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Personalize the customer experience
The influence of digital leaders in other industries has raised the bar in insurance as well . Several areas offer opportunities for personalization that can strengthen customer relationships .
Targeted health management shift
Life insurers have long maintained a focus on mortality protection , but concern over mortality risk has diminished in many markets , which has reduced demand for core products . Despite recent increases in online research for life insurance , spurred by COVID-19 , the long-term decline of mortality risk is likely to continue . In the coming decade , insurers will play an increasingly prominent role in the health of their customers as life expectancy increases and health trends change .
By 2030 , the number of people aged 60 and older will grow by more than 50 percent , from 900 million in 2015 to 1.4 billion . 3 Further , noncommunicable diseases — those more closely linked to lifestyle and behavior , such as diabetes , heart disease , and lung cancer — will account for 71 percent of all annual deaths globally and represent an increasing proportion of mortality risk . 4 We believe these factors will motivate life and annuities manufacturers to engage customers in the shared-value economics of healthy living to increase policyholder longevity . Technology will play an important part in this transition . The proliferation of data and connected devices , particularly wearables , will continue to make it easier for life insurance companies to play an active role in shaping customer health — to everyone ’ s benefit . Armed with this information , life insurance companies can provide well-timed , personalized reminders or notifications around diet , disease management , doctor appointments , local health resources , and physical activity . Customers are increasingly willing to share their data in exchange for personalization ; today , six in ten consumers globally are comfortable sharing personal details with their insurer in exchange for lower premiums . 5
Increase in data-share
This trend has accelerated during the pandemic . Evidence shows that a higher proportion of consumers are willing to share data collected on their watches related to heart rate . In recent months , life insurance companies have relied on more detailed questions and medical records instead of in-person physical exams , which have not been possible with physical distancing .
Shared-value life insurance products , such as Vitality , are in the vanguard . Developed by Discovery Group in South Africa , Vitality pioneered the model of shared-value economics in its product design and pricing , leading to the creation of an engaged wellness ecosystem . Now in 22 markets , the program has seen a 35 percent reduction in mortality among highly engaged members and a 15 percent lower policy-lapse rate . 6 In addition , some Japanese life insurance companies are migrating to a “ pay as you live ” premium schedule with dynamic pricing . For example , customers who exhibit regular healthy behaviors , such as exercising and attending doctor checkups , are rewarded with lower premiums . In the future , we expect to see life insurance transition from the traditional “ assess and service ” model and shift toward “ prescribe and prevent .”
The evolution toward continuous underwriting , made possible by increased data and device connectivity , will present further opportunity for personalization . Currently , mortality underwriting suffers from two primary data gaps . First , it is constrained to a single moment in time — the initial sale . The only data available at that point are past morbidity and behavioral data on the customer . Second , it fails to account for a customer ’ s lifestyle changes , which are significantly more controllable .
Underwriting evolving into 4 phases
1 . Currently , insurers focus on automating the underwriting process to improve efficiency gains and reduce inconsistencies .
2 . Some insurers have advanced to accelerated underwriting , for which applications are submitted digitally .
3 . Doing so dramatically reduces the need for invasive fluid and paramedical exams and results in near auto-issuance for the majority of policies . Insurers will then graduate to microsegmentation and personalization , for which individualized offers are generated using comprehensive internal and external data sets with enhanced accuracy .
4 . Finally , winning companies will provide continuous “ onetouch ” underwriting , with dynamic adjustment based on customer behavior and suggested personalized actions to significantly drive healthier behavior .
Together , this four-phase evolution flips the underwriting approach on its head , with environment , health , and lifestyle becoming primary inputs and medical data providing only one part of the picture .
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