Most life insurance companies take seven factors into account when determining a person’s policy and people with conditions such as diabetes may not be able to get life insurance at all, that is 60% of the U.S. population.
When insurers use more data to develop policies and combine that with machine learning, they can create a range to develop new policy spectrums so that if someone has a pre-existing condition, they are not rejected but put into a different class which will help companies profitably reach new audiences.
Legacy insurance companies that refuse to adapt to the new parameters established by COVID-19 and advances in technology will fall prey to newer startups who have embraced the 21st century.
Incorporating Insurtech Into The Insurance Process
New startups have based their model on incorporating insurtech into the insurance process from the very beginning and have been able to transform the process of buying insurance, thus making it easy and transparent for consumers.
For years, the lack of digital-know-how has harmed the insurance industry and as a result, its agents and consumers with outdated policies, but the COVID-19 pandemic has highlighted other ways the lack of digital adoption is hurting the industry:
Consumers were not able to get required medical exams during lockdown resulting in a backlog waiting to get life insurance – in some cases up to 3 months.
Deferred preventative healthcare could lead to a flood of claims later this year, with many companies lacking the technology to process the claims in a timely manner.
Unknown factors to the mortuary tables will result in even more outdated policy offers that consumers don’t want or need.
Agents can’t sell the way the used to and this impacts their earnings and livelihood. Face-to-face meetings and social distancing means selling insurance products online via zoom, apps, and through social networks are requisite for agents to survive and thrive.
“For many years, the major players in the insurance industry have not had a lot of competition and so they did not think there was any need to change the way they were doing business. But now the established players are becoming bogged down with paperwork and outdated models while digitally advanced insurance start-ups are having success.” —Paul Ford, Co-Founder and CEO of Traffk
Source: Value Walk
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