A recent report published by Atidot, an insurance technology company providing AI, big data, and predictive analytics tools to the life insurance industry, exposes the widespread problem of under-insurance in the U.S. life insurance industry.
According to the report, only 26% of the total coverage needed for life insurance is currently met, leaving 74% of unmet potential coverage. The report also found that insurance companies are missing out on an average of $785 dollars in annual life insurance premium payments per person who requires insurance coverage nationally, resulting in a total missed potential of almost $70 billion in annual premiums.
While there are deviations depending on income levels, age, and the number of dependants, the average coverage needed per person in the U.S. is $450,000.
“Policyholders are generally unaware that they are underinsured, and the onus must be on the insurance industry to remedy that,” said Dror Katzav, CEO of Atidot. “Life insurance companies need to be able to utilize the troves of data at their disposal to better engage with their customers. New solutions enable insurers to harness this data efficiently and know when to contact clients to update their coverage and prevent lapsation.”
The report analyzes the levels of insurance on a state-by-state basis, uncovering the rate of under-insurance for individual states and the U.S. as a whole. The state with the greatest percentage of under-insurance is West Virginia with an average of 85%, while Oklahoma, the least under-insured state, still recorded a staggering 51%. The findings clearly show how widespread the problem is, demonstrating an alarming disconnect between providers and policyholders.
The report reveals that companies are forfeiting enormous profit potential and placing their most valuable asset, a loyal customer base, at risk by failing to capitalize on the data they possess. The failure to strategically interact with their clients comes at a substantial cost for insurers and customers alike.
The full report can be found here: https://www.atidot.com/under-insurance-report-2018
About Atidot: Atidot is an insurtech company empowering the life insurance industry with big data and predictive analytics. Atidot’s cloud-based platform provides life insurers with data-driven insights to inform decision-making and develop new business strategies. Founded by a team of data scientists and actuaries, including the former Chief Actuary at the Israeli Ministry of Finance, Atidot is working with leading insurance providers to allow them to take control of their existing data to improve policyholder retention, sales, and in-force management, thereby increasing revenues. For more information, visit www.atidot.com.
Looks like California is somewhere between 71% – 81% under-insured.
What a coincidence, WI is also somewhere between 71%-81% under-insured.
Made me laugh.