On Tuesday, February 21st, I co-hosted a webinar on the Top 10 Trends in Life, Annuity, & Benefits Insurance with my Aite-Novarica Group colleagues: Nancy Casbarro, Senior Principal; John Keddy, Senior Principal; and Ken Toffolo, Research Council Fellow. During this hour-long presentation, we discussed each of the 10 trends and shared our perspectives on how we see them impacting the life, annuities, and benefits space going forward. Here are some highlights from our discussion.
Traditional Approaches Are Less Viable
Core system modernizations remain an important element in the strategic plans of insurance carriers, but the approach to modernization has matured. Rather than the “one size fits all” system that carriers implemented in previous years, new systems should be nuanced and address a greater variety of needs. Ensuring data integrity, configurable products, and transparency are built into the end-to-end life cycle provides a competitive advantage for carriers. When implementing new policy administration systems, opting for a greenfield approach allows carriers to deploy configurable capabilities while optimizing speed to market.
Meanwhile, the useful life of technology is getting shorter, driven by the rapid growth of technology advances. This has significant implications for both the resources needed to maintain systems and the funding mechanisms used to finance them. As companies focus on the digital transformation of their systems and operations, they are surprised by the size of the integration tail that is required to support an end-to-end digital experience. Carriers should develop a strong enterprise technology and business architecture organization, governance program, partnerships with vendors of their key systems, and a strong organizational commitment to the business goals and objectives of the transformation program.
Understanding that these are business projects enabled by technology, rather than pure technology “plays,” can be critical to achieving the operational and financial goals of major transformation efforts.
Users and Their Expectations Are Changing
Insurers are facing a growing realization that the types of products that were important to baby boomers, older Gen Xers, and their parents are not what the market will demand in the future. Products will need to reflect the reality of delayed family formations in America, an array of different definitions of family structure, depressed birth rates, and heavy debt burdens (e.g., from educational loans).
Carriers are also realizing the importance of experience across users, including attractive user interfaces, reliable data, and automated processes. Although life/annuity/benefits customers have a relatively low transaction volume, their expectations for a seamless experience are growing, driven by comparable experiences with other financial and retail capabilities which they routinely interact with.
Experience is also important to internal employees at carriers. The antiquated systems that have plagued carriers for years are difficult to learn, require a great deal of institutional knowledge, and are not acceptable to today’s younger employees, who are extremely tech savvy. As the workforce changes, companies will need to get creative in attracting talent and effectively transferring knowledge.
To learn more about the top 10 trends Aite-Novarica Group foresees impacting the life, annuities, and benefits market in 2023, read our report Top 10 Trends in Life, Annuities, and Benefits: Preparing for a Dynamic and Variable New Reality or reach out to me at [email protected].