Life Insurers’ Need for Speed (to Market)

For today’s life insurers, it’s not just innovation that rules the day; speed to market for new products is critical to maintaining competitive advantage and relevancy in a rapidly changing market landscape. Those who can’t keep up risk being left behind by competitors as well as loss of profits and market share. Jason Kozlowski, Manager of New Business and Product Strategy at Sapiens, joins Christine Burke, Sapiens’ Life Marketing Director, in a deep dive on the importance of speed to market and how process efficiencies and solution automation can help insurers race to the top of today’s life insurance marketplace.

Christine Burke|Jason Kozlowski

Christine Burke: Hello and welcome to the Sapiens Insurance 360 podcast. I’m your host for today, Christine Burke. I’m the Life marketing director here at Sapiens, and I’m so pleased that you’re out here listening. This is where we discuss the latest issues, trends, and news from across the insurance solution and technology spectrum. Today, we’re going to be taking a look at the Life and Annuities (L&A) market space. The success of L&A insurance can be attributed to a resilient business model that combines effective risk management, long-term investment strategies, and customer-centric product offerings. Despite obstacles like low interest rates and technology challenges, L&A insurers continue to innovate and adapt to stay ahead and stay relevant in an ever-changing market landscape. But today, the L&A market remains highly competitive and increasingly standardized, and the need for speed or getting to market faster is paramount.

Delivering new products to market in nine months or modifying existing products in two months or less, has become the expectation, and companies that can’t respond efficiently may run the risk of being left in the dust by competitors, or may see their profits suffer. On today’s podcast, “Life Insurers Need for Speed (to Market),” we’re going to be taking a look at the advantages of being first to market, why speed to market can be so elusive, and how process optimization can help. Here to guide us on our discussion today is a colleague of mine here at Sapiens, Jason Kozlowski. He is Manager of New Business and Product Strategy, and having been in the insurance industry for more than 20 years, he’s helped numerous life carriers achieve their business transformation and is extremely passionate about the advancement in the L&A industry.

Welcome, Jason!

Jason Kozlowski: Thanks, Chris. Happy to be here!

Christine Burke: Great! So, Jason, to start us off, I’ve heard you talk in the past about the changes in the way life insurance is being sold by carriers in recent years. Can you give us a little bit of background on that?

Jason Kozlowski: Yeah, it’s actually, quite exciting. We’ve seen a huge shift in the industry with the way insurance, life insurance is being sold over the last 5 to 10 years, and even over the last one or 2 years, we’ve seen even kind of further shift. So you kind of think about the way that insurance was always sold traditionally. Actually, let’s say up until a decade ago, it was mostly sold by agents, exclusively, very little direct to consumer, business that was out there. The application process was lengthy, of course, almost always needed things like bloodwork and paramedical exams. And that took time, right? It was invasive and it would take time to turn those cases around, could be 30 days, could be 60 days before you had a policy in hand, in some cases. The application process, it was, once upon a time, it was all paper-based applications. And then, you know, carriers started to adopt the e-applications. But even with the e-applications, it was still kind of a very lengthy application process, right? Where you went from start to finish, answering a lot of questions. After you were done with the application, it was submitted to underwriting, the underwriting process started at that point. Think, you know, overall, we’ve seen a big change in all of that over the last few years. So carriers are, of course, going after more of the, you know, direct to consumer markets. So we’re starting to see a big shift there. You know, the younger demographic, they increasingly want that, you know, DIY online experience. They want it to be as easy to buy life insurance as it is to buy car insurance online. Are we 100% there yet as an industry? No. But are we starting to take those steps and shift in that direction? Absent some of that’s because products have gotten simpler. You know, we’ve seen a lot more, term products and simple products that consumers understand, versus the more complex permanent products that were once, kind of dominated the marketplace and things like that. Another thing that’s really enabling a lot of these changes is instant evidence data, where carriers can call out to databases and get underwriting evidence, to get your medical records and things like that. You know, virtually instantaneously, and allows them to auto-decision eligible cases. Or you can do that straight-through processing, in a lot of cases, even at the point of sale. We’re getting to the point where more and more carriers are doing that point of sale, straight-through processing, and by the time you finish the application, you can have a decision. And a lot of that is a result of kind of changing up the e-application in a lot of respects. So instead of doing that long e-app like we talked about where you submitted it after you completed everything and you waited, now the technology exists to where carriers can get an authorization upfront that says, you know, yes, I’ll agree to allow you to get my medical records. And while I’m completing the application, they can be going out and ordering those records. So that by the time you finish up, we may have an underwriting decision and you can walk away and have a policy in hand in a lot of cases. So that’s a huge shift that we’re seeing. Another big change is, just out of communication, keeping people in the loop. It was largely a black box. Once upon a time, you didn’t know what happened, where you were at, how long until you had a policy? Now, of course, the technology exists to keep the agent, the customer in the loop every step of the way. Let you know exactly where you’re at in the process, and when you can expect to have a decision. So a huge shift, over the last few years.

Christine Burke: And you’re right about the instant communication needs. Everybody wants to know right away what’s going on, but you also mentioned the instant underwriting evidence. Can you talk a little bit more about that?

Jason Kozlowski: Yeah, we’ve seen a huge shift in the industry over the last decade or so in the amount of instant underwriting evidence that’s become available, for carriers to use. So you know, once upon a time, we had, kind of the earliest examples of that were things like MIB, the Medical Information Bureau, motor vehicle records and things like that, those were kind of some of the early examples of instant evidence data over the last decade or so, we’ve started to see prescription history, RX history being used very, very heavily within the industry. So, I mean, of course, like anything, there’s an adoption period where carriers get comfortable with it. The technology improves, hit rates, improve. And so we’ve seen a big shift there. Now, there’s virtually no carriers that aren’t using prescription history as part of their underwriting process. And that’s instant. You know, we can, call out to databases, get that information back, within a minute or so.

Medical claims data has been another huge one that we’ve started to really see carriers adopt over the last few years. So in addition to your prescription history, what about all your medical claims information? So you have insurance and the insurance has been billed for an office visit, for any type of treatment. Odds are that’s in a database somewhere, right? And, you know, carriers can now access that information. So there’s requirements and evidence providers that are really specializing in making that information available to carriers. Of course, a big one that’s been a huge topic in the industry for the last several years would be electronic health records, EHRs. That’s a really big growing space, a lot of advancements in the last couple of years are around EHRs, where those requirements evidence providers are getting data, they’re duplicating it, normalizing it, trying to help carriers make sense of that information.

And then once all that data is available to the carrier, they, of course have rules engines that can aggregate and process all that data, help them arrive at, in a lot of cases, those instant decisions where applicable, the straight-through processing. But even if it’s not being used to make an instant decision, it can still make everyone’s life easier. You can make the underwriter’s life easier. It can flag things that are problematic, make recommendations like rate class and whatnot. You know, an overall, all of that, you know, is a win-win for the insurer. The carrier helps things get issued a lot quicker, frees up people’s time from working on mundane tasks and letting the automation and all that instant data kind of come together, do its thing, provide the consistency, you know, and just numerous efficiencies across the organization. So, yeah, it’s, it’s really exciting stuff.

Christine Burke: And I mean, along with all that data, of course, the other hot topic and how to utilize data is, you know, the big word on everyone’s minds these days is AI. How does AI play into affecting speed to market?

Jason Kozlowski: Yeah. Great question. Yeah. You can’t get away from AI these days in any industry. Exciting stuff. AI is going to transform the way we do just about everything in life, I think at some point. But yeah, with insurance carriers, it’s no different. I think, AI is going to really help carriers supplement their business intelligence and their analytics, help them ultimately make more sense of it when it comes to things like their predictive models and their large language models and whatnot, helping carriers with their predictive analytics. As far as things like trying to even do predictive analysis on things like policy lapses and upselling, cross-sell opportunities and whatnot. We’ve seen some exciting, use cases for AI there, behavioral analytics is is a huge one, that we’re starting to really see take off, where, there’s a lot of technology out there to help carriers track the behavior during the application process, which is really, really neat. We can flag things that don’t look quite right, if you think about it. You know, when the application is submitted and comes into the underwriting process, all the underwriter knows or the system knows if the systems evaluating, those responses with rules and whatnot, all they know is the final response. So if you said, yes, you’re a smoker, no, you’re a non-smoker, that’s all the system is, is aware of, historically. So now we’ve got tools that allow carriers to use behavioral analytics to track your behavior throughout the application process. Did you waver on a question or your response to that question, am I a smoker or am I not a smoker? Maybe you changed your response a couple times, right?

So that kind of information can be tracked. And AI is helping carriers with that as well. I think within the life space in particular, what we’re seeing, from an AI standpoint would be, kind of the number one focus right now is helping carriers from an efficiency standpoint. So we’re starting to see a lot of those types of use cases where efficiencies can mean a lot of things by what we’re talking about, summarizing data. So the EHR documents, a lot of times those are still coming in as PDFs as opposed to data feeds, attending physician statement (APSs), PDF data that, if we have summarization of those documents for the underwriter, it can save them a lot of time, right? Bring a lot of efficiencies, flag things that are potentially problematic that they might need to look at instead of, reading the full report and things like that. And then they can, of course, dig in deeper where it makes sense. So we’re seeing a lot of that, I think in, probably 2024 or 2025, that’s kind of probably the number one focus of most of the carriers that, that we’ve worked with is try to use AI to gain those efficiencies, maybe even triaging and prioritizing items, some use of chatbots out there to assist the underwriter throughout the underwriting process. So we’re starting to see a lot of that. I think with AI in any respect, we’re in the very early and it’s going to be really exciting to see, how things change over the next, 5 to 10 years. It’s exciting times, that’s for sure. I think as the industry matures and AI technology matures, everyone’s comfort level is going to increase over time. The models are going to get better. And I think there’s probably a lot of use cases that we as an industry haven’t even identified yet. So it’s exciting stuff, absolutely. But even today, the carriers are starting to make a lot of use of it. And that’s really exciting.

Christine Burke: Well, Jason, I have to say you’re still as passionate as ever about the life and annuities industry. Any closing thoughts on really the state of the industry today?

Jason Kozlowski: Yeah, I think overall, the themes that we’re seeing that carriers that want to stay relevant and need to stay relevant within the industry, they’re embracing change, right? And I think what’s important is that you embrace the changes that are out there, the technology that’s out there so that you can stay relevant, stay competitive within this industry. You know, most changes and technology that we’ve seen, you know, over the years has ultimately made our lives better. Even though sometimes there’s that initial fear factor, it’s, part of human nature to be scared of change sometimes. But ultimately, these things almost always end up making our lives better, our jobs better, you know, bring us the efficiencies.

A lot of times are much needed within the industry. and the way we do business. I think examining your business processes is super important. We’ve worked with a lot of carriers over time that, you know, frankly, you know, maybe have fallen behind in a lot of respects. They’re now trying to play catch up. They may still have a lot of manual processes that are very time consuming, things that can be easily automated in a lot of respects. So always kind of examining those business processes, identifying the pain points, the things that take a lot of time, that ultimately end up costing money, for the carriers. And being able to, to do that and want to adapt to those changes and embrace that technology. Again, I think it’s really, really important for carriers to stay relevant.

Christine Burke: Absolutely. Well, thank you, Jason, you’ve really brought us up to speed – pun intended – on the landscape and more specifically, how insurers can expedite their product development so that they can race to the top of the L&A market for greater profitability and impact to their customers. I know I’ve learned a lot about this topic, and I’m sure our audience has as well. To our listeners, we want to say thank you for spending your time with us today. We love hearing from you. So if you have any comments, please reach out to us on our social media channels or follow us. Don’t forget to subscribe to our podcast and we thank you again for listening. Have a great day!