carriers like Foresters and big brands in the U.S. have all in some way, shape or form used this concept for underwriting, using data as a proxy to predict mortality.

The underwriting is very different. The analysis, the risk and the exposures are very different. There are good reasons for it, but the life insurance side could certainly take some lessons from the playbook that the P&C carriers have adopted. In auto insurance or homeowner's insurance, some of the apps that consumers have available to them are turnkey. They're very transactional and our business is adopting these more and more as we embark on the future.

Did Foresters have a lot of catch up to do to apply predictive analytics to life insurance?

We have been working with fluidless underwriting (using less invasive sampling tests for life policies) for quite some time.

Much of our business we classify as non-medically underwritten so we don't need blood or fluid in the underwriting process, but we price for that. That's priced a bit differently than underwriting that analyzes an individual's mortality based upon blood, urine and lab work that you would normally get in that process.

Predictive analytics takes fully underwritten business and uses data in a way that can jet issue the policy within days using an accelerated algorithmic underwriting platform. When a carrier takes lab work, typically the underwriting cycle is somewhere between 20 and 30 days. You can make a decision based on the data you analyze from that individual. So you are accelerating the speed to issuance and you are giving that individual the benefit of fully underwritten pricing with a timing advantage.

So you're capturing some operational efficiencies and you're again taking risk where data is suggesting that, Hey, you can make a decision on the mortality outcome relatively quickly. It's allowed individuals that are looking for speed and efficiency to get a policy in very little time. As an organization within our sector, we've been in some respects ahead of the innovation curve.

When it comes to technology and operations, how does the fraternal structure of the firm differ from the mutual structure that many insurers have?

Fraternals and mutuals typically have similar distribution structures. Fraternals, unlike mutuals, are aligned to a singular mission. Our mission is to serve the well-being of middle market families and their communities. We have a limitless market, so an individual can become a member by virtue of purchasing one of our products.

This concept of well-being, which was originally founded on the idea of financial well-being, today can be applied holistically. We can think of well-being across so many different dimensions. That has allowed us to embrace technology in so many ways. I mentioned the ability to embrace [predictive] data analytics, but we've embraced technology and digital platforms through our member benefits. In a fraternal life insurance company, a percentage of earnings goes back to policyholders or members.

We have designed a membership benefit platform and portfolio that has become increasingly digital to fulfill our objective around well-being. Our latest innovation in the member benefit platform was the partnership with Dacadoo. We customized an offering based on their engagement platform to direct our efforts at well-being. It's accelerated our innovation to find how our products, our services and our membership benefit platform intersect with each other.

The engagement platform allows our members to manage their health proactively. The platform is unique in the fact that individuals can engage with each other and embrace challenges. They get a health score. We customize this platform so people can engage in community service and volunteerism because we know that those activities are healthy activities. We embedded a reward system in that platform. So we reward our members for healthy behaviors.

We refined how all our products and services intersect with these member benefits that we've built in the portfolio and in Foresters Go. It allows us to engage our members, our policyholders in unique ways. In the traditional model of the life insurance business, you typically engage with your customer twice. You see that customer through an agent when they complete their application and then years and years down the road, you're paying some type of claim. That model is fraught with difficulty.

Our members are engaging in a community. They're reaping the benefits outside of simply life insurance. We're enabling a way to reach out and promote healthy behaviors, longevity and much more fulfilled lives.

Has supporting member health in the way Foresters and Dacadoo are doing through this partnership lowered risks?

We underwrite risk every day. The Dacadoo partnership allows us to better manage risk. The risk is there. All of us are living our lives day to day. And we know what those risks are. We're living in unique times. Hopefully on the better side of a pandemic. This is a more challenging environment from every perspective. Our environment and member community allows us to manage that more effectively.

We know you get better health outcomes from engaging in better nutrition and mental well-being and exercise, but we also know that volunteerism leads to healthier outcomes both physically and mentally. We believe that we're managing risk pretty well, not only from the underwriting [point of view] and how we use data, but how we supplement that with the member benefit platform.

How do you balance the human element or the agent element with the digital experience?

The digital element is exactly that. It's an element. It's a component of how we engage. What we have always done as an organization, as a community, is to engage with our membership. And you see that through the member branch governance, where member leaders engage with local communities. They sponsor activities, family fun events and community engagement.

In many ways the middle market community, everyday American families, has been underserved by the traditional life insurance community. What we built many years ago is a platform where agents can serve everyday Americans, do it in a digitally enabled way and build scale in their own practice, so they can make a living. When I joined Foresters, I saw infrastructure, an administration platform that can capture scale and an authentic mission to do something that's really driven by purpose.