Expect more demanding consumers
The changing nature of the customer of today, will present challenges for the life insurance industry.
FAnews spoke to Clyde Parsons, the Chief Innovation Officer at BrightRock and Lisa Gibbon, Divisional Executive for Onboarding at Liberty about the post pandemic consumer and the challenges going forward.
Conscious consumption
According to Parsons, one of the trends that has come out of the two years is conscious consumption, and it’s something both providers and advisers need to take note of.
“Consumers are far more selective of what they choose to buy and the services they choose to use. This is especially the case with complex financial services products like life insurance, where consumers are likely to act with even greater caution. At the same time, though, the last two years have increased the value that consumers place on life insurance, which is borne out by surveys around the world,” he said.
“It is essential, in this environment, that product providers offer clients value-for-money products that match their needs and that are efficiently priced. Advisers have a critical role to play in providing objective advice and helping to manage expectations on both sides, helping to ensure that clients know what they’re buying, and helping to hold product providers to account in terms of the value and service offered to clients. In the life insurance market, clients aren’t necessarily looking for instant service; they are looking for providers that provide clear, easy-to-access communication and keep them informed. Clear and regular communication between product provider, adviser and client can ensure that customers receive good service, while also knowing what to expect from the product they’ve bought,” added Parsons.
The challenges experienced
Affordability, according to Parsons, is one of the key issues. “Clients pay a significant portion of their income for insurance cover that they know that they need but are often unable to afford as much cover as they need. When their cover is insufficient to meet their need at the time of claim, clients feel disappointed and question what they’ve been paying for. Clients need to know that insurers are charging them premiums that are appropriately priced, for cover that efficiently meets their changing needs and it’s vital that clients understand how much cover they have and for which financial needs. Cover needs to be able to be structured according to duration, how the client expects their needs to change over time (i.e., do the needs get larger like with critical illness or do the needs reduce over time like with Income Protection cover), and make provision for changes if their needs don’t behave as expected.”
“There is also a lack of flexibility. Many insurance structures are onerous and complex, and it is difficult for clients to make changes to their cover or access more cover when their circumstances change,” emphasised Parsons.
Parsons added that there are barriers to claims. “The life industry can be very proud of the number of claims paid during the COVID-19 pandemic. However, there are still many products with unnecessary barriers to claim, due to subjective, outdated, or overly onerous claims criteria. Many of these barriers – like general survival periods, proof of loss of income to qualify for a claim, or subjective permanent disability criteria – result in claims being repudiated that should be paid. This is something our industry needs to focus on urgently.”
Gibbon added that the importance of full disclosure should be a priority conversation that all insurers should be having with their clients and advisers as often as possible. “Not only will it help to reduce the occurrence of non-disclosure claims, but it will also ensure that clients receive their pay-outs when they need it most. One of the main reasons for the repudiation of claims can result from claims being submitted for the events that do not meet the claims criteria for the benefit being claimed under. Other declinations can result from a non-disclosure of information by clients. This means that these clients did not truthfully disclose, or chose to omit, pertinent information relating to their health, finances, lifestyle, or occupation during the initial underwriting phase.”
These three issues, according to Parsons, can cause a disconnect between clients’ expectations and how their life cover performs in their hands, resulting in complaints to the Long-Term Insurance Ombud. “While we are seeing changes in the right direction in our industry, with new products addressing many of these issues, our industry needs to focus not only on improving service to clients but on improving the underlying product structures to address these constraints.”
Changing needs and expectations
Parsons said, “We can expect more demanding consumers, who will vote with their feet. Providers need to make it easier for clients to make contact with them, easier for clients to understand that they’ve been sold and what they’re covered for, and easier to understand when to claim. Clients will increasingly demand transparent product and benefit structures where it is easy for the client to understand the value and importance of their cover, and how it links to their needs. Conscious consumption will also push financial advisers and clients to providers who make it easier to claim – both in terms of the claims process, but also in terms of the product structures.”
“Clients are increasingly tech savvy and have high expectations. They want products customised to their individual needs and meaningful engagements with experienced and friendly faces they can relate to at all their financial decision points in all the stages of their lives. The overall idea is to deliver a modern, digital, human augmented onboarding and underwriting experience that responds and delivers quickly, putting the client's needs at the centre of data driven decision making,” said Gibbon.
“Artificial intelligence encompasses a whole range of technologies that are continually evolving and that offer advisers and insurers the ability to access vast swathes of customer information securely from anywhere, to allow better and more targeted advice, risk assessment and decision making. At the core of this is cloud technology, which allows relevant data to be accessed anywhere and anytime. This extraordinary ability to access big data offers insurers the agility and resilience needed to quickly respond to market changes and customer needs. The sheer depth of data becoming available means that advisers and insurers can increasingly see clients' needs and risks in a broader context and offer more appropriate solutions almost immediately. It must be emphasised though, that an insurer would not access client data without explicit consent from the client to do so. A cloud hosted automated underwriting capability can also deliver an intuitive experience focused on people's unique personal circumstances. It also includes complete security of personal information which is vital to the insurance process,” added Gibbon.
“With these data-based systems at our disposal, the future would see getting insured becoming more like the process of getting a credit check at the bank. It used to take a long time, but with access to secure data relating to every individual, it can be done quickly and efficiently. The result is that a person can be insured faster, in a more personal way and without having to jump through as many hoops in the process, notwithstanding the need to fulfil all the required business, underwriting and legislative requirements were applicable,” continued Gibbon.
A final word to brokers and advisers
“Now more than ever, we realise that we must also remain positive, be a protective shield for the people worst affected by this newfound economic volatility, and along with our advisory partners, help our clients make the best decisions to keep their future goals intact,” said Gibbon
“The important thing is that we are beginning to emerge from the impact of the COVID pandemic and we are seeing some degree of normality return to our lives. We have learnt a lot over the past years and one thing is for sure - COVID highlighted the value of being insured. It's not just about numbers, it's about knowing life is never certain, it's very precious, and the best and worst can happen at any time. There is so much value in being prepared,” emphasised Gibbon.
“We feel that regular communication and honest, proactive and reactive advice is what adds value to clients’ lives. It’s the shared experiences between advisers and their clients that are most important for maintaining connection in such a trying situation,” concluded Gibbon.
Writer’s Thoughts
The changing nature of the customer of today, will present challenges for the insurance industry. They are increasingly tech savvy and have high expectations, and they will only become more demanding as the years go by. The post pandemic consumer… have you experienced any challenges? Please comment below, interact with us on Twitter at @fanews_online or email me - [email protected]
