The insurance industry has undergone rapid innovation over the last decade, but not all sectors within the industry have evolved equally.
Property & casualty (P&C) insurers, for example, have made impressive strides in digitizing and optimizing claims. Life insurance has been slower to modernize. This disparity has resulted in a significant innovation gap between life and P&C claims processing. It stems largely from fundamental differences in claim volume, complexity, and customer expectations. But as the gap grows, it becomes increasingly unsustainable in today's fast-moving, digitally driven world.
Outlined below are the key lessons life insurers can learn from P&C's digital transformation, as well as a road map for how life insurance carriers can accelerate claims modernization while preserving trust, empathy, and compliance.
Why the Innovation Gap Exists
P&C insurers handle millions of claims annually, many of which are low-severity, high-frequency events like fender-benders or storm damage. Keeping pace with claims volumes is what provided incentives for early investment in automation, AI, and self-service to help optimize processes for both the insurer and the insured.
In contrast, life claims are often low-frequency but high-emotion, and manual processes were deemed the most acceptable approach for these emotionally charged events.
Consumer expectations have since shifted.
Wider industry pressures – demographic changes, labor shortages, the pervasiveness of AI, and more – are further catalyzing this transformation. Gartner predicts that by 2026, 30% of enterprises will automate more than half of their network activities.
The call to action is clear: Life insurers must digitize to meet modern expectations without compromising on a customer experience that balances empathy, accuracy, and compliance.
Leveraging AI for Automation
P&C insurers have already built a foundation of speed and efficiency by embracing digital-first operations. From first notice of loss (FNOL) to straight-through processing (STP) and digital documentation, many previously manual claims processes are now automated, rules-based, and augmented with AI. The result is better fraud detection and faster triage at scale.
Major auto and home insurance carriers already use automated workflows and proprietary mobile apps to resolve minor claims blazingly fast. Insurers use these platforms to submit photos of vehicle or home damage, which AI tools instantly assess, use to estimate repair costs, and process in real time. In some cases, claims are approved and paid within minutes.
Alternatively, life claims remain labor-intensive and complex, with paper death certificates, manual policy validation, and disconnected systems leading to long delays. These laggard operations no longer align with customer expectations or enable operational sustainability.
The AI models that are widely used in P&C to assess claim complexity, detect anomalies, and flag fraud in real time can similarly be applied to life insurer workflows – flagging incomplete claims, triaging straightforward cases for fast-track approval, even personalizing communication based on behavioral or demographic data.
McKinsey anticipates that by 2030, more than half of claims activities will be automated.
Digital With a Human Touch
From mobile-first claims submission to real-time status update chatbots, many P&C carriers now offer seamless self-service options that keep customers happy and informed. This has reshaped customer expectations across all lines of insurance – and life insurance is no exception.
But the inherently emotional and often painful nature of life insurance claims make clarity, transparency, and speed essential when adopting practices from P&C.
Rather than being a one-to-one template for life insurance innovation, P&C's use of customer journey mapping and design thinking offers life insurers a model for where to begin when modernizing their operations. By mapping the end-to-end life claims experience – from the beneficiary's first contact to final payout – insurers can uncover and address friction points such as multiple document requests, long silences, or poor communications.
The X-factor for implementing these changes is that, alongside automation and personalization techniques such as instant document upload and multi-channel status updates, life insurers must also create precedents for enabling swift human intervention at key moments. For life insurance, the human touch must never be far away.
Tech solutions must then strive to make the process easier without making it feel cold. Automation should never come at the expense of empathy.
Intelligence Through Data and Ecosystem Integration
Advanced data usage has long been a defining feature of P&C claims transformation. Carriers routinely use third-party data – weather reports, IoT and telematics data, government records – to populate claims automatically, assess risk, and identify anomalies in real time, resulting in faster decisions.
Life insurers can achieve the same effect by integrating with government databases, obituary application programming interfaces (APIs), health records, and even social media, to validate deaths quickly and securely.
A Matter of Life and Death
The innovation gap between P&C and life insurance claims has finally become a solvable challenge, with the barrier to entry for automation, more empathetic customer experiences, and smarter, more connected data ecosystems lower than ever before.
By adopting the automation tactics honed by P&C insurers and anchoring them in the empathy that life insurance demands, life insurers can modernize claims in a way that enhances trust, improves efficiency, and delivers lasting value.
But life insurers must act now. Because reimagining life claims through a digital lens isn't just possible: It's imperative for long-term competitiveness and customer loyalty.
