Technology and Life Insurance

I am personally happy and comfortable in a technological world. I generally opt for technological solutions to problems I encounter at work. I almost never shop in brick and mortar stores. I joined Amazon Prime the very first time I saw it. I buy groceries online. I buy from curated services where packages of clothing and other consumer products arrive on my doorstep and bring me great pleasure after a long work day. But enough about me.

Almost every day we get an inquiry at CCS from a client about issues related to the use of technology to apply for, underwrite, and/or deliver life insurance and annuities. While it seems that the answers should be easy in 2015, long after the ability to do these industry-specific tasks became available, they are not. Rules are often unpublished and byzantine. Regulators do not make it easy to do business electronically. I see lots of companies wanting to use technology and struggling for permission to do so. While it may not be accurate, regulatory positions seem to be resistant to or fear change rather than clear regulatory concerns.

So in that context, an article in the 2015 issue of Best’s Review caught my eye. In Closing the Gap, Mary Pat Campbell, a researcher with Conning, answered a question related to how life insurers can sell more effectively to the middle market as part of a larger discussion of a growing gap in life insurance protection compared to need. She says: 

“One possibility is better use of technology. Look at what banks and other financial institutions are doing to try to offer flexible payments or ease of transactions. And look how fast the underwriting process is in certain segments of the property/casualty insurance industry. I don’t see the life insurance industry really keeping up with the other financial institutions they really are in competition with.”

I know from my own perspective, I am unlikely to buy anything I can’t buy easily online. Intuitively it seems right to me that more technology would lead to more customers. But what I see and hear is the life insurance industry wanting very much to keep up with other financial institutions, but they’re met with regulatory roadblocks with any movement away from paper and pen.

Someday life insurers will be allowed to use the technology of 2015 and beyond, but the question is how long will they have to wait for regulators to be comfortable with what is new and different? If the wait is until it is no longer new and different, life insurers will never be able to compete with other financial institutions that are allowed to adapt more quickly.