3 life insurance underwriting predictions for 2022 and beyond
The life insurance and annuity industry proved resilient in 2021, even in the face of COVID-19 and the delta variant. I’m encouraged by the amazing scientific breakthroughs that created and distributed new vaccines so widely, and I’m looking forward to a much brighter 2022. I’m also optimistic about the future of our industry. I believe digital transformation will accelerate in the coming year and we’ll witness technology and human ingenuity working together to deliver underwriting innovation.
When it comes to life insurance underwriting, it’s the underwriters themselves who are the heart of human ingenuity. They are optimistic about their future and they are embracing change. An Accenture Research survey of over 500 underwriters found that underwriters remain optimistic despite the pace of change in their field. They are also enthusiastic about technological advances in underwriting and their organizations’ use of those advances. The full results of the study will be coming out soon, but you can get an early peek here.
Our predictions for 2022 reflect this optimism as we pursue bold new advances in underwriting—advances that underwriters welcome and that technology enables.
1. Underwriting will be at the center of the customer experience conversation
Customer experience will determine who wins the digital war for new business and workforce talent. People from all demographics are increasingly comfortable doing business digitally. That trend is expected to continue as AI, data analytics and cognitive insurance platforms simplify and improve the customer experience for everyone. Today’s insurance customers expect a friction-free, in-the-moment experience; they want self-service, but are open to advisory services when needed. The same applies to the workforce talent pool. Workers expect a friction-free experience, whether they are customer-facing or in the back office. The technologies they use must empower them to provide a truly improved and reimagined insurance experience, not just incremental “business as usual” improvements.
2. AI-led underwriting leaders will pull away from the pack
Insurers that continue to invest in artificial intelligence (AI) will become even more competitive. Sixty-two percent of insurers are investing in AI and nearly half believe it will be critical to business development over the next three years, according to the GlobalData Emerging Technology Trends Survey 2020. Some insurers are already using AI to harness the vast quantities of data now available to them from different sources, such as the health and wellness sector. Using AI-processed data, insurers can obtain more accurate risk assessments and deeper insights into their consumers. Those insights can then drive new differentiated product and service innovations to market, targeting digitally savvy, online insurance consumers. But to get there, insurers must invest in digital core technologies that will enable them to connect to new third-generation underwriting platforms that take advantage of AI and automation. All together, investing in AI will generate business growth through a better experience for underwriters, agents and consumers
3. Underwriting will contribute to insurers’ ESG programs
Environment, Sustainability and Governance (ESG) is now mainstream, and companies that invest in ESG enjoy both financial and societal benefits. Accenture, in collaboration with the World Economic Forum, found that organizations with deeply embedded sustainability management practices outperform peers by 21 percent on both profitability and positive environmental and societal outcomes. A separate study by the U.S. SIF Foundation found that, as of 2020, ESG assets account for 1/3 of total U.S. assets under professional management.
Life insurers have a role to play here, particularly with the convergence of health and wealth underway in our industry. Underwriting technology holds the power and promise to offer coverage to traditionally underserved and underinsured socio-economic segments. Through the ethical use of AI and transparent, bias-free predictive modeling, underwriting can play a key role in helping the industry operate sustainably and equitably.
Finally, there’s cloud technology, which is helping businesses from all industries operate more sustainably by reducing carbon emissions as well as costs. The cloud also provides underwriters with the computing power required to take advantage of the advances in data analytics needed to process the explosion in data sources.
I, too, am filled with optimism as I see progress in our industry through technology and human ingenuity. Let’s talk about achieving your future initiatives and discuss our soon-to-be-published underwriting research.