Life Insurance for the Digital Age: An End-to-End View
January 24, 2018 by Nitin Nayak and Stephen Abrokwah
According to a Swiss Re study, life insurance ownership has declined at a dramatic rate over the past 30 years and is currently at a 50-year low.1 This situation is most pronounced among the middle market and millennial households. Declining sales partly explain the research estimates of the life insurance protection gap,2, 3 which has been estimated to exceed USD 86 trillion globally and USD 20 trillion within the United States alone. The average household protection gap within the United States is now estimated to be just under USD 400 thousand. Independent and captive agents constitute the majority of the existing distribution channels for life insurance products, and they have gradually migrated toward supporting mostly high net-worth individuals for larger face amount policies.
As a result, many in the mid-market segment are left to their own sources for both educating themselves and purchasing life insurance products. With a greater availability of both internal and external data, along with advances in predictive models, an increase in competitive pressures, and a shift in demographics toward millennial and Gen X generations, it is now an opportune time for primary insurers to reassess the traditional approaches for addressing the protection gap. The industry has started examining this issue from multiple viewpoints along the customer journey. Recommendations include educating customers about the value and affordability of life insurance, reducing the friction and waiting times in the buying process, and improving the quality and speed of assessing/pricing customer’s mortality risk. As a result, existing actuarial methods are being supplemented with several nontraditional data sources and modelling techniques, which are currently in various stages of deployment.
This article provides an overview of various innovative solutions supporting an end-to-end underwriting process for life insurance products. View the full article here: pro-2017-iss108
1The US Mortality Protection Gap–An update. Milka Kirova, Swiss Re Economic
Research & Consulting, August 2015, http://institute.swissre.com/research/overview/insurance_monitoring/the_US_mortality_protection_gap_an_update.html
