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Perspective

Trends to Watch in the Life & Health Insurance Industry

December 01, 2014| By Steve Woods | L/H General Industry | English

Region: U.S.

This past year Gen Re held two events that brought together insurance leaders for education and discussion regarding Life and Health insurance market topics the Advisory Council and the Gen Re Summit. During these forums, several themes emerged regarding trends and issues relevant to this industry. Below are some of the highlights.

Changing Consumer Needs 
Insurance sales across the board have been relatively flat for 20 years. During this time, the industry has survived two financial crises, the 9/11 terrorist attacks and a prolonged low interest rate environment. Sadly, fewer heads of household possess insurance today, a trend that doesn’t appear to be improving.
 
Part of what we’re seeing is a growing concern with the relevancy of the current suite of products in the market. Carriers seem to agree that to attract the next generation of buyers - Millennials in particular insurance products need to be designed to address immediate “life phase” needs rather than an entire lifetime. In addition products need to be less complex with a buying process that is simple and not driven exclusively by current distribution.
 
Looking more long term, carriers discussed the possibility of a new, non-traditional entrant such as a Google or Amazon that would leverage their “big data” and create a new paradigm in the insurance market for ease of doing business, while at the same time solving for how to capitalize on the current underserved markets.
 
Disruptors to the Buying Experience 
Given the many paths to purchase available to consumers today, it’s difficult for insurers to ignore the need to create more direct ways to access insurance. With the ability to customize the buying experience everywhere you turn, insurers must acknowledge this with options to personalize products and services to meet specific individual needs.
 
A change in the role of the intermediary, given consumers’ preference to buy direct, is a real possibility. This may mean looking at what the traditional agent does and shifting his or her focus from sales to more of an advisory role instead. Read more about this topic in Drew King's recent blog post.  
 
Changes to Risk Assessment 
Underwriting is experiencing several changes today, with the introduction of new tools, technologies and techniques for assessing applicants. Most carriers are implementing and/or experimenting with some of these resources, but it is too early to definitively declare any of them a success, with early feedback being mixed. Prescription databases are being received very favorably, with carriers expanding their use. 
 
At the same time, APS summary vendors are having some challenges with quality, and lab scoring is being discussed by most carriers, but it is still challenging to explain negative results to a proposed insured. Carriers are also talking a lot about automated underwriting systems and who the preferred vendors are but this technology has certainly not become mainstream.
 
Predictive Modeling and Decision Analytics 
Decision analytics continues to be a hot topic within the insurance industry. The medical testing labs and other third-party vendors are offering a variety of models that claim to assess relative mortality at the time of underwriting. 
 
Early results for using decision analytics have been mixed. With limited real world results to date, carriers are still debating the appropriate use of decision analytics for solving business problems or improving results. Carriers are looking to decision analytics as a way to simplify the customer experience, shorten the cycle time and lower expenses - all paramount to the success of a direct-to-consumer model. According to a decision analytics expert who spoke at one of our events, the key success factors for using big data and analytics are starting with a decision and then looking at the data available to identify the solution, knowing your model and making sure they are scalable, and seeking outcomes that drive action. 

 

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