A growing niche of insurtech startups are finding ways to digitize life insurance to make it more appealing to consumers. That’s the conclusion of a Business Insider report about the mashup of insurance and technology.
The report finds that life insurance-focused startups are tackling a number of problems with the status quo, including a lack of consumer understanding of the product, inconvenient application processes, weak customer loyalty, and inefficient data management and processing. Some are focused on improving products for consumers, while others are helping insurers to modernize. These startups are giving incumbents a way to revamp this product, either by partnering these companies or using their technology.
Here are the top-line findings of the report:
- The need for innovation in life insurance has never been clearer — life insurance sales on the whole are slowing, and policy ownership is hitting record lows. A lack of consumer understanding, inconvenient application procedures, low customer loyalty, and old IT systems are denting providers’ returns.
- Life insurtechs are looking to revamp the space in two key ways: Consumer-focused players focus on eliminating the pain points that put consumers off buying life insurance coverage, while insurer-focused startups offer ways to improve processes and operations for the providers that still dominate much of the market.
- There are some risks attached to bringing technologies not typically used in insurance into this tightly-regulated space, but life insurers can adopt best practices to mitigate them and reap rewards, like: getting full customer approval to use their data, hiring tech-savvy compliance teams, and prioritize customer education about the product. Startups, meanwhile, should pick incumbent partners carefully.
- Incumbents’ activity in life insurance innovation to date has been limited to implementing some shiny new technologies, largely on the front-end. If life insurance incumbents want to stay relevant, they’ll have to invest in the core systems needed to give them the freedom to innovate and introduce changes on their own terms.