Life insurers can't afford to hold back on innovation

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Life insurers have not been known to provide the same type of customer services that property & casualty insurers do to attract and retain loyal policyholders. For example, the “once and done” approach to selling a whole life policy employed in the past carried with it a stigma of avoidance—the policyholder and/or beneficiary did not necessarily want to encounter the insurance agent or the insurer once they obtained their policy, because it typically meant having to borrow against its cash value or file a claim.

Today, most life insurers offer a host of other financial services products to their customers, yet continue to face challenges related to that stigma. And common sense dictates that the most obvious and effective way to obviate that stigma is to introduce additional reasons to engage with customers more frequently and across multiple channels.

In a recent Digital Insurance web seminar, Samantha Chow, senior analyst with Aite Group, talked about the mobile channel, revealing results from her firm’s latest research on the life insurance industry’s adoption of mobile apps relative to improving the customer experience.

From Chow’s perspective, the mobile channel can be used to improve customer communications, engagement, payment and lapse, mobile policy management and even education (explaining benefits and providing additional products and services).

“These are all valid touch points to build upon the customer relationship,” she said.

Although the insurers in the study confirmed having a customer-centric focus and a desire to engage with policyholders, the stats around the use of mobile apps as a channel to accomplish that goal tell a different story. Of the 56 consumers interviewed, only 20 percent said their life carriers offered a mobile app. Not surprising, of the 41 top carriers interviewed for the research, only 17 percent acknowledged offering a policyholder mobile app.

Results from the study show that those carriers that do offer a mobile app require online activation first, which entails customer input -- date of birth and policy number at a minimum. Few offer authentication beyond user name and password, including digital signatures. And of those with authentication systems using digital signature and biometrics, fingerprint was more commonly offered. Only one carrier in the study said they offered voice and facial recognition as part of their security-related two-factor authentication. It’s worth noting that in the wake of the Equifax mess, online security has taken on new importance, and proponents of biometrics believe that the beauty of this technology is that it offers strong security and therefore reinforces trust, which for any insurer, is gold. Perhaps equally important, biometrics also reduces the customer’s effort level in engaging with the insurer.

The revelations that the life insurers in Aite Group’s study are side-stepping biometrics, however, may help explain whether policyholders feel that the mobile apps being offered today provide value; of those policyholders who do have a life insurance mobile app, about half said it provided no value, noting it to be only “somewhat user friendly.” Only one carrier, USAA, which coincidentally offers biometrics as part of its user authentication process, was noted as providing “a lot of value.”

What can we learn from this? We know that life insurers have trailed their P&C counterparts in resolving legacy core systems issues, but the technology required for a basic yet effective mobile channel is API-based, front-office through and through. And while careful attention is required to balance integration with back office along with user preferences, usability and required security, it’s not a question whether life insurers have the technology, perhaps it’s that they don’t choose to employ it.

The reasons they don’t choose to employ it is either because they don’t think it’s worth it, their culture remains one of the “once-and-done” sale of a life product only, or they don’t understand what the customer wants -- convenience, personalization, speed and security -- and therefore is missing a huge opportunity to further engage in a positive way with them. If you are betting on the third item there, so am I.

If the hallmark of successful marketing techniques is to make it easier for the customer (and this includes the agent) to do business, maybe it means that those life insurers that want to grow their business by offering additional products and services need to go the “mobile app extra mile” in order to engage their customers.

Some carriers, like USAA, TIAA, Munich Re, and in Asia, Kyobo Lifeplanet, are offering easy-to-use, intuitive mobile apps that use biometrics to streamline the policyholder’s experience. Other life insurers’ decision whether to go that extra mile and step up their mobile game may be made for them.

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Mobile technology Identity verification Biometrics