As the COVID-19 pandemic spread across the country, new research from LIMRA and Boston Consulting Group (BCG) finds 4 in 10 consumers purchased life insurance using a hybrid of online and consulting with a financial professional, an increase of 10 percentage points compared with life insurance purchases prior to the pandemic.
Nearly 4,000 Americans were surveyed between July and August 2020, to identify how COVID-19 affected consumers’ perceptions and behavior when purchasing life insurance. The findings are presented in a report titled “The COVID-19 Effect: High Tech With Human Touch to Optimize Life Insurance Customer Experience,” which was released Oct. 26.
COVID-19 has increased consumers’ awareness about the importance of having life insurance coverage. Between March 2020 and July 2020, the number of Americans saying they felt a heightened need for life insurance increased from 49% to 58%, according to LIMRA research. This new study shows a third of consumers (32%) who began shopping for life insurance were prompted by the pandemic.
Researchers explored how consumers would approach the buying process. Until now, the most common method used to buy life insurance was working with a financial professional face-to-face. However, concerns about COVID-19 made meeting face-to face unattractive to many Americans.
“When the United States shut down to mitigate the spread of COVID-19, life insurers accelerated their adoption of digital technologies to allow consumer to continue to purchase life insurance while adhering to social distancing guidelines,” said Rob Sims, BCG managing director and partner. “Earlier this year, LIMRA research revealed carriers expanded their accelerated and automated underwriting, expedited use of e-signatures and delivering digital policies, and encouraged video conferencing for customer meetings. All of these changes streamlined the process for consumers to buy life insurance.”
Despite life insurers working to make purchasing life insurance online easier, the study found consumers still wanted to consult with a financial professional. More than a quarter of consumers said talking to an agent eased the purchase process.
“Instead of thinking of technology as a replacement for financial professionals, this research shows technology should be used as an enabler to enhance and possibly transform the pre-pandemic life insurance sales model,” said Todd Silverhart, corporate vice president and director of LIMRA’s Research Quality and Performance.
“The study also underscored the invaluable role financial professionals play in customer satisfaction. Almost every life insurance owner surveyed (97%) said they were satisfied with the service they received when working with their financial professional, which was higher than any other service channel,” Silverhart added.
Overall, this study reveals three important long-term outcomes for the life insurance industry from the pandemic:
- The acceleration of insurers’ digital agendas will continue. Technology will be deployed across the value chain and in distribution especially, improving productivity and the customer experience.
- The “human touch” in life insurance will remain critical, but take a different form. Hybrid sales and customer engagement models that involve a mix of digital and human interactions (often together) are here to stay. Financial professionals will remain central to the sales process even as carriers adopt more digital technologies.
- The use of accelerated underwriting will expand. Carriers are unlikely to reverse the changes to underwriting practices triggered by the pandemic tighten standards, which shortened the time (and cost) of policy delivery. Better access to and use of data should also enable better risk selection over time.
To read the full report, visit: The COVID-19 Effect: High Tech With Human Touch to Optimize Life Insurance Customer Experience.