For more than a decade, you’ve heard that “the life insurance industry is in the throes of massive change.” Overhead costs are too high. Agents are aging out of the workforce, with a limited pipeline of talent to fill the void. Consumers are becoming more autonomous in their buying decisions —demanding to quickly compare and purchase products through the channels most convenient to them. To prepare for the future, carriers must augment their “feet-on-the-street” customer acquisition model with a more agile, digital strategy.
Yet, time and time again, those efforts have fallen short. Although, in the past, some carriers used digital means to target prospects or accepted applications online, not much else in the process has evolved. Customer experience remained generic. Competitively priced underwriting still took 30 days, and the middle and back offices continued business as usual.
Today, with almost 70% of insurers revamping their underwriting systems over the past five years, that scenario is poised to change. End-to-end digital platforms enable companies to collect data at every customer touch point, analyze it efficiently and apply automation, machine learning and robotics to the middle and backoffice operations. As a result, companies have the opportunity to achieve profitable distribution by acquiring and onboarding sustainable customers more quickly and at a lower cost than traditional methods.
This paper explores the elements of an effective digital customer acquisition system, and its impact on targeting, onboarding and final decision making.
Digital Platform, Defined
Before looking at how customer acquisition works through an end-to-end digital platform, it’s important to identify how this technology differs from existing legacy systems. A true digital platform is conceived from beginning to end from a digital perspective, with a data-oriented marketing capability and an independent underwriting engine that allows carriers to continually learn from gathered data.
Applying design thinking to understand the customer would mean, for example, if a company asks five questions about asthma, but the data shows it only takes three of those questions to adequately assess risk, the underwriting guidelines need to be reviewed to speed up the process. By constantly gathering and analyzing data, carriers can continually refine their models and pricing rules, translate customer insights into experiments, and bring in agile execution to increase straight-through processing.
The same concept also applies to the customer experience. If 10 prospects in the same micro segment abandon an application process on the same question, carriers can use that knowledge to modify the workflow for that micro segment, or reword the question, and track results. Although companies see benefits from a digital platform early on, the real competitive advantage comes from combining in-force data sitting in the middle and back office with data collected for continuous improvement. The larger and more complete the dataset, the more formidable is the advantage. Therefore, an effective digital solution inherently delivers end-to-end ROI, if carriers make efficient use of the data. However, if backend legacy systems are still in the mix, they could threaten ROI if these systems lack the agile architecture and process support required for automated workflows, full-cycle analytics, and straight-through processing.
What the Acquisition Journey Looks Like in the Digital World
With the capability to apply analytics at every interaction throughout the customer acquisition process, carriers can give consumers a more personalized experience and improve the efficiency of their own operations.
Targeting: Applying Analytics for More Effective Customer Engagement
Currently, most life insurance companies rely heavily on captive agents and intermediaries, using digital technology to funnel leads to their sales teams. Expansion means adding more intermediaries in those targeted areas, an increasingly difficult task as the workforce shrinks. Even with a leads funnel, the traditional sale is a numbers game. Agents have to sift through a lot of prospects to find the individuals who both have the desire to purchase life insurance and meet the risk profile sought by the carrier.
A digital customer acquisition strategy transforms that approach to make it more efficient and targeted. Carriers can now apply analytics to build a model of their ideal customer to micro segments based on risk tolerance, demographics, location and projected lifetime value. This detailed prospect information enables carriers to design targeted, direct-response marketing campaigns. Clean, relevant marketing messages are created for each micro segment, and delivered through digital and other media the segment is more likely to use. Lastly, performance is measured, and those messages are fine tuned to increase response and to drive closure.
The goal is to identify and attract the most profitable customers, engage them online, and move them through underwriting and onboarding with minimal human intervention.
Digital Customer Onboarding: Enhancing the Customer Experience
So, we’ve targeted prospects that fit our analytic model, and reached out to them through appropriate digital channels with relevant messaging for each micro segment. Let’s say one of those prospects clicks on a banner ad, and is taken to the carrier web site. What happens next? As soon as that prospect accesses the site, he or she is staged within the system. After getting basic information, the workflow engine determines what the next step of the journey should be, based on predetermined rules. Based on the consumer’s age and zip code, the system can predict the kind of insurance the consumer might be looking for and customize the next screen based on that information — with messaging created specifically for that micro segment.
Three critical differentiators at this stage of interaction separate the digital omni-channel experience from a single-mode interaction.
First and foremost is the creation of a streamlined customer experience. People are busy. The goal is to onboard them quickly — ask the right questions, explain the policy clearly and simply and get the e-signature before consumer gets distracted by three other unrelated things, or four other product offers. To that end, the system dynamically adjusts the questions the prospect is asked, based on answers to previous questions and predetermined rules. For example, if a person responds yes to diabetes, this triggers a question about type and diagnosis date; with subsequent questions based on those answers.
Someone with type I diabetes will take a different path compared to someone with type II diabetes; a new diagnosis will take a different path than a person who has had the condition for the past 20 years.
Instead of everyone answering the same (lengthy) line of questioning, the system automatically presents only the questions relevant to the individual applicant. The idea is to move the prospect through the process as rapidly as possible, while still effectively evaluating risk.
Secondly, every time a prospect navigates the site, searches for information or answers a question, the system tracks that activity, offering a helpful chat as needed. If consumers abandon the site at a particular point or when they’re asked a specific question, that’s all documented by segment including any follow up with the call center or agents, so the customer journey is continually improved. Every nuance — from the order of questions to the way the questions are asked — impact response. By capturing consumer behavior as people go through this omnichannel process, the carrier can constantly refine the customer experience and elevate close rates.
Finally, a critical accelerator of back-end processes, the policy document creation is happening behind the scenes while the prospect goes through the onboarding process. Data collection has always been critical to underwriting, but the process of accessing this data, post application, was the very thing slowing down the operation. That scenario changes with a digital acquisition model. As the prospect answers questions, the digital platform pulls data from myriad sources to validate and automatically evaluate risk. If, based on the data, the system identifies that a prospect has a high probability of closing, it also pulls information from Lexus-Nexus or other paid sources to ensure that customer’s journey goes faster. Instead of traditional workflows, where underwriting happens long after the prospect has filled out the requisite paperwork, in a digital customer acquisition model, decision making happens simultaneously as the consumer moves through the application process. Such data availability puts risk assessment on an exponential learning curve. This could enable preferred ratings and hence competitive pricing to truly enter the realm of automated underwriting.
Streamlined Decisioning: Reducing Month-long Processes to Minutes
Based on the data collected and documentation pulled, the digital platform uses predictive, real-time analytics to determine the specific workflow for that individual. For example, if the data indicates that the prospect fits a specific, low-risk profile and does not require additional medical exams, he or she advances to straight through processing. The consumer is offered a specific product or products, makes a selection, signs the document electronically, pays and is issued a policy in minutes, without human intervention. If the data shows that the prospect is a higher risk, requires medical exams, or appears to be gaming the system, that individual receives a message stating that a representative will be in contact. Then, that application and supporting data is forwarded to the appropriate staff member for further vetting or to schedule any required medical tests. The number of workflows and situations depend on each individual carrier’s guidelines, preferences and state rules.
Again, the targeting process, the workflow process, and the customer journey are continually refined, based on the intelligence gained, as more applicants come through the system.
This is the real power of a digital customer acquisition solution. Market acquisition costs can be lowered dramatically as close rates and straight-through processing rates go up by simply adjusting processes, workflows and questions based on past interactions. This ability to continually move the needle can have a huge impact for companies, in terms of revenue, growth and lowering overhead costs.
Positioning for a Digitally- Enabled Future
Ultimately, it all comes down to this: How can insurers grow, penetrate a larger market, broaden their customer base and reduce distribution costs? It’s not just by adding agents and surely not by sustaining manual underwriting processes. Nor will it be by maintaining the fragmented engagement-onboarding-decisioning cycle necessitated by multiple legacy systems. By adopting a digital customer acquisition strategy, supported by an end-to-end digital platform with applied analytics throughout each part of the process, life insurance companies can transform the activities of the front, middle and back office into a continuum to drive better customer experience. Companies taking on the challenge to modernize systems and the means by which they engage with consumers have the potential to issue policies faster, cheaper and build long term relationships with a more profitable customer base.