Life insurance and, by extension, retirement planning, is a highly nuanced topic that can easily confuse many people. It's because of this that agents will always be around because they have the experience needed to explain the particulars, not to mention help clients strategize for their fiscal futures.
Nevertheless, automation is touching a variety of industries - from cars to coffee - all in a bid to lower costs and enhance efficiency. This includes the life insurance realm, as more insurers are taking advantage of self-activating mechanics, a new report reveals.
2 in 3 life insurers using automation for underwriting
"Two-thirds of life insurers have used automation for underwriting."
In terms of underwriting, 66 percent of life insurance companies in North America have used, or are using, automation, according to a recent study conducted by worldwide research organization LIMRA. Additionally, close to 1 in 3 are in the preparatory stages, meaning they haven't yet implemented automated underwriting but will do so once conditions are ready.
As to the reason why automated underwriting is becoming more mainstream, time management is hands down the prime motivator. Of the life insurers polled, 100 percent indicated it was to reduce the turnaround time from processing to policies going into effect. In a close second was saving costs, cited by 92 percent.
Mary Art, research director at LIMRA's distribution and technology research division, indicated that in some cases, underwriting is being subsumed by automation entirely.
"While fully automated underwriting (no human interaction) is typically available for only a few products, our study found that there is a spectrum of automated underwriting in which companies may use automated underwriting fully or use it in conjunction with rules-based assessments and an underwriter's review," Art explained. "Clearly, the significant advances in technology have played a major role in companies' ability to leverage big data and algorithms to evaluate life insurance applications."
Customer satisfaction enhanced through automation
Automation may not only enhance work output and cut costs, but it can also benefit the consumer by expediting the purchase process - a benefit that can't be overemphasized in today's hyper-connected information age society, Art continued.
"Obviously, automated underwriting can ... lower the cost and time it takes to issue a policy," said Art. "But life insurers also understand that consumers' expectations are changing. Most consumers are used to the ease and convenience of buying goods online and our research shows they feel that purchasing a life insurance policy should be a similar experience."
"Consumers will waste 900 hours on hold this year."
Waiting in line or on hold is something that everyone experiences but would rather not. This year alone, consumers will spend 900 million hours on hold, according to a study conducted by mobile advertising firm Marchex.
Other reasons for the automation explosion
As for some of the other reasons why life insurers are jumping aboard the automation bandwagon, nearly two-thirds said it was to satisfy consumer expectations, nearly 40 percent cited reducing fraud and omissions and nearly one-third aimed to reach more consumer markets.
More than anything else, though, it's all about making the customer happy.
"Ultimately, life insurers are working to make the process simpler and quicker for both the company and the consumer," Art explained.
Though the fundamentals of Leveraged Planning Solutions are fairly straightforward, the program requires a deft understanding demonstrated by agents in order to formulate a plan for their clients - something that no form of automation can sufficiently replicate. For more information on Leveraged Planning Solutions and life insurance premium financing, speak with a Global Financial Distributors advisor.