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        holistic planning
Keeping up with insurance innovations
Data and personalization
are changing the business. Where does the advisor fit in?
by Michelle Schriver
      Like the rest of the financial services industry, the
insurance business is facing disruption. Persistent low rates and increased longevity test firms’ bottom lines; evolving client expectations combined with clunky legacy systems make traditional products a tough sell. What can insurers and advisors do?
One way forward is to harness tech to better connect with customers who have come to expect seamless
experiences from digital services, says Rohit Sood, a senior partner at McKinsey & Company in Toronto. “How does the insurance product stack up?”
Not so well — at least in its traditional form. A model of “assess and service” at point of sale means policies are often offered based on data acquired at the client’s inconvenience, with little ongoing service. “The touch points of life insurers are amongst the lowest in financial services,” Sood says.
That will change this decade, as the industry focuses on client service using predictive analytics, personaliza- tion and client engagement, he says.
Client experience: extended version
Health-tracking wearables are one example of this new client service.
Dacadoo, an insurtech firm headquartered in
Zurich, offers a digital wellness platform that drives client engagement with health and life insurers (including Dublin-based Irish Life, owned by Canada Life Assurance Company, and London, U.K.–based Aon plc). An app pro- vides a health score to users who opt in, and offers them personal health insights and nudges.
Insurers don’t use wearables to learn more about lon- gevity risk, as some might assume. That risk is well under- stood, says Blake Hill, vice-president of insurance business development at Dacadoo (North America), in Waterloo, Ont.
Instead, wearables allow insurers to get to know customers better and “remain relevant as a brand” as products become commoditized, says Hill, who was pre- viously an actuary with Manulife and head of its wellness
     Low rates, new products
Low rates are arguably the biggest challenge to insurers in recent years, says David Officer, associate part- ner and the Canadian life insurance advisory leader at Ernst & Young in Toronto. In response, insurers have reduced costs and improved oper- ations, including automating back- office processes.
They’ve also collaborated with non-traditional partners, like tech com- panies, to cross-sell or bundle prod- ucts, he says, and acquired brokerages and managing general agencies to tap into distribution networks.
Product innovation typically involves new or expanded features
that target specific demographics, he says. For example, policies like
those provided in conjunction
with Toronto-based insurtech Jauntin’ provide flexibility to cover gig-economy workers exposed to risks, such as bike couriers. Com- bination benefits, such as hybrid life insurance plus long-term care, which is popular in the U.S., extend cover- age options to those less inclined to purchase traditional products. (Such a product was offered by Kingston, Ont.–based Empire Life Insurance Company in 2013, but discontinued after two years.) And annuity options supplement incomes for policyholders with longevity risk who might other- wise balk at the product. For example, a U.S. annuity introduced in 2018 unpacks its benefits so that clients can access their accumulated values at a set date while continuing to receive lifetime income payments.
MARCH 2020

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