It’s a human tragedy, but COVID-19 has also been a wake-up call for people that could transform the life insurance industry: That’s the verdict of Brona Magee, deputy chief executive officer and head of global markets for SCOR Global Life.

Magee had her own brush with mortality a few years ago when diagnosed with an aggressive form of cancer. She made a full recovery, but it transformed her perception of life and health insurance, she says. As vaccination rollouts bring an end in sight, could the pandemic do the same for the population at large?

To discuss this and other issues, Magee joined Intelligent Insurer’s Re/insurance Lounge, the online, on-demand platform for interviews and panel discussions with the market’s leading players.

As Magee admitted, despite early optimism, COVID-19 has hit life insurers hard. It’s not just market volatility that’s impacted the industry; the human tragedy has resulted in significant losses.

An April 2021 report by analysts at Fitch Ratings shows gains from operations at the life insurers down 40 percent on 2019—“largely due to higher claims paid, primarily as a result of increased mortality from COVID-19”.

“We have had a financial impact. For life insurers, a pandemic is the ultimate test,” she said. Ultimately, however, it’s a test the sector passed, and the insurer was able to pay claims to more than 20,000 families affected by the virus.

“It had a manageable financial impact but, much more than that, we have shown that we are here for these times,” she said.

Bringing home the risks

The longer-term impact from the pandemic may be more profound, however—and beneficial to the industry, if it can grasp it.

According to Magee, the crisis has led to significant changes in customers’ attitudes and behaviours.

First, the pandemic and its casualties have brought home the importance of insurance, just as Magee’s illness did for her.

“There is a much better appreciation of the fragility of life. People understand the fact that life is fragile, and they want to protect their family if something goes wrong,” she said. “We’re seeing a global increase in demand for life insurance.”

This comes not just from the core customer base but from segments where demand hasn’t traditionally been strong, including among women and younger buyers.

More generally, people are more aware not just of their mortality but also their health. “The pandemic has highlighted the impact of chronic conditions such as diabetes and hypertension that led to higher mortality rates from COVID-19. People see that, and they want to manage those conditions if they have them,” she said.

The other significant change forced upon people, meanwhile, has been from the lockdowns and other restrictions: “Over the course of the pandemic, we saw everything going online,” said Magee.

“People are now expecting everything they buy online to be a seamless experience.”

It was not only customers who were affected by this—almost overnight, insurers found that medical underwriting became practically impossible.

“Doctors and nurses at the beginning were too busy to do medical exams for life insurance applications, while people were uncomfortable visiting healthcare facilities,” she explained.

Combined, these changes present both a challenge and an opportunity for the industry.

On one hand, life and protection insurers should be able to capitalise on the renewed interest resulting from the pandemic. On the other, they will need to offer easy access and the seamless digital experiences that customers now demand.

“Ultimately, it’s going to be a good thing for the life insurance industry, but there are some changes we need to make to remain relevant in future,” she said.

This, in turn, represents a challenge for medical underwriting, which remains a key barrier to simpler, smoother sales. “It’s the single biggest pain point in the life insurance consumer journey,” she said.

As she also pointed out, however, that life insurers still need a “risk classification process”.

A quid pro quo

The answer for Magee is data. This can meet the industry’s needs and customers’ demands. As a result, SCOR is putting significant effort into developing predictive models and using electronically available health records to develop underwriting scores. This will help it identify those it can put into a straight-through process and those that require more detailed underwriting.

“People are ready to share their data if it accelerates the application process,” she said.

The same principle applies to data from wearable devices such as fitness trackers, which the company is already experimenting with. For example, it has developed a model that uses information such as a customer’s resting heart rate and sleep patterns to determine their “biological age”, which could be older or younger than their physical age and can be improved through activity.

“People are prepared to share data, but they want something back. If they think they’re living a healthier life than the general population and walking 10 kilometres a day, they want to share that data and to get a discount on their life insurance premium as a result.”

One benefit is that this approach can deliver the more personalised experiences that Magee said customers are now demanding, offering not just a payout but support and encouragement to improve health.

“They want to feel they’re dealing with a life insurance company that knows them.”

In Korea, for example, SCOR is building a platform linking together artificial intelligence technology companies, hospitals, genetic testing companies and other care providers with insurers to offer additional services to the consumer throughout the policy duration.

In Germany, it’s offering a mental health solution using a wrist band and app to identify events causing stress and to help customers handle them better.

Another benefit is that it allows the business to cover more people. In January, the company launched Vitae, a new biometric risk calculator using machine learning to better capture correlations between risk factors. The technology aims not to exclude individuals from cover but to let the company accurately assess the risk to include more people.

“It’s focused on those who are not in perfect health and uses artificial intelligence to bring together all the available data and knowledge,” Magee said. “It’s to make an informed decision about somebody who’s maybe not in perfect health but to try and offer as many people access to life insurance as we can offer.”

“It’s about bringing as many people as possible into the life insurance net.”

To view the full Re/insurance Lounge session click here

Image courtesy of Shutterstock / Mumemories