Mon, Oct 5, 2020 4:00 PM GMT
To succeed over the next decade, insurers must get serious about relationship-building with consumers, says a new report from New York–based McKinsey & Company.
The management consulting firm’s report outlines the significant challenges global insurers face, including modest premium growth and increasingly depressed interest rates in the face of Covid-19.
To move beyond such challenges, the report outlines how the client-insurer relationship can deepen through data and technology to serve clients over their lifetimes.
Yet, a client-insurer partnership is “far removed” from the role many insurers play today, the report said.
It suggested insurers rethink and transform their value propositions, which means shifting from “a provider of mortality risk protection to an orchestrator of healthier living; from a savings product manufacturer to a partner in financial wellness.”
To make that shift, insurers can personalize every part of the customer experience and develop innovative products, the report said.
For example, with many clients willing to share their data for customized services, insurers can provide “well-timed, personalized reminders or notifications around diet, disease management, doctor appointments, local health resources and physical activity,” the report said.
Regarding products, the report noted that some insurers are moving toward more capital-efficient products that perform well in a low-rate environment. Instead of being rooted in guaranteed returns, products may offer upside potential with guaranteed downside protection.
The industry is also moving toward increased flexibility in product coverage and payments to serve clients of different ages and at different life stages.
For example, in regions such as Asia and the U.K., financial payouts are being replaced with guaranteed placements in senior living communities, the report said.
The report also suggested insurers focus on capabilities and skills.
While 44% of work activities in financial services and insurance have the potential to be automated by 2030, technology and digitally savvy workers will increase in value, the report said. Yet, the sector lags in digital and tech talent.
“Covid-19 and recent social unrest present an opportunity for life insurers to reframe their societal purpose, which may help recruit and retain exceptional talent,” the report said.
So-called soft skills were also highlighted.
“Emotional, interpersonal and social skills will also become more critical, especially for customer-facing agents who can help consumers address their changing financial and coverage needs,” the report said.
Life agents are expected to continue to play a critical role in serving clients, and, as such, integrating digital and physical channels was suggested in the report.
The report also noted that insurers can arm agents with advanced analytics on their customer base as well as digital leads.
For full details, read the McKinsey & Company report on the future of life insurance.
Source: Investment Executive
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