Here's how the insurance industry can own the Digital Age

“Industry Innovation needs to be systemic,” said Wintrich. “That demands the right technology tools to gather, interpret and manage data. It also requires foresight: an ability to look at industry trends, determine what’s real, probable and possible, and stay ahead of the competition.”

The industry’s need for a better holistic view of customers and prospects is real and growing, particularly in respect to data available about them on social media. Wintrich said that social customers tell an average of 42 people about a good experience — and 53 people about a bad one. Customer satisfaction is a leading indicator of company financial performance.

The “voice of the customer” on social media carries more weight with prospects than does a marketing campaign; and retention of an existing client costs less than acquiring a new one.

“The cost of churn—replacing a customer who’s left for another company—is about three years’ worth of business,” said Wintrich. “If you have such churn after two years, you make no money. If the customer leaves after one, you’ve lost money.”

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Data gathering tools can also be used to build a tailored policy based on an applicant’s lifestyle, health, employment and marital status and other factors. For many, such customization can be a godsend, as in situations where an applicant would normally be declined or rated because of his or health condition.

Wintrich noted, for example, that accidental death and disability (ADD), life and disability income insurance are typically 3 to 5 times more costly for diabetics than for healthy individuals.

However, using a Fitbit and other tools for monitoring real-time changes in an applicant’s health condition and activities —weight loss or gain, blood sugar levels, daily exercise and sleep — an insurer may be able to offer a policy for a premium at or near the preferred or standard rate. Or, if a policyholder veers off a prescribed dietary, medical or exercise regime, the insurer can offer coaching to get them back on track, dynamically adjusting the policy premium to suit the individual’s health status.

“People who answer ‘yes’ on an application to a question asking whether they’re a diabetic are almost always declined for insurance,” said Wintrich. “That means lost commission for the broker and revenue for the insurer.

“Now, a carrier can ask whether a diabetic applicant is enrolled in a company’s wellness program and is monitoring his or her health through a Fitbit, Apple Watch or other wearable device,” he added. “If data from that device is connected to a company’s health-monitoring Web portal, an applicant may now become a low risk and eligible for conditional coverage.”

For healthy policy applicants, he continued, technologies are coming to market that can quickly and seamlessly facilitate the sale. In Wintrich’s example of the “digital insurer of the future,” the entire sales process — delivery of a policy quote, ratings and reviews from friends on social media, underwriting validation, policy issuance, notification of the premium paid and access to the policy online — takes place within an 11-hour period. The information at each step is communicated to the applicant across multiple devices: the desktop, laptop tablet and smart phone.

Such end-to-end policy customization transaction capabilities, and the customer data underpinning them, will be key not only to securing and retaining new customers, but also the benefits brokers who interface with them. 

“We’re telling insurers, ‘You need to pay close attention to the data that people are giving you,’” said Wintrich. “It will be increasingly important for brokers and agents to closely align themselves with carriers that are adopting best practices in regard to data collection and analysis.”

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