Factors Powering Continuous Underwriting

There are important factors that will underpin the rapid rise of continuous underwriting by generating seemingly never-ending streams of up-to-the-second customer data.

The Internet of Things (IoT)/Wearables

Sapiens’ eBook, IoTwenty Five: Internet of Things in 2025, highlighted the lucrative potential of IoT: “There will be 20 billion IoT devices around the world by 20202 and McKinsey Global Institute research predicts that IoT’s impact on the global economy could reach $6.2 trillion by 2025.”

This isn’t just a rosy future vision… information gathering is already greatly improved compared to the early days of IoT. Devices such as the Fitbit have gone mainstream. Insurers are reaping benefits from integrating with wearable technology and the “connected self” as part of the overall IoT. As with social media and customer engagement platforms, wearable technology (wearables) is generating helpful information that can be utilized for improved underwriting. Health coverage decisions can be formulated with the latest and most accurate information, reducing insurers’ exposure to risk (which will of course lower their costs). As an added benefit, usage-based insurance (UBI) programs, based on data from wearables, enable insurers to provide more personalized programs and enhanced customer service.

Customer Engagement Platforms

Life insurance is a low-touch industry, making it challenging for providers to obtain worthwhile customer data without shifting from “today’s death-benefit paradigm to a high-touch, interactive, digital dialogue with their customers,” as I wrote in my previous eBook: Engage in a Winning Strategy! Customer Engagement’s Benefits and Challenges for Life Insurers.

Getting customers to sign up for branded customer engagement programs generates a wealth of data on life insurers’ client base (and the information is proprietary to insurers). If the engagement program syncs with wearable technology and health applications, there will be an even greater reservoir of data and a more accurate overall snapshot. The insights mined from this data can be used proactively to influence and fuel continuous underwriting processes.

By personalizing insurance to policyholders’ needs, life insurers can cross-sell based on customer life events, encourage better health for policyholders and provide discounts based on activities.

Social Media

As we wrote in a previous Sapiens white paper, Successful Social Media Strategies for Insurers, it’s not news to report that we are living in a connected, digital world. There is probably not a single person reading this who isn’t on either Facebook, or LinkedIn. And yet, because insurers are still experiencing some difficulties with social media – such as determining which info

rmation posted by users is reliable – the myth that providers can’t yet make good use of social media stubbornly persists in some quarters.

But the application of advanced analytics to social media is already beginning to disrupt the traditional underwriting process as users openly broadcast the minutiae of their lives. A few innovative insurers are building their brands and offering a unique customer experience by providing optimized social media content and using the data obtained from social media to shape their underwriting strategies. Many insurers, however, have been slow out of the gate to fully embrace this medium’s advantages.

It’s true that privacy issues are a concern and insurers must be careful to comply with all relevant regulations, but expect social media to play an increasingly important role in the underwriting process as time passes.

My new white paper, “Continuous Underwriting is Underutilized in the Life Insurance Industry,” lays out the business benefits of continuous underwriting, offers mini-case studies and explains the essentials for continuous underwriting success.

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Erica Moe

Erica Moe

Erica Moe is the head of Sapiens' North American Life Insurance practice. She possesses expertise in business and technology-enabled transformations, mergers and acquisitions, outsourcing, software implementations, business architecture and end-to-end operations for the financial services industry (life insurance, P&C, group benefits and banking).

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