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Why personalization is the next imperative for life insurance innovators

Life insurance has traditionally been an arena where customers were unlikely to move around much, but this has changed. Competition has stiffened, and people have access to new digitally-driven policies. As a result, simply making experiences convenient for customers is no longer enough. To win in this new era, insurance companies need to differentiate by delivering hyper-personalized experiences and products.

As recently as 10 years ago, the heart of customer experience in the life insurance industry were meetings between customers and agents. These appointments were essential to establishing a loyal relationship and a positive experience. It worked. Customers came into the agent’s office or called them on the phone. Agents could easily educate or persuade customers on the right policy with coffee and conversation.  Interactions were personal. Agents met their customers and knew when they were getting married, purchasing a house, planning for a baby or grandchild, and those sorts of life events.

Back then, few could have imagined how the process or experience of buying life insurance would transform.

Today, there has been a significant shift from the agent-led model to a digitally enabled model where customers have the power to educate themselves and make insurance decisions without an agent to guide them or waiting weeks to actually get approved. It’s fast and easy. But how personalized is it? 

The next phase of innovation in the life insurance industry will focus on creating and offering truly personalized life insurance products and solutions — solutions designed to address the customer’s specific needs at specific moments in their lives. 

This type of customer experience is far beyond merely updating legacy systems and delivering smartphone apps. 

What does customer-centric life insurance look like?

Compared to insurtech startups, established insurance companies are in an enviable position: They have brand recognition — and the trust that comes with it — direct access to customers, and massive volumes of customer data. 

For the life insurer, this combination of trust, knowledge, and access makes it possible to gain a far clearer picture of an individual’s needs and address them on a timely, frequent, and individual basis. For customers, the difference is contextually relevant information at the right time via the channel of their choice, whether it’s a smartphone app, an online experience, or a discussion with an agent or representative who’s informed by a comprehensive view of the customer, their journey, and their needs. 

In each case, the customer is presented with relevant options and confident in their ability to decide and act on them quickly and easily. 

Done correctly, these more frequent data-driven interactions can build loyalty between insurers and insureds and deliver the level of protection they individually require. 

Use the currency of customer data to differentiate

To become the data-driven organizations they need to be, life insurance companies need to do big-picture, board-level thinking about how to personalize policies and experiences. Data from internal sources and external partners can be merged to form an information ecosystem from which insights can be gleaned, and experiences can be created. 

While it’s no secret that decades-old legacy solutions were designed for yesterday’s product-centric approach, even core systems deployed recently — referred to as “modern legacy systems”— are being replaced. Insurers are recognizing those systems were never designed to support real-time integrations with backend systems, partners, external data providers, and emerging insurance information sources, such as wearables and electronic health records.

The ability to ingest, analyze, and act on multiple data streams necessitates adopting a new category of solutions: coretech. Modern coretech systems feature a customer-centric design and an architecture that uses the same technologies as insurtechs. Three requirements are fundamental to such a platform: a rich catalog of APIs, event streaming, and low-code configuration tools.

APIs: Building blocks for customer-centricity 

An API is a software gateway that serves as a communications intermediary between technology systems (“applications”), such as your core policy admin system and a policyholder’s IoT-connected fitness tracker. In other words, APIs deliver the protocol for system-to-system interactions. Further, as every API handles a specific communications task, complex interactions between technology applications typically necessitate multiple APIs or a means of adapting APIs to the target use case, otherwise known as persona-based APIs. 

This makes investing in an open (non-proprietary), API-rich technology platform your first step. Whether you use it to replace your existing core systems —  or deploy it as an integration layer to give you the real-time flexibility, agility, and upgradability you need —  an API-enabled platform is crucial to delivering personalized experiences that are second to none. 

Event streaming: Your superpower for data-rich environments 

Knowing your customers requires real-time access to data in order to interpret their actions and intent quickly and respond accurately. As responses can range from suggesting a new product based on current circumstances to providing tips for maximizing existing products, event streaming plays a pivotal role in personalization and the customer experience. 

Leaving a job, launching a business, buying a house, moving countries, opening a joint bank account — these are all pivotal points in people’s lives; points at which data is created within other systems. With a platform capable of event streaming, all this information can be ingested, analyzed, and acted upon cost effectively in real time. No more waiting for periodic dashboard updates or nightly batch jobs to apply changes. “Monthiversary” processing becomes instantaneous, giving customers and insurers a real-time record. 

Rapid configuration: Checking for resonance and iterating in response 

No matter how carefully you design products and experiences, they only prove their true worth in the wild. What’s more, there’s the opportunity cost of the time spent getting products in-market. This makes the benefit of a platform with low-code configuration capabilities self-evident. 

Tools that can help you quickly configure and refine products and user interfaces will be vital to insurers’ success. The sooner you can get in front of a customer, the sooner you can either realize the benefit of your investment or pivot based on explicit or implicit customer responses.

As you’ve likely already discovered, modernizing customer journeys goes beyond mobility. To compete in the coming life insurance market, insurers need to learn how to use digital to initiate and expand access to personalized products and customer experiences. Using this approach, the loyal life insurance policyholder of today could easily become the loyal user of multiple products in the future. 

To learn more about how to reimagine your business around the customer, download our ebook: “How to Become a High-Velocity Insurer and Win in the New Digital Economy.” 

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