Life insurers must transform on several fronts: digitize operations, harness data analytics for innovation, and reinvent distribution. BCG’s expertise in digital transformation can help insurers accomplish their transformation agenda.
Life insurers must combine digital, data analytics, and distribution to master life insurance strategy in the twenty-first century. By building digital and advanced analytic capabilities, they can customize products and create new offerings that are more highly valued by consumers. They can also provide agents with qualified leads and tools to boost their productivity and address consumer needs more holistically. This, in turn, shifts the role of agents from sales to advisories, transforming the distribution chain.
Moreover, by combining human and technological capabilities, they can enable “bionic underwriting.” A simpler, faster, and less invasive process, bionic underwriting improves efficiency, cuts costs, and boosts customer satisfaction.
BCG works closely with life insurers to refresh their digital strategies, refine distribution, harness the power of data analytics across the value chain, and maximize value from their in-force books.
BCG has developed tools in partnership with our specialty businesses to help clients optimize processes, drive innovation, and implement digital transformations. BCG GAMMA leverages artificial intelligence and predictive analytics to address a variety of challenges in the insurance industry, including pricing effectiveness, risk management, and in-force management, while BCG Digital Ventures helps insurers innovate through applied technologies and agile methodologies, such as innovation sprints. BCG Platinion provides services and solutions focused on the technology side of digital transformations, such as IT architecture, cybersecurity, and implementation management.
BCG’s international life insurance consulting teams use their expertise in business strategy, digital transformation, and advanced analytics to help clients tackle a broad array of imperatives, including optimizing portfolios and risk management, simplifying customer journeys, leveraging fraud analytics and big data, and reimagining distribution. We pair a global perspective with a rich understanding of insurance operations and local markets, as well as the variations in business regulations and practices across and among them.
We tailor our life insurance consulting approach to the needs and circumstances of each client, leveraging a number of proven tools, capabilities, and solutions. Examples include:
Reinvention of Distribution. Life insurers’ traditional model is ripe for reinvention, particularly when it comes to distribution. BCG helps agencies use data and predictive analytics in a more focused way to drive highly qualified leads, address consumer needs more holistically, and provide support in the recruiting and training of new agents. This can reduce customer acquisition costs by up to 20% and reduce administration costs by up to 30%.
Finding New Growth. The business for which life insurance carriers are best known—financial protection—provides limited opportunity for interacting with customers. This limits insurers’ ability to identify new ways of helping customers and to engender loyalty. Providing easily accessible, high-value solutions that go beyond traditional products, such as financial and physical wellness offerings, opens up a promising area of value proposition expansion for life insurers.
Bionic Insurer. BCG guides our clients to the future of insurance underwriting: the bionic insurer. We call it that because it combines technological and human capabilities. Bionic insurers are better equipped to redesign the organization, execute insurance transactions digitally, share data between platforms, and leverage multidisciplinary teams to solve customer problems, manage critical processes, and continually improve the customer experience.
Bancassurance 2.0. BCG’s Bancassurance 2.0 model promotes excellence in three dimensions: close collaboration between bank and insurer to ensure integrated governance, personalized value propositions specific to the banking channel, and operational efficiency. Our proprietary bancassurance benchmark measures the performance of the bancassurance model along these dimensions, which helps uncover and quantify opportunities for improvement.
Runoff and In-Force Management. We help companies make the most of their in-force books by minimizing losses and maximizing profitability. Using advanced data and analytics to develop a sophisticated understanding of each customer segment, companies can be proactive about in-force management and influence customer behavior to reduce customer churn rates. In an environment in which new business may not always be profitable, this capability is more important than ever.
Legacy Management 4.0. Migrating policies and contracts from legacy systems to new platforms is often challenging and expensive. We use AI and robotics to radically cut costs and improve efficiency, while maintaining or improving data analytics capabilities and the customer experience.
Executives have ambitious plans to reimagine customer engagement, ways of working, and growth strategies.
Across the next decade, life insurers will face a challenging new environment. Are leaders willing to adapt and evolve to meet these industry shifts head-on?
Fitness tracking apps and personal health data from other sources are giving insurers a unique opportunity to expand their role.
Change management has leaped to the top of executives’ agenda as insurers struggle to improve customer engagement.
With global economic headwinds affecting the life insurance industry, the time to invest in a transformation of the distribution model is now. BCG’s alumnus Tim Calvert explains how such a shift can lead to dramatic increases in operating margins—and will benefit everyone along the value chain.
After decades of little innovation, life insurance distribution—and particularly the agency channel—is on the cusp of significant change.
