How To Capture Younger, Modern Buyers?

The life insurance industry is poised to harness the power of technology

by Melbourne O’Banion

As we enter 2023, innovations in technology and products will continue to modernize life insurance. From outsourcing tech builds, providing bundled offerings, exploring no-med policies and enhancing user experience features, to providing AI and full-stack software solutions, traditional carriers wanting to appeal to modern buyers this year will continue to adopt new technologies that have enabled many startups to disrupt the space—or risk getting left behind.

Following are eight predictions about what the life insurance sector has in store for 2023 and beyond.

1. Traditional Carriers Will Outsource Tech Builds

This year, we may see an increasing number of traditional, large-scale carriers outsourcing their tech builds—not because they lack the resources to build these solutions in-house, but because their resources can be better allocated to higher-yield areas of the business. When evaluating whether to build or buy tech solutions, many will seek out tech partners who can move quickly to implement these tested, proven solutions.

2. There Will be an Increase in Embedded—and Bundled—Life Insurance Offerings

Life insurance is an easy addition to many service bundles, as it is relatively simple to embed or bundle these services with other related offerings. This is especially true for brands with loyal customers who already rely on them to manage their money and lives online, such as property and casualty insurance brands. By providing life insurance to loyal customers as they age and become more aware of the need for it, these parallel insurance providers can quickly and easily expand their offerings.

3. No-Med Policies Will Increase in Popularity

An increase in the number of no-med, smaller face value policies due to technological advances is also likely in 2023. As the accuracy and affordability of predictive data grows, insurers can more confidently make underwriting decisions without medical exams or blood draws.

4. Economic Forces Will Drive New Tools Designed for Customer Convenience

As consumers navigate the threat of a recession, increasing inflation, and rolling layoffs, they will continue scrutinizing recurring expenses—including life insurance. Carriers who provide online management tools that make it quick and easy for customers to adjust their coverage accordingly will almost certainly retain more policyholders. This will, in effect, drive continued improvements in the user experience across all insurers’ native platforms.

5. Gen Z’ers Will Become a New Focus

Gen Zers are now getting married and having kids—and, when added to the underinsured millennial demographic, they present a massive opportunity. Because this digitally savvy generation grew up using smartphones in elementary school, they demand the most sophisticated digital experience from start to finish. Insurers who don’t modernize their user experience stand to lose substantial market share over the next decade.

6. Insurers Will Optimize the Application Process

Customers today expect the application and purchasing experience for life insurance to be incredibly easy, intuitive, and seamless. Since they are accustomed to the frictionless purchasing experiences provided by many tech giants, they often abandon any online process that hits more snags than they are accustomed to—which means life insurance providers must work hard to reduce any potential digital friction. This also means the overall customer experience user experience must be equally future-forward and efficient (i.e., 24-7 text and/or chat support).

7. Nimble Software Will Become the Norm

With the insurance industry continuing to innovate and focus on change, nimble software will continue to empower carriers to meet the needs of new customers and provide bespoke solutions that they can scale over time. Leading life insurance companies in 2023 and beyond must deliver full-stack software solutions that empower them to be agile, innovative and recast the cost structure.

8. AI

There’s a reason AI is written about in nearly every publication today: It’s getting better, faster. In fact, the speed at which AI is getting smarter has revealed a myriad of ways carriers can utilize it for efficiency. From underwriting reflexives to policy administration to claims, look for AI to take over as a dominant force of change in the insurance industry in 2023.

While all of these technological advancements are vital for the health and longevity of the life insurance industry, they are also the key to ensuring all Americans are cared for and covered—which is our primary mission as an industry.

Recent statistics show the importance of this mission: All income levels were less likely to own life insurance in 2021 and the total percentage of Americans with life insurance fell by 2% in 2022, with 50% of Americans holding life insurance, down from 52% in 2021. Also, according to LIMRA’s 2022 Insurance Barometer Study, 26 million of those insured require more coverage than they have, but only 53 percent are likely to obtain it.

The top three reasons are:

1.) They think the coverage is too expensive.

2.) They have other financial priorities.

3.) They don’t know what type of coverage or how much to buy.

These statistics clearly underscore the need for the life insurance industry to rise to the occasion, thanks to advances in technology and software, to ultimately deliver a better user experience and more affordable coverage options for all Americans.