Equisoft recently held it’s 2019 Client Advisory Board—where product experts, top analysts and life insurance company leaders who are at the forefront of digital tool development and implementation met to explore the future of digital agent tools and the industry as a whole.
Equisoft’s Bruno Leduc, Senior Director, Digital Insurance Solutions described the CAB as, “A great chance to evaluate the evolving industry landscape and to show clients what we’re proposing to do in the coming years with our digital agent tools. It’s a unique opportunity for clients to have input into what’s coming and engage with top industry leaders on the most important issues that will define the way forward.”
The two-day symposium generated healthy debate and, although all in attendance were extremely positive about the future, those exchanges exposed several significant challenges for the industry.
The biggest challenges the life insurance industry faces—top trends from a top analyst
At the highest level, it’s clear that the life insurance industry faces a major gap between opportunity and reality.
As Tom Scales, Head of Life & Health Insurance at Celent, pointed out, there’s a huge gap between current industry performance and where it could be. He explained that, “Celent conducted research two years ago that shows the difference between the amount of life insurance coverage in force and the amount that should be in force in North America is 19 trillion dollars. Think how many million-dollar face policies that is. And, 62% of the people who weren’t covered could have easily afforded it. They just weren’t choosing to buy it. Significantly, the biggest age range that was affected was between 35-55 years old.”
That research points to an untapped need, in a tech-savvy, affluent market who are used to digital interactions for sales and service that are accelerated and highly personalized. It points to a need for different sales and distribution and marketing models for life insurance that speak to those people in a way that makes sense for them—meaning online and across multiple devices.
To set the stage for the more detailed discussions about the future of digital tools, Tom presented his thoughts on current industry-wide trends. He highlighted further, more specific, challenges the industry faces:
The industry remains under pressure to reinvent itself
- Because of difficult economic conditions, flat markets, interest rate challenges, regulation, and faster pace of technology change.
Use cases and concepts for the exploitation of new technology are better understood
- The fastest path to value is less clear.
The majority of insurance today is still sold through traditional means
- There is still more value to be gained from process optimization and efficiency.
The technology landscape is becoming more diverse
- This requires greater levels of monitoring, careful planning and selection to manage risk.
In particular, when it comes to digital agent tools like illustration and eApps, Tom projected that:
- Life insurance companies will make their largest investments in improving the entire agent experience
- eApp usage will improve, but only modestly
- More capabilities will be provided to the consumer, including technology-advisor hybrid solutions
- Carriers will provide Direct to Consumer (D2C) for agent’s portals
The biggest challenge, when it comes to sales and service in life insurance is that the service experience is not meeting expectations—not even close! It doesn’t measure up to the experiences consumers have on a daily basis when they shop at Amazon, browse movies on Netflix or even order dinner. But, as Tom said, “When it comes to the Life insurance experience—it really shouldn’t be this hard.” He expects that, “In the coming year, more than 20% of transactions will be processed without a human.” And that percentage will rise as the years roll on.
Given those industry trends, what does the evolution of digital agent tools look like over the next few years?
The Equisoft/illustrate and Equisoft/apply product roadmap
For Equisoft the future is driven by the integration of digital tools to enable better performance for all stakeholders in the industry—carriers, distributors, agents and consumers. The move from a monolithic architecture for illustration and eApp to an approach based on micro-services is a critical driver of the roadmap for product development. These micro-services will allow the coming versions of Equisoft/illustrate and Equisoft/apply to:
- Enable a no-code carrier self-maintenance – for improved support and maintenance that can be shared across carriers
- Improve SAAS & cloud support to facilitate connexion to the Equisoft family of products
- Facilitate connexion to internal carrier tools to ensure product developments can be more easily shared across Equisoft customers
Version 3 of those solutions will improve the user interface across all devices. As well, client solutions that mirror agent tools will be developed. Equisoft/illustrate will have a client corollary which will enable consumers to adjust their quote, compare options and request access to agent. Equisoft/apply will have a client version which enables clients to securely complete ad-hoc questionnaires and prefill the eApp. The agent servicing portal will have a client corollary providing a self-service option for consumers.
An insurance ecosystem is all about integration and collaboration
As Bruno said, “We’re not just talking about adding small features to our existing products, but we’re excited about being able to integrate them together and integrate with clients’ internal products. We’re creating tools that can make a real difference for the carriers.”
The go-forward thinking for Equisoft/illustrate and Equisoft/apply is to evolve the overall technology stack to bridge the gap between carriers, distribution and agents. Traditionally those three stakeholders had their own unique tools that sat on a desktop and didn’t talk to each other. But, now, as Bruno noted,
“Because Equisoft has an end-to-end offering, from modern PAS back office to agency systems, CRM and digital agent tools, we are in the unique position of being able to connect all of those solutions to each other—for the benefit of all. That’s very much the roadmap we foresee for digital agent tools over the next five years.”
The vision for the future of digital agent tools is for data to be able to flow freely between stakeholders – when it’s needed, where it’s needed. Processes are automated. Manual entry is greatly reduced. Efficiencies are gained. Straight-through processing enables real-time, world-class digital agent and customer experiences. And because of the micro-service/API-driven methodology product changes can be made quickly and easily for all clients.
As Tom Scales said, “What it comes down to is companies are looking for a more all-inclusive solution. So, they want components that are pre-integrated. That’s where a relationship with a single vendor with an end-to-end offering has a lot of appeal to them—because you can start with the back end on an OIPA platform and move to CRM, illustration and eApp. Any time organizations can avoid spending money on things like integration, testing and dealing with multiple vendors that’s a positive.”
The Great Debate—direct-to-consumer and the distribution channel
The CAB generated debate around the idea of carriers offering direct-to-consumer solutions for their products. Some worried about a backlash from their distribution partners, some had already implemented a solution in the captive sales force channel—and some had other issues.
Equisoft presented a direct-to-consumer concept for Life Insurance that was made possible by a lot of the work already done or being done in the Equisoft/illustrate, Equisoft /apply and portal tools—a great example of building out micro-service modules that are integrated vs the old monolith approach.
Tom Scales summed up the differing points of view carriers have about D2C: “D2C digital experiences are going to be provided for the consumer. The question is by who and how. There’s a divergence of vision between carriers who have their own captive sales force and those who work with independents.”
Those with captive forces have more control over the distribution chain—they have higher interest in direct-to-consumer offerings because there is less friction with the sales force. On the other hand, those who are highly dependent on distribution are selling to agents, so, they worry about a backlash from advisors concerned about losing clients or potential clients. These insurers may instead consider white-labeling a direct-to-consumer offering for their distribution partners and look for ways to involve the agent in a support role, compensating them accordingly.
Carriers also need to think about and eventually implement, not just the D2C tools, but processes and procedures that reduce fraud. As Scott Schuetz, Executive Vice President/COO of GCU said,
“Everyone on the internet is 6’3” and 180lbs.”
He’s been through D2C implementations before and has seen first-hand the need for verification of customer information in order to ensure underwriting accuracy and prevent fraud. “People have selective memory,” he said. “They choose the answers they imagine will benefit them the most, thinking we won’t be able to check. If companies aren’t on top of that D2C can have serious consequences for the bottom-line”
An integrated vision of a digital future for life insurance
The future of digital agent tools lies in the integration between vendor solutions, integration with internal carrier tools and a freer flow of data and communication between all stakeholders. There’s an appetite for alignment on issues, a recognition that everyone doing their own thing in their own way is perhaps not the most efficient solution. What was clear in the CAB discussions is that the potential for the industry is huge and carriers have a strong desire to evolve and embrace the new technologies, closing the gaps Tom Scales identified at the beginning of the symposium.
Vendors and carriers are not trying to perpetuate old models and replicate past success but are proposing changes and looking to see who can take an idea and be the spark for innovation in the industry.
Tom Scales said, “The industry is ready for the move to a fully digital experience. We have reached an inflection point where people are starting to challenge why it is so hard to do business with life insurance companies. It just shouldn’t be. We have so many areas to improve: getting to a higher percentage of eApps, better, faster underwriting, improved customer service, and better back-end policy administration systems to support those things.”
As Scott Schuetz of GCU said, “Insurers and, in our case, fraternals, have a long history and proud tradition of service to members, agents and the community. GCU wants to move into the future as technology, consumer preferences and agent expectations change. We want to continue to be viable and grow, which means making some major changes in order to stay relevant. Companies that don’t do this are going to get purchased and become a closed block.
“There’s a way to move into the future and preserve our values. In our case it’s our culture to be adaptable. We’re been around since 1892. We wouldn’t be here today if we didn’t continually change.”
That’s a great thought for the whole industry.
Equisoft is excited to be a leader in the open dialogue about what the future of life insurance will look like and how we get there. We’re already looking forward to continuing this vital conversation at our next CAB.
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Senior Director, Digital Insurance Solutions
+1 514 989-3141 ext. 189