A reinsurer's new study found several things that could be the difference between success and failure for advisors – and big data’s at the top of that list
Swiss Re issued its sixth and final Sigma research report for 2015 this morning; it looks at how technological advances are radically changing how life insurers interact with consumers while simultaneously enabling them to better assess and price risk.
These changes, especially big data, have the potential to positively impact an advisor’s insurance practice. Here’s why.
“From our discussions with experts internally and externally we heard quite a few people mentioning electronic health records on the data side are the thing that’s going to make the biggest difference in the short term,” Swiss Re Senior Economist Milka Kirova told LHP. “In order to streamline underwriting, automate the process, increase the precision of risk assessment and pricing, they [experts] thought that on the data front this is the most important advancement they’re looking forward to.”
The three other biggest changes (other than big data) expected in the life insurance industry include the use of internet-enabled portable devices (wearables) for sharing information; the utilization of artificial intelligence and cognitive systems to create new opportunities for innovation; and the advances in medical technology to improve health outcomes while extending life expectancy, thus changing risk pools.
Ultimately, all four of these positive changes will help substantially reduce the time and expense involved in the underwriting process and by doing so producing better pricing for advisors and clients alike.
“The life insurance sector is set for fundamental transformation, brought about by technological advancements and new digital data analytic techniques,” states Swiss Re’s research report. “The impact will span the entire insurance value chain from product development and underwriting through to distribution, services and claims. To date, the sector has been slow to adopt new technologies, but this is changing.”
How important is innovation to the industry?
“The use of automated underwriting engines will be very useful tools for advisors to have,” said Kirova. “Actually, some platforms are already available where an advisor would be able to enter the risk parameters of the client getting binding quotes from several companies and products and they can complete the transaction on the spot.”
But we’re not quite there.
“The industry is really behind in terms of meeting the expectations of consumers,” said Kirova. “In the digital age younger consumers are used to fast transactions, very friendly user interfaces, and a pleasant buying experience. We’re not there when it comes to buying insurance. It’s just starting to change.”
These changes, especially big data, have the potential to positively impact an advisor’s insurance practice. Here’s why.
“From our discussions with experts internally and externally we heard quite a few people mentioning electronic health records on the data side are the thing that’s going to make the biggest difference in the short term,” Swiss Re Senior Economist Milka Kirova told LHP. “In order to streamline underwriting, automate the process, increase the precision of risk assessment and pricing, they [experts] thought that on the data front this is the most important advancement they’re looking forward to.”
The three other biggest changes (other than big data) expected in the life insurance industry include the use of internet-enabled portable devices (wearables) for sharing information; the utilization of artificial intelligence and cognitive systems to create new opportunities for innovation; and the advances in medical technology to improve health outcomes while extending life expectancy, thus changing risk pools.
Ultimately, all four of these positive changes will help substantially reduce the time and expense involved in the underwriting process and by doing so producing better pricing for advisors and clients alike.
“The life insurance sector is set for fundamental transformation, brought about by technological advancements and new digital data analytic techniques,” states Swiss Re’s research report. “The impact will span the entire insurance value chain from product development and underwriting through to distribution, services and claims. To date, the sector has been slow to adopt new technologies, but this is changing.”
How important is innovation to the industry?
“The use of automated underwriting engines will be very useful tools for advisors to have,” said Kirova. “Actually, some platforms are already available where an advisor would be able to enter the risk parameters of the client getting binding quotes from several companies and products and they can complete the transaction on the spot.”
But we’re not quite there.
“The industry is really behind in terms of meeting the expectations of consumers,” said Kirova. “In the digital age younger consumers are used to fast transactions, very friendly user interfaces, and a pleasant buying experience. We’re not there when it comes to buying insurance. It’s just starting to change.”
