Shaping the future of life insurance through digital disruption

In light of a global health crisis, Canadians feel more vulnerable. They have a stronger desire to protect their loved ones and a growing interest in ensuring they can protect their own health. One way Canadians are doing this is by exploring life insurance as a better way to prepare for the future. Research shows that 64% of Canadians think life insurance is one of the most important types of coverage to have during the pandemic. This belief has led to an increase in Canadian life insurance applications, particularly among people under 50.

Life insurers have been seeking ways to differentiate their offering in an increasingly commoditized market. While the growth of digital channels has streamlined the purchase journey down to a matter of minutes, the life insurance offering and experience after purchase continue to look very much the same – the customer purchases the policy and typically doesn’t engage with the insurer again until renewal.

Customers need more out of their financial products. It’s essential that life insurers consider how to engage their customers with an expanded value proposition at the point of purchase and more regularly thereafter.

Differentiated value to quicken the pace of purchase

While concerns over mortality risk continue to decline, lifestyle and behaviour-related diseases are on the rise. Canadians are looking for seamless, effective ways to manage their health and well-being. Life insurers can play a key role in leveraging consumer health needs by shifting their sales talk track from financial protection to proactive health management, engaging customers with a relevant offering, and delivering tangible value for their day-to-day needs. 

Increased touchpoints to drive loyalty and reduce attrition

Beyond making policies more attractive to potential clients and boosting customer acquisition, a benefit that creates additional customer touchpoints can help drive loyalty and retention. Today, the lack of ongoing engagement makes it difficult for insurers to identify new ways of helping customers. With access to a service that provides ongoing value, customers will continuously engage with their life insurance provider, helping to reduce policy lapse rate, keeping the life insurance provider top of mind, and providing an immediate advantage for policy maintenance. 

Reward customers for healthy behaviours

Helping customers better manage their health can lead to long-term benefits beyond customer acquisition and retention. Life insurers can save on payouts and develop targeted health offerings based on aggregate health data. 

Globally, we’re observing a shift towards rewarding customers for healthy behaviours leading to shared value for the customer, the insurer, and the community. One flagship example is the Vitality program developed by Discovery, a South African insurance company. The program offers customers incentives to engage with their health through gym memberships, discounts on healthy foods, and other rewards. This model unlocks value for all parties — the customer lives a healthier life; the insurer sees reduced claims over time. The Vitality program has shown strong results, demonstrated by 30% lower hospitalization costs and members living 13 to 21 years longer than the rest of the insured population. Leveraging healthy behaviours to adjust premiums provides a strong incentive for individuals to stay on top of their health, which can help attract new customers or retain current ones.

Personalize the customer experience and adapt the offering

Going beyond the broader demographic approach, life insurance carriers can evolve to more continuous underwriting, using data and connectivity, to personalize offerings. One example includes continuous updates of the product offering based on different life stages, which goes further than mapping out key milestones like a new job or getting married. This requires a strong connection between the insurer, advisor, and the insured to identify what services would be most valuable — whether an insured is travelling, moving to a new city, purchasing a home, and so on. 

With growing demand for life insurance, an enhanced focus on health and well-being, and increasing savviness within digital channels, life insurance companies have an opportunity to adopt a new narrative and way of thinking to increase customer acquisition and retention. Virtual care is one of many value-added services that can help life insurers shift the focus from financial protection to health and well-being, create a new channel for customer touchpoints, and provide a tailored offering to suit the needs of different segments.

This article was written by Robin Cooper, Director of Strategic Partnerships at Maple, and Sarah Khan, Manager of Strategic Partnerships at Maple.