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    holistic planning
                         Wearables allow insurers to get to know customers and stay relevant as a brand
advice will be personalized and timely, creating trust.
To be effective, however, AI requires sufficient data, which must be cleaned and aggregated to deploy to advisors on appro- priate platforms with appropriate apps, Colaço says. So far, most innovations in insurance are occur-
skills on challenging cases, Cutler expects more hard-to- insure people to be approved. Plus, approving low-risk cases faster — within 30 minutes — meets clients’ evolv- ing expectations. Manulife’s long-term objective is to employ AI underwriting for 50% to 60% of its life insur- ance approvals, and across products.
Canada Life uses AI underwriting for life insurance applications up to $1 million for those aged 18 to 45.
Insurtechs will also use data, such as prescription his- tory, to find proxies for medical specimens, says Daniel Shum, insurance technology leader at Deloitte in Toronto. This will free clients from inconvenient medical visits.
Easy does it: direct-to-client channels
As insurtechs remove friction throughout the insurance process, will direct online sales be next?
Colaço says online sales are typically success-
ful where products are simple or guaranteed, with well-understood benefits offered by trusted brands (e.g., creditor protection). Following that formula, some U.K. insurers have been successfully selling term insurance online for more than a decade, he says.
Toronto-based PolicyMe, a direct-to-consumer online insurance channel aimed at millennials, follows a similar formula. While the platform’s users with complicated needs can access its licensed advisors, the typical client requires term insurance to cover an income or mort- gage — “a pure projection need,” says Laura McKay, co-founder and president at PolicyMe.
The insurtech sells the traditional insurers’ products, partnering only with those that support digital signatures.
“We try to strip out any of the friction in the [sales] process,” McKay says. Policies are received within days, not weeks.
Canada Life leverages AI for its digital application tool SimpleProtect, which enables term policy issuance of up to $2 million through an advisor-driven process in as little as 20 minutes, says Katrina Lee-Kwen, senior vice- president, non-par insurance solutions and individual cus- tomer digital strategy at Canada Life.
David Officer, associate partner at Ernst & Young in Toronto, describes the direct-to-consumer channel in insurance as “exploratory” so far. “Throughout all the demographics, there’s absolutely still a need for the one- to-one relationship,” he says, owing partly to the prod- ucts’ complexity.
The nature of life insurance as a product — people don’t typically seek to buy it — means it will remain advisor-driven, says Shum.
And traditional insurers maintain other advantages over fintechs, Hill says, such as building and managing partnerships, as they’ve done with advisors.
Further, insurers are highly regulated “for the right reasons,” he says — to protect clients. And they still own “the most important thing,” which is the brand and the customer. AE
ring beyond our borders. “Canada is typically a laggard rela- tive to other developed markets,” though some Canadian insurers are making investments in the space, he says.
A 2019 report commissioned by the Society of Actu- aries and the Canadian Institute of Actuaries found that Canadian insurers’ main priorities with predictive analytics includes simplified underwriting.
Hill expects AI underwriting and claims assessment will result in less bias. As it stands, “we don’t really know the consistency between [human] Underwriter A and B,” Hill says. “AI has a huge opportunity to bring standardiza- tion within and across insurance companies with how risk is assessed.”
Karen Cutler, head of underwriting at Manulife, says the firm uses AI underwriting for about 17% of its term life insurance approvals for those age 18 to 45, up to
$1 million. With human underwriters freed to hone their
MARCH 2020
Top-of-mind trends for insurers
Climate change and an increase in nat- ural disasters aren’t yet impacting life and health insurance products relative to property and casualty, but such trends will be “part of the future plan- ning for all the carriers,” says David Officer of Ernst & Young.
Artificial intelligence will predict risky situations, such as where flooding will occur, says Joshua Gans from the University of Toronto’s
Rotman School of Management.
As a result, insurers will price risk better and serve the market more effi- ciently, he says.
Another trend hitting the insur- ance sector is regulatory scrutiny on conduct and fee disclosure. “Insurers and advisors will need to think differ- ently about the economics of the life insurance transaction,” including at the portfolio level, says James Colaço of Deloitte. Any innovation related to disclosure will consider transparency, fairness and value, he says.

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