Has life insurance finally found its golden ticket?

Fifty years ago, people around the world first watched in awe as Charlie Bucket unpeeled a Wonka bar to reveal a golden ticket that would set him on the path towards not just a chocolate factory but a world of magical opportunity. In 2005, a remake of the classic rags-to-riches tale was released to yet more box office acclaim.

This year, the story is getting yet another telling. But, this time, in a new setting: the insurance industry.

Like Charlie, the European life insurance market has been looking for its golden ticket for a long time now, hoping to transform its lacklustre reputation for customer experience. But with higher underwriting risk and lower room for error, it’s not been able to take the leap of faith to experiment with significant investment in new technologies. As with Charlie, who could only afford to buy one chocolate bar, the sector has joined the race at a disadvantage. As such, life insurance has been consistently falling behind other insurance markets in terms of technological advancement, data availability, and predictive analytics.

Fortunately, in the last couple of years, life insurance’s very own golden ticket has arrived on the scene – and, this time, it’s hidden in plain sight.

Augmented automated underwriting (AAU) is transforming customer experience throughout the sector, leading to improved conversion rates and reduced overheads. By integrating predictive models into existing underwriting processes that utilise data to enable a more accurate projection of applicants’ risk levels, obstacles to onboarding like extensive, invasive questionnaires and in-person medical exams are reduced, and straight-through processing (STP) increased.

If the golden ticket was Charlie’s way into Willy Wonka’s chocolate factory, data has been the chocolate bar behind AAU’s golden ticket success. While in the US market, there is a plethora of data available, from pharmaceutical prescription (RX) databases carrying consumer records, through Financial and Motor Vehicle Records, to the Medical Information Bureau, a U.S. wide database of all previous disclosures and claims made on life insurance applications, there are much more robust data protection standards in Europe that life insurers need to navigate. This is impacting the way the European data market and data sharing has developed.

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To date, there has been very little data sharing in Europe. However, new regulatory changes are potentially coming into play which will lead to open insurance throughout the EU. Open insurance may provide the opportunity for insurers to share data with other insurers and third parties, creating more personalised experiences and services for customers, all within the remits of GDPR.

Through the utilisation of new data, AAU is able to bypass the slow and often manual process of obtaining medical reports to construct a full picture of claims patterns for an applicant’s profile, improving traditional processes and the customer experience. Where previously ‘digitalisation’ in the life insurance sector was little more than the online-ification of offline processes, amplifying inefficiencies and losing customers’ attention along the way, AAU has flipped the script, pursuing a more digital-native approach that prioritises slick-user experience and minimum friction. A sector once riddled with excessive manual processes and back office procedural steps is now processing life insurance premiums in a couple of clicks, getting in line with the fast-paced world of on-demand services like Amazon and Uber.

But Charlie & The Chocolate Factory is about more than happy customers, flashy inventions and the next generation’s never-ending hunger for something new. It’s about human nature. It’s easy to be thrown off by terms like artificial intelligence, machine learning and digitalisation, but the evolution of InsurTech is an innately human endeavour.

At present, most underwriting teams spend up to 35% of their time manually handling inbound customer queries received from brokers. In addition to enhancing the end-customer’s experience, AAU allows underwriters to focus on their value-add as human employees, dedicating more of their time to new business activity and one-on-one conversations.

Over the next five years, general insurance is expected to continue its advancement through technological changes. AAU is enabling life insurers to make their way to the front of the pack in the best way possible: by prioritising the happiness of customers and employees alike. Like Charlie, life insurance has found its golden ticket. It’s time to enter the chocolate factory.