Without question, the life insurance industry needs to innovate to make its products easier for clients to buy, Alex Lucas, SVP and Head of Insurance for Manulife told The Insurance and Investment Journal. However, it also must go a step further and find new ways to engage the client once they own life insurance, he adds.
“We are really behind a lot of other consumer categories. It’s difficult to acquire and, other than the annual or monthly payment, there’s no real experience of ownership.”
Lucas sees an opportunity for the industry in engaging in conversations with consumers about insurance – about its value to their families in covering risk – but he also thinks it needs to be positioned as an engaging product category to own. He points to Manulife’s Vitality program, which offers rewards to clients for healthful behaviours, as the best example of how his company is trying to change the conversation with clients.
Under the program, participants earn points toward rewards for achieving wellness goals, such as regular exercise or having an annual check up. Participants are given a fitness tracker, have access to a gym membership discount, a health screening exam and can receive gift cards.
Lucas says Manulife is pleased so far with client participation in the program, which was launched a year ago in Canada. He expects interest in the program to grow as the company expands the rewards available.
Less intrusive underwriting
In terms of making the product easier to acquire, improving underwriting practices is key and an innovation priority for Manulife. The insurer is looking for ways to manage risk in underwriting in the least intrusive way to the customer, says Lucas.
Progress has already been made in this regard, he says. Now Manulife no longer requires fluid samples for eligible insurance applicants age 45 and younger for up to $1 million face amount for most life insurance products. “What’s happened there, especially at a larger firm like Manulife, we had years and years of data and we were able to mine that data and build models that tell us when we need those fluids as opposed to asking every single person for them.”
He adds that the company has expanded its research and development capabilities in the underwriting area, as well as its analytics capabilities more broadly at the company level. The goal of such research is to make purchasing the product easier to buy without raising costs. “You can make underwriting easier and less intrusive now. The problem is that often means the cost has to go up.”
Another innovation priority for Manulife is improving electronic processing – a common goal in the industry, Lucas underlines. Better electronic processing will be an enabler to other advances, such as underwriting innovation, he explains. “We need to get more and more of the industry processing electronically to take advantage of new things like analytics and predictive models in the background.”
When it comes to improving electronic processing, Manulife is challenged by its back-office, infrastructure and legacy systems. “I think all the carriers are struggling with that to a certain degree.”
He gave the example of electronic applications. “It’s pretty easy to have an electronic application, but it’s connecting it to your underwriting engine in the background and your back-office systems and then expanding it to include e-signature and e-contract delivery” where the real value creation comes in, he says
Lucas adds that because of their technology challenges, traditional companies face “a bit of a threat” from fintech startups which “have looked at the experience of our products and are targeting us with new ways to market and buy product. It’s obvious that we have to innovate at that front end. But for us, innovation in the back end, our infrastructure and how we connect these things together is the real opportunity for us.”
Leveraging consumers’ connectivity
In improving electronic processing, the goal for Manulife is not about going direct-to-consumer. “It’s about electronic applications, electronic signature, contract delivery…really getting the way we function as an industry up to date, so we can leverage the connectivity of customers.” Achieving this will cut down on the paper, reduce processing time and create an experience that is more in line with customer expectations, he says.
In pursuing this electronic transformation, Lucas says he thinks the company is “a couple of years into a five plus year journey, just to get a complete electronic processing platform out there and incrementally improve on it over time.”
He says Manulife has a good start on this, “one of the best in the industry” but the focus must be on making it so a majority of customers can buy insurance electronically and in a much shorter period of time, “than the 25 to 30 days it takes the industry today.”
Online service capability
Online service support is another client engagement area where the insurance industry needs to innovate, he adds. Compared to the banks, the insurance industry has not made a lot of service transactions or interactions available online, such as the ability to change an address, or modify a product online.
“We can do some of those things online today, but I think the insurance industry as a whole is a little slower to move a lot of that service capability online.” He adds, however, that he expects this situation to improve.