What is the future of selling life insurance?

27 Oct, 2022

Historically in New Zealand, most life insurance was sold through independent financial advisers or bancassurance. Pre-COVID, it was broadly accepted this would remain the status quo. With no drive to shift the method of sale, and customers happy with their current arrangements, the in-person sale of insurance looked to be here to stay.

However, the COVID-19 pandemic vastly changed how the entire world does business. Face-to-face interaction was halted for so long that we all had to find a new way of conducting and managing a business.

After years of doing business over the phone or digitally, what does the future of selling life insurance look like in New Zealand?

In a previous blog, we looked at whether insurers can sell life insurance in the digital space. We now look at whether selling in the digital space is the way of the future or if there is still a place for the trusted advisor in the sales process.

Answering this question is almost akin to crystal ball gazing

The importance of the high trust relationship built between a trusted advisor or banker and the client can't be understated. Multiple studies have shown that the number one consideration and deciding factor for purchasing life insurance is trust and confidence, which is unlikely to change.

Nonetheless, over the past few years, customers have had no option but to embrace a digital way of conducting business (not just in the insurance space), and they like it. This digital access is no longer a bonus but a requirement for doing business. A recent Asia-Pacific study found that two-thirds of respondents considered online features important when selecting an insurance company. Insurers need to commit to a digital transformation or risk losing customers.

Globally, direct-to-customer sales of life insurance have been underwhelming. For example, in the European market, direct sales make up less than 10% of all insurance sales. As we all become accustomed to operating in a digital space, confidence and trust in digital transactions will increase. This outcome is especially likely as the digital natives increase to the point of dominating the consumer pool.

But what is it that people like about digital channels?

Customers enjoy the seamless, easy access experience that digital channels provide. Updating personal information, changing insured values, and processing claims are examples of the activities customers prefer to do online.

Technology is particularly valuable in bancassurance channels. Banks have access to quality life information about their clients, which can provide valuable insight when used properly and with respect for individuals' privacy. This data allows more targeted offerings and a more personalised premium based on lifestyle and risk factors, simplifying and streamlining the application process.

For example, a major insurer in Asia embedded a stand-alone digital cancer product on a bank's website and mobile app. The product used existing customer information to populate the application. It simplified the application to only one question, resulting in a better customer experience and a higher penetration rate.

To remain competitive, it is our opinion that insurers will have to adopt hybrid business models with a mix of digital and in-person channels to deliver the seamless experience that customers are, and will continue to, demand.

The hybrid operating model offers customers the best of both worlds. They can experience the trusted relationship of an advisor and the customer-focused and convenient digital channels for managing their policy and any claims they make.

Constant innovation in the digital space will allow insurers to provide the best possible customer service in the shortest time. These digital tools will also reduce the overheads associated with the industry and result in cost savings for customers, giving a competitive edge to those organisations who invest in their digital transformations

To offer a competitive digital experience, insurers must constantly be innovating, with new products, ways of operating and seamless customer experience front of mind.

This is where we come in

AMS offers a market-leading, sophisticated bancassurance product that we continually improve. By implementing our product, our clients remain at the cutting edge of technological development without any R&D or implementation costs.

Our insurance SaaS solution efficiently manages all of your life insurance product types and offers a platform for customers to manage their life insurance in a digital space.