This year, I’ve collaborated with several groups and firms within the wealth management and life insurance segment of the financial services industry. A recent industry analysis prompted me to reflect on the critical role of technology in the life insurance sector.

What Does Africa Have to Do with US Life Insurance Technology?

Throughout my 26 years in this industry, technology has been a consistent challenge for many companies. Terms like “archaic,” “obsolete,” and “legacy systems” dominate discussions about innovation in the insurance space. I’ve frequently compared this to the technological leapfrogging seen in Africa, and it’s a comparison worth sharing.

Growth continues to be a significant challenge for life insurance companies, as highlighted by the LIMRA and BCG analysis below. Despite the post-pandemic tech boom over the past five years, growth remains a top concern, while technology is a close second. Additionally, the focus on distribution has fluctuated, and currently sits towards the bottom of the priority list.

The Role of Technology in the Life Insurance Value Chain.

Your position within the life insurance value chain significantly impacts the technological focus of your operations. Insurance companies often place minimal emphasis on technology, leaving distribution companies to navigate an increasingly digital world on their own. Producers, in particular, find themselves caught between advanced sales technology and inadequate support for back-end servicing. Ongoing challenges at the carrier level often result in neglected backend processes.

This year, I’ve spoken with several fintech and Insurtech companies, and they’re all observing the same trend: the growing need to simplify and automate tools to enhance the client experience during front-end sales. Over the past decade, many fintech companies have entered the space. However, in recent years, there has been a noticeable increase in collaboration and innovation, with insurance companies becoming more willing to partner and create new solutions.

However, even if a groundbreaking technology were introduced tomorrow, the real challenge for most companies would remain:

• How to analyze the vast array of available technologies and navigate the increasing number of competitors.
  
• How to feel comfortable and flexible enough to adapt to the rapid pace of change.
  
• How to determine the best fit for each type of technology within their unique workflows.
  

The Africa Landline Analogy

Before my hike up Mount Kilimanjaro, I did a significant amount of research, during which I came across an article about landlines in Africa. The article highlighted an interesting statistic: while only about 2% of households have a landline, approximately 90% of adults own a mobile phone.₁ This leapfrogging of landline infrastructure has enabled rapid and efficient connectivity to the global economy.

This technological leap has not only provided widespread connectivity but has also unlocked access to various tools and resources that were previously out of reach, such as the internet, banking, e-commerce, and social media. A single innovation has delivered multiple solutions.

Reflecting on this change, I believe the life insurance industry is on the verge of a similar transformation. The persistence of legacy systems, coupled with growing pressure from producers, necessitates a more transparent and efficient approach to conducting business and improving client experiences.

The Future of Insurance Technology

Universal API Example

LIMRA recently published an article titled “Universal APIs: Integrate, Simplify, and Modernize.” This piece highlights the capability of carriers to integrate internal systems and seamlessly connect to external parties without the need for extensive and costly coding.

As the industry reaches a pivotal point, tools like universal APIs are essential for the future, enabling distribution groups, firms and producers to better service their policies and clients.

Imagine having a single, unified source for all your insurance information, allowing you to seamlessly generate the organized data you need. I believe this reality is just a few years away, if not sooner.

Medical Record Example

Imagine a future where your clients have full access to all medical records through a decentralized platform. Medical facilities worldwide could upload documents to this platform, and clients could use a 24-word mnemonic phrase to grant specific access to an insurance carrier. Each carrier would receive a unique passphrase for secure access during the application process. Without that passphrase, documents remain fragmented and inaccessible, ensuring privacy and security. This process could happen in seconds, eliminating the need for APSs, specific doctor forms, and significantly reduce the time required for fully underwriting policies.

This concept is not far-fetched, as the potential for blockchain technology to transform electronic health records (EHRs) is already being explored. According to a study by Han, Zhang, and Vermund (2022)₃, blockchain offers a promising solution to the interoperability and privacy challenges faced by traditional EHR systems. By utilizing a decentralized ledger, blockchain can enhance data security and streamline access to medical records, making this futuristic scenario a possible reality in the near future.

Key Questions for Your Company

• Is your company ready for these types of changes, and will you be ahead of the curve?
  
• Do you have the right systems, workflows, and processes in place today to be agile enough to adapt quickly?
  
• Do you have quality data, and are there mechanisms in place to clean and monitor it?
  

A Look to the Future

To put technological progress into perspective, a movie I recently watched highlighted that it took humanity over 100,000 years to evolve from the hunter-gatherer stage to the agricultural age. The shift from the agricultural age to the industrial age, beginning in the late 18th century, took around 12,000 years. However, moving from the industrial age to the atomic age, starting in 1945, required only about 200 years. Finally, the transition from the atomic age to the information age, which began in the late 20th century, occurred within just a few decades.

Our capacity to accelerate and advance technology is continually increasing – is your company ready to scale with these inevitable changes?

Conclusion

As we approach the next wave of technological evolution, it’s more crucial than ever to ensure your company is equipped to adapt, scale, and thrive. If you’re uncertain about where to start, how to structure your company’s foundation, or how to implement these changes, 3G Practice Consulting is here to assist you.

Contact us at greg@3gpconsulting.com to build a strong foundation for long-term success.