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The Actuary The magazine of the Institute & Faculty of Actuaries
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The examined life

Mandy Luo looks at how technological advances and data collection could help actuaries engage with consumers when it comes to life insurance – especially elusive millennials


9 MAY 2019 | MANDY LUO

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Image credit: Ikon

Advances in technology mean consumers can 
be incentivised
to make positive behavioural changes”


The past five years have seen the life insurance sector transformed. Pathways to purchase have been automated, customer journeys modelled, mapped and personalised, and payment gateways perfected as the industry automates processes in line with contemporary consumer culture.

Reimagine Life, ReMark’s fifth annual study of consumer trends in the global life insurance industry, suggests that, with the innovative use of consumer data and delivery of clear benefits in return, we can change the customer relationship for the better – and even entice the millennial generation to engage. 

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Figure 1

Changing drivers, changing journeys

Consumers today use a broad range of channels to research, interact and purchase. While many life insurance purchases are still initiated by some form of human contact – insurance agent, financial adviser, bank staff or telemarketing call – the journey to the ultimate purchase decision is changing. 

Consumers increasingly want to research their proposed purchase online. Different generations have different engagement preferences, determined and defined in part by the complexity of their protection needs. However, data indicates that all generations show an appetite for online engagement at some point in the pathway to purchase, and will be happy to provide certain personal information in a secure online environment.

The rise of digital channels does not correspond to a fall in traditional intermediary channels. Rather, online channels are used to supplement information and services from other sources, particularly early on in the customer journey. At the point of purchase, the continued strength of intermediary channels is clear – 61% of consumers state that they intend to purchase via advised channels, and 79% claim that their last purchase was via an advised channel.

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Figure 2

A seamless online-to-offline channel approach, which allows the consumer to mix and switch their channel without hindrance, is an attractive guiding principle; it points to the potential for hybrid advice models to solve the consumer’s dilemma. Such models – combining online research, auto-advice technologies, and human confirmation and completion (whether face to face, phone, chat, etc) – can deliver advice in a relatively cost-effective and flexible manner, building trust through a more effective customer experience.


How to convert the unconvinced?

The relationship between consumers and sharing data is complex. At one extreme, there is the ever-present mobile device, wholehearted engagement on social media and widespread adoption of applications that facilitate service, save time and ease interactions. At the other is ongoing doubt and suspicion about the security and privacy of data sharing and use – and a lack of trust in corporate intentions in that regard. 

That said, most consumers are willing to answer some health questions. And the majority, across all generations, now feel comfortable completing health questions online – albeit with a striking bias in self-perceptions of health status.


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Figure 3

Insurers need to have realistic expectations of the data they are likely to obtain. Even from a willing consumer, there is limited likelihood of rich activity and diet data. However, as new approaches to underwriting – such as SCOR’s Biological Age Model – demonstrate, the combination of ongoing wearable data and incentives offers possibilities in terms of identifying consumer health at application and ongoing engagement. The application of regular repricing based on wearables data – the ‘reward’ part of the data sharing equation – suggests that both the renewal process and lapse rate experience may well be improved.


Dynamic lives demand smarter solutions

Novel applications of consumer technologies also lie at the heart of the response to the Millennial challenge. Compared to their parents, Millennials are not particularly disposed to buying life insurance, nor are they receptive to many of the traditional propositions and messages of insurers. 

Especially in developed markets, Millennials are more motivated by happiness, health, wellness and related goals than by fears. Wellness and loyalty programmes, powered by wearable technology that enables the sharing of data and rewards, are a key gateway to all segments, but especially to Millennials. 


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Figure 4


Wearable devices – whether a next-gen fashion accessory or a simple tracking band – feed into the interests of both insurers and consumers. Wearables have been adopted by keep-fit enthusiasts and extreme athletes alike, and users are a significant cohort of engaged customers; interest is rising in the trade of data for rewards such as regular repricing. 

Wellness programmes make tangible the promise of protection through ‘prevention first’ strategies, and the associated willingness to share data opens new avenues to engagement. Dynamic underwriting presents new ways to assess risk and manage conditions. Enabling services, rather than death benefits, become the driving factor, as insurers help consumers to pursue healthier life choices.

Loyalty and wellness programmes are opportunities to engage consumers in a positive way and connect them with relevant products and services. Such a strategy has appeal beyond the Millennial cohort. There is broad support across all demographics for insurers to do more to support quality of life and extend their proposition beyond death benefits.

Data-driven approaches such as the Biological Age Model offer incentives to consumer and insurer alike. Consumers benefit from personal health intelligence and learn how even the simplest exercise (daily steps) can have a significant effect on mortality risk; they are rewarded for taking responsibility for their personal health management. Insurers benefit through continuous risk assessment from a simple dataset, for dynamic underwriting that minimises risk, facilitates competitive pricing, speeds the purchase cycle and enhances the customer experience.

Personal fitness is just one side of the wearable device equation. Next-generation medical monitoring devices and medicine-tracking apps could reframe the protection proposition entirely, making possible dynamic partnerships of prevention and protection in the personal health management sector.


A positive narrative

Technology transforms expectations and experiences; advances mean consumers can be incentivised to make positive behavioural changes through dynamic underwriting, automation and more frequent customer engagement. 

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Figure 5


Engagement is the key to re-imagining the insurance value proposition in line with contemporary attitudes and interests. The challenge is to sustain that engagement and secure the data stream on which such dynamic propositions depend.

For dynamic underwriting to flourish, engagement strategies and messaging must chime with the desire for lifestyle-based protection – acknowledging, rewarding and encouraging positive behavioural change. That means joining customers on their journey. It is about tapping into interests and serving those interests to become a valued part of consumers’ efforts to get fit and stay fit. The benefits cut both ways. 

Ultimately, the relationship between consumers and technology is simple. Consumers love their devices and want reasons to use them. Mobile engagement defies boundaries; few activities are undertaken without it and fewer still are impervious to it. The complexity is ours to own.

The machine age is here. Speed matters. Ease of use matters. But the consumer wants – and the insurer needs – the best of what humans and technology can offer them. 


Mandy Luo, FSA is ReMark’s chief actuary and head of data analytics


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