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April 26, 2018

Digital Innovation in Life Insurance

Summary:

The focus can move from life protection to life enablement, support that helps people lead a long and healthy life.

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There is a view that the life insurance business needs to change or to innovate to remain relevant and reach new customers; if incumbent players don’t make an environment that appeals to new customers, someone else will step in and do it in their place.

It’s possible that big data warehouses – or mobile and digital operators – will mass market life and health insurance protection to their customers, based on the data they have about them. While we can’t rule it out, this outcome is unlikely for multiple reasons.

For a start, life insurance is not a simple transaction, and access to it is selected. It requires capital, distribution channels, underwriting and claims expertise, product knowledge and actuarial know-how. While these challenges may deter new entrants, they are not insurmountable obstacles.

See also: Selling Life Insurance to Digital Consumers  

Life and health insurance are closely linked to healthcare provisions; our products align with fundamental biometric events – including ill health, disability, disease and death. It’s no surprise we manitain a mainly medical approach to risk selection.

Technology offers new ways to manage risk that rely less on face-to-face disclosure and traditional clinical assessments. This is why we see so much interest in understanding how innovation might work.

Healthcare is adopting artificial intelligence, virtual reality, machine learning, sensors and other innovative technologies – including genomics – to deliver a more patient-centric approach. Insurance can similarly transform by adopting more customer-centric solutions.

In healthcare, digital channels and mobile health solutions are welcomed when they blend with traditional methods and work simply. For insurers, this could mean placing innovation into spaces where it helps customers and where it makes sense to augment existing ways.

See also: 2 Paths to a New Take on Digital  

This means the focus is on how we engage with people and offer them services linked to ensuring their health. The focus can move from life protection to life enablement, support that helps people lead a long and healthy life.

The industry needs the energy, innovative vision and technical skills of entrepreneurs. In turn, entrepreneurs need the network, customer base and data – as well as the insurance expertise – brought by insurers and reinsurers. Working together, we can create an environment where people will share their personal data, knowing we can be trusted to use it appropriately, to keep it safe and to have it be a force for good. To do this means examining the emerging digital options and working out how to optimize the benefits to our customers.

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About the Author

Ross Campbell is chief underwriter, research and development, based in Gen Re’s London office.

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