Takeaways:
- Beneficiary management and sub-account allocations complicate digitization
- Life insurance clients need more professional advice
- Personal data security makes account access complex
Life insurance coverage is harder to digitize than P&C because policy terms, redemption issues and security concerns are more complex, experts said in a recent webcast hosted by Sureify, a life insurance and annuities software provider.
"Life insurance products are often quite complicated," said Jake Littman, senior analyst at Corporate Insight, a consulting firm. "When you're making investment allocation decisions, policy conversion, coverage adjustment, a withdrawal or a loan request -- these come with a lot of implications for the contract, for the product that customers should have."
Beneficiary management and sub-account allocations are particularly complicated, according to Littman. Life insurers have challenges with informing beneficiaries that they are on policies, so they may even be unaware they are named on a policy. Beneficiaries may also not have access to the online account for a policy.
Retirement funds have mastered the application of technology to manage sub-account allocations, so the technology exists and could be used in life insurance and annuities, Littman added. Some life insurers, such as Lincoln Financial and MetLife, have made progress on modernizing sub-account management, he said.
On the back end of life insurance, when a policyholder dies and beneficiaries are collecting and making withdrawals, however, online processes aren't being supported, according to Littman, because beneficiaries need professional guidance to make consequential decisions at a difficult time.
Personally identifiable information that life insurers hold requires careful management of access, according to Brian Weber, AVP, marketing communications at Kuvare, a life insurer. Life insurers shouldn't just apply AI to access this data, Weber added.
Some life insurers have held off adding multi-factor authentication security measures because their older clients are not digitally savvy, making MFA an obstacle, Littman said. Still, these insurers may require MFA for making changes to policies, he added.
Whether it's the distributor or carrier's job to upgrade life insurance technology, policyholders must also be involved, stated Weber. Beneficiary selection improvement requires policyholder input, while sub-account allocations are more of an internal function for the insurer, Weber explained.
Assigning technology responsibilities to these different parties centers on how easy or difficult the particular tasks are, Littman added. "Having the more simple processes in the hands of the policy holder is totally fine, like making contact information updates, those types of low stakes things," he said. "Even beneficiary management. Even though there's some work guidance needed, having the policyholder owning that process a lot of the time, it's probably okay. It's simple enough."
When digitizing asset allocation, however, insurers should think about making it a more collaborative process between policyholders and their advisors, Litman said.
