There’s a record amount of interest in life insurance. Google Search traffic for “life insurance” increased by 50% between March and May 2020, likely brought on by the unprecedented COVID-19 pandemic. 43.1 million new life insurance policies were sold in 2020, and there has been a record amount of disbursement to beneficiaries.
Even with all this success, on average 4.2% of all life insurance policies lapse annually, while 6.4% of all term life policies lapse. Further, more than 40% of all life insurance policies have no active agent servicing the policyholder.
Why is this happening? Well, the answer is it all comes down to communication. Life insurers are forgetting about the customers and coming up short delivering on customer experience.
According to a recent study commissioned by Equisoft and conducted by Forrester, which compiled responses from over 200 North American life insurance executives, many of the barriers people face that prevent them from purchasing life insurance include not having someone to talk to when they have questions and not receiving follow-up information about the next steps. In essence, communication issues that can be resolved with improved customer experience.
Life insurers recognize that the industry is plagued with communication issues. Our study found that 34% of respondents cited personalizing communication, experiences and interactions as a challenge for marketing execution. This statistic is especially troubling considering that customer expectations are rising due to the first-rate experiences people are accustomed to in every other industry.
So how can life insurers address their communication issues?
The good news is insurers have already tackled their first challenge: placing customer experience improvements at the top of the agenda. 66% of survey respondents said they want to improve their IT capabilities to enhance customer experience, and 72% of respondents also said improving the experience of customers is a top five priority in the next 12 months.
The bad news is that insurers are placing too much emphasis on technology to improve customer experience and not enough on the human aspect of it. With all these new technologies that can streamline the needs for analysis, underwriting or claims processes, insurers are forgetting that adding the human touch to interactions can go a long way.
Purchasing life insurance is an extremely intimate process‒asking consumers to confront anxiety-laden subjects like personal health, finances and their own mortality. It requires a personal touch that technology can’t always emulate. When a customer is looking for a life insurance policy, they’re looking for a company that can help them pick what’s best for them and their loved ones.
Insurers need to improve their communication by prioritizing customer experience as opposed to heavily relying on automation to do the job for them. This doesn’t mean getting rid of technology completely, but strategically incorporating it in areas where it can add value.
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One example of how to do this is with data. New data analytics and collection technologies can be useful in streamlining the quoting process, as well as determining which prospective clients agents should reach out to first or what information to include in follow-up emails. The technologies can also be used to personalize communications and automate meeting scheduling, making it easier for agents who may be inundated with clients.
A part of improving communication is also making sure policyholders and prospective clients have someone to communicate with. Statistics show that 90% of new agents throw in the towel after a year. Over five years, resignation rates increase to 95%. Further, between 20% and 40% of agents will be aging out of the industry over the coming decade. That’s a lot of agents that policyholders rely on.
Many might think the solution here is to implement technology that can take on the job of the agent, but, in reality, it’s finding technology that can support agents and help them do their jobs more efficiently. It’s using technology to automate tedious and repetitive tasks, which then gives agents more time to meet and chat with policyholders. Adopting this path not only takes some of the weight off agents’ shoulders but also dissolves a key barrier that prevents people from purchasing life insurance.
Life insurance is a people business. As insurers turn toward automation to solve their problems, it’s important to remember who they are truly helping and what their needs are.