We look at how the life insurance industry has changed since the pandemic began.
It’s not surprising that the coronavirus pandemic added acquiring life insurance to the top of many consumers’ to-do lists. In fact, many insurance firms have noticed double-digit increases in the number of life insurance policies they’ve sold over the past year.
Before the pandemic, just over half of American adults reported having a life insurance policy, down from 63 percent a decade earlier. It’s no question that this resurgence in life insurance activity has brought substantial changes to the industry for 2021 and beyond.
Let’s take a look at life insurance trends that are a direct result of the coronavirus pandemic.
Increased Sales in Tumultuous Times
Fear has always been a prime factor in increased life insurance sales. COVID-19 caused many consumers to become hyperaware of the financial risks associated with severe illness and death. As a result, the feeling of personally needing life insurance increased in both 2020 and 2021.
In fact, 32 percent of consumers say they are more likely to buy life insurance as a direct result of the pandemic, and 42 percent of consumers say they are more likely to purchase life insurance because of having COVID.
The pandemic even spurred an increase in life insurance interest among many current policyholders who said they didn’t feel they have enough coverage. LIMRA reported that 20 percent of customers were looking into increasing their coverage because of the pandemic. Fear may have catalyzed widespread interest in life insurance policies, but it is now up to insurers to attract new customer segments and achieve sustained growth.
Changing Demographics in the Life Insurance Industry
Consumers, especially younger adults, have been buying insurance in greater numbers than any other age group since the start of the pandemic. There was a 13 percent increase in life insurance applications among the under-44 age group compared to a nine percent jump for 45- to 59-year-olds and 0.4 percent in the 60-plus category.
Younger adults are more likely to have children to be concerned about, along with higher amounts of outstanding mortgage or student debt to cover. Younger workers also experienced higher unemployment rates compared to older workers, so they may have purchased individual coverage to make up for the loss of employer-sponsored group policies.
Luckily for insurers, many young adults don’t need convincing right now on the importance of life insurance policies. Still, going forward, they will need to pivot product offerings and processes to continue to appeal to the newer generations.
Leveraging New Technologies and Data Analytics in Life Insurance
The pandemic sparked interest in life insurance purchases – and applicants are expecting to shop seamlessly for coverage. Fifty percent of consumers say they are more likely to buy life insurance through automated or simplified underwriting than through the more time-consuming and traditional processes.
As a result, insurers are turning to data analytics, big data, predictive models, artificial intelligence and machine learning to streamline their underwriting process and classify risk more effectively.
Three out of 4 life insurance companies in the U.S. have some type of automated or accelerated underwriting process. Fast and accurate automation enables a faster turnaround time in underwriting and claims decisions while reducing the need for manual intervention.
Going forward, intelligent automation will be a critical success factor in achieving cost efficiency and speedy operational processes that meet consumer expectations.
Acceleration of Digital Agendas
Coronavirus restrictions, changing demographics and developments in technology have forever transformed consumers’ expectations of life insurance providers. Now more than ever, consumers seek ease of access, speed, personalization, and choice regarding life insurance products.
Less than a third of customers have purchased life insurance solely in person since the pandemic began. This compares with 44 percent who were buying life insurance policies in person before the pandemic.
Across the life insurance industry, companies are exploring new technologies and partnering with InsurTechs to create new models, tools and the best digital experience possible. Eighty-five percent of insurance CEOs say COVID-19 has accelerated the digitalization of their operations, and 78 percent say it has turbo-charged progress on creating a seamless digital customer experience.
From here on out, insurers need to continue accelerating digital agendas and meeting consumers where they are – behind their computers and smartphones.
As we settle into post-COVID life, it is clear the world won’t return to the “norms” we experienced in 2019. The life insurance industry will continue to experience this influx of increased sales for a brief time, but the changing demographics, leveraging of new technologies and acceleration of digital agendas are here to stay.
We saw signs of massive and unprecedented industry progress occur in just a few short months. To remain competitive, life insurance companies will need to continuously scan the landscape to identify opportunities and use the current momentum to develop tools and models that not only capture new audiences but satisfy returning customers.