Life insurers had to rev up their digital operations faster than planned during COVID-19, and new research says those changes are here to stay—even when the pandemic fades. That acceleration puts insurance companies in a watershed moment for delivering the full digital experience many consumers want and in making good on tech plans that have been in the works for years. It also means that customers can look forward to less cumbersome, time-consuming insurance shopping and policy service.

Key Takeaways

  • As online and mobile activity soared during the pandemic, insurers had no choice but to ramp up digital policy-shopping and service.
  • Observers say that's creating a turning point for insurers to implement their digital strategies as consumers demand and expect more.
  • 74% of carriers say they'll boost self-service, and many are moving to automated underwriting.

How the Pandemic Changed Consumer Expectations

Eight in 10 insurance executives say their companies' digital efforts sped up due to the pandemic, and nine in 10 agree that consumers expect the new tools to continue post-pandemic, according to a new survey of 71 life and multi-line insurance leaders by LIMRA and McKinsey & Co.

"COVID has been a catalyst for supercharging the accelerated digitization that was already underway in the industry," Kartik Sakthivel, chief information officer, LL Global, LIMRA and LOMA, told Investopedia. "Technology initiatives originally slated for 2025/2026 were moved into 2021/2022, especially those around customer experience and agency engagement."

As life insurance companies pivoted, they fast-tracked things like e-signatures, digital quoting, and automated underwriting. Now, the momentum to lock in a wider and permanent menu of virtual tools is stronger than ever as the bar gets higher for meeting customer expectations around digital.

"Consumers—conditioned by the likes of Amazon and Apple—want to use digital, self-service platforms and expect faster turnaround times," Sakthivel says. LIMRA's research shows that 74% of carriers say they're likely to boost self-service, and many are moving to automated underwriting that often skips the medical exam—meaning  quicker policy decisions and less hassle for consumers, he says.  

According to LIMRA's poll, most insurers say it's very likely that consumers will increasingly expect:

  • Self-service insurance models
  • Digital insurance shopping
  • Faster turnaround times
  • Video tools

And when companies were asked where they intend to expand digital investments over the next 12 months, their top response (72%) was to provide virtual sales capabilities for agents and brokers, the survey found.

Moving at the Speed of Digital

Keeping up with the pandemic-induced speed of change is paramount as legacy insurance systems modernize and compete with newer digital-only disruptors, notes a recent report by Bain & Co. It calls the scenario "a digital reckoning for insurance companies."

With digital insurance providers like Lemonade promising a five-minute application process for term life, aided by its AI-powered chatbot "Maya," for instance, "insurers have no choice but to upgrade the digital experience," the report says.

One example: USAA Life Insurance Co. enabled the use of electronic medical records for life insurance underwriting along with "auto-decision" based on those records. The company says more than half of its 2020 life insurance applications were submitted via digital channels. 

"The great part about a digital customer journey is that digital is always on, it's always consistent, and you'll know pretty quickly if your customers are enjoying or not enjoying that process," Brandon Carter, chairman and president of USAA Life Insurance Co., told Sakthivel during a recent “LIMRA Unplugged” video podcast. "So, you have the ability to pivot and to double down in areas that you wouldn’t know in an agent-based experience or even a direct-to-consumer or non-digital experience."

That capability is important, according to a separate benchmarking study of 104 life and property/casualty insurance executives released by Bain last year. Leading insurers use immediate data and user feedback, it found, to constantly experiment and refine their interactions in ways that most appeal to customers—namely simplicity and ease of use.

"With the cost pressures and the shift in customer behavior caused by the COVID-19 crisis," that report concluded, "the future is arriving sooner than insurance companies anticipated."