The AI Surge: A Game Changer for Life Insurance

September 2024

In the ever-evolving landscape of the life insurance industry, a significant transformation is on the horizon, driven by emerging technologies and shifting consumer expectations. As we step into the future, it is imperative to understand the potential impact of these changes on the distribution of life insurance.

AI in Distribution

Artificial intelligence (AI) has emerged as a formidable force, poised to revolutionize various sectors, including life insurance. The integration of AI in life insurance is not just a trend but a paradigm shift that promises to redefine how policies are marketed, sold and serviced.

According to the Gallagher Re Q2 2024 Global InsurTech Report, one-third of Q2 InsurTech deals went to AI-centered InsurTechs, reflecting the industry’s emphasis on emerging technologies.

AI’s influence on life insurance distribution is multifaceted. From predictive analytics to personalized customer experiences, AI enables insurers to streamline processes, enhance decision-making and deliver tailored solutions. This transformation is not merely about technology but about meeting the evolving needs of consumers who demand seamless, intuitive and efficient interactions.

InsurTech on the Rise

The InsurTech market is experiencing exponential growth. As per Grand View Research’s “InsurTech Market Size, Share & Trends Analysis Report” (2030), the global InsurTech market is projected to grow at a compound annual growth rate (CAGR) of 52.7 percent from 2023 to 2030. This surge is indicative of the industry’s commitment to leveraging technology to innovate and stay competitive.

The rise of InsurTech underscores the industry’s focus on digital transformation. Life insurance companies are increasingly adopting AI-driven platforms to enhance their distribution channels. These platforms facilitate various distribution methods, including advisor-led, direct-to-consumer (D2C), hybrid and embedded sales, thereby expanding the reach of life insurance products.

Industry Stakeholders’ Perspectives

Senior Leaders: For senior leaders in life insurance companies, the integration of AI is both an opportunity and a challenge. On one hand, it offers a path to efficiency and innovation; on the other, it demands a strategic overhaul of traditional business models. As one executive noted, “AI is not just an add-on; it’s a fundamental shift that requires us to rethink how we operate and engage with our customers.” Looking ahead, AI is set to transform operational aspects such as new business processing, claims processing, customer service and orphan policy management. Automated underwriting systems can expedite new business processing, while AI-driven chatbots and virtual assistants enhance customer service by providing real-time support. In claims processing, AI algorithms can swiftly analyze and approve claims, reducing turnaround times and increasing customer satisfaction. Additionally, AI can help manage orphan policies by identifying potential policyholders who might need attention and ensuring they receive timely communications and service.

Distributors: AI-powered tools can provide distributors such as managing general agents, brokerage general agents and independent marketing organizations with insights into customer behavior, enabling them to provide context for advisors on more relevant products for clients and target markets, improving customer (both advisor and consumer) satisfaction. Couple this with platforms that facilitate a more efficient underwriting process, reducing the time from application to policy issuance, and you can see where the potential to improve the purchasing experience lies.

Advisors: AI, a valuable ally, allows advisors to focus on building relationships and providing personalized advice, while AI handles the more tedious aspects of data analysis and policy recommendations. This symbiotic relationship enhances the advisor’s role, making them indispensable in a technology-driven ecosystem. Advisors can leverage AI-driven platforms to better understand their clients’ needs and offer tailored solutions, ultimately improving client satisfaction and retention.

Consumers: At the heart of these changes are consumers. Modern consumers expect convenience, speed and personalization. AI helps meet these expectations by enabling insurers to offer customized policies based on individual needs and preferences. Current industry technology platforms support consumers in receiving quotes, completing applications and managing policies with unprecedented ease. AI-powered tools will provide consumers with proactive insights and recommendations, helping them make informed decisions about their insurance needs.

The Road Ahead

As AI continues to reshape the life insurance industry, the focus should be on creating a more customer-centric experience. Insurers must embrace this technology, not just to stay relevant but to lead in an increasingly competitive market. The next few years will likely witness more significant strides in AI integration, further blurring the lines between technology and human interaction in the insurance landscape.

About the Author

With 30 years of experience in the financial services industry, Ray Adamson is a seasoned expert in life insurance distribution and digital transformation. He currently serves as the chief customer officer at Lavvi, a leading InsurTech startup specializing in digital distribution platforms for life insurance.

About Lavvi

At Lavvi, we are driven by a singular purpose: to connect families with financial security. With over 17 years of experience in insurance distribution, we have a deep understanding of the industry's key audiences — carriers, distributors, advisors and consumers.

Our digital distribution platform for life insurance supports carriers in providing an intuitive buying experience for advisors and consumers through a streamlined financial needs analysis, quoting and application journey.

The application programming interface (API)-driven platform supports multiple distribution methods, including advisor-led, direct-to-consumer, hybrid and embedded sales. As a solution that is in-market, Lavvi's “out-of-the-box” solution can be deployed and production ready in as little as 90 days.

For more information about how Lavvi's innovative solutions can transform your life insurance distribution process, visit our website or contact us today.