As the life insurance industry contends with digital disruption, professionals should consider how no-code development can streamline what’s become an overly complex application process.
Nobody in their right mind enjoys applying for life insurance. Aside from forcing the applicant to confront the fleeting nature of life, insurance applications are complex and generally confusing. And with a shifting insurance landscape that’s been disrupted by startups and changing consumer behavior, the share of Americans with a life insurance policy is falling. While 77% of Americans had a life insurance policy in 1989, less than 60% have one today.
Although there are numerous potential factors behind this decline, industry experts agree that the complexity of the life insurance application process is to blame. Potential customers have been conditioned by transformative businesses such as Amazon, Uber, and Airbnb to expect a completely streamlined consumer experience from the first touch to final purchase. These experiences are a far cry from the complicated, time-consuming life insurance application process.
The traditional life insurance application process involves an extensive medical underwriting and information collection process that can take up to 90 days. Unfortunately, nearly half of customers who begin their life insurance applications never make it through to the end. This drop-off rate has huge revenue implications for the carrier, who lose out on roughly 40-50% of potential customers due to this drawn-out process.
The length of this process and the drop-off rate are directly correlated — if insurance carriers can find a way to reduce the information collection process by 10 days, the drop-off rate will decrease by 1%. Accordingly, life insurance professionals should consider what they can to modernize a tedious, expensive process. A simple solution is no-code development, which uses a configuration-based model to accelerate application development to everyone’s benefit. Here are three key ways no-code development can improve on traditional life insurance processes.
1. Flexibility in Information Collection
Currently, the information collection stage of a life insurance application is extremely lengthy, making it impossible for carriers to get all of the necessary information in one sitting. Because of this, carriers have begun filing products with the state that will let applicants apply for life insurance via an app. However, when created with traditional development processes, these apps offer little flexibility in the order and wording of the listed questions further down the line.
This is a huge pain for carriers, who will have to rewrite large portions of code if they later decide to change even a single question in the application. But the implications are even worse for customers, as this rigidity means that they may have to slog through dozens of questions that aren’t even applicable to them. For example, a carrier might ask whether or not an applicant is a smoker. If the applicant answers no, they are still presented with a series of extraneous questions regarding how often they smoke and for how long they’ve been smoking. This unnecessary line of questioning could be the last straw that causes an applicant to abandon the application altogether.
By investing in no-code development, life insurance stakeholders can add much-needed flexibility to information collection. No-code development allows you to easily model complex rules with simple drag-and-drop functionality, meaning that you can ensure that the non-smoking applicant does not have to be saddled with the same long set of questions as a smoker. A configuration-based method will allow you to easily and logically redirect your applicant to the next series of relevant questions, making it much more likely that they’ll stick around until the end.
2. Communication via Customer Channels
As customers go through the application process, certain new requirements may pop up based on their responses. For instance, an applicant may indicate that they are a trained pilot halfway through the process, which requires a whole new set of questions to measure risk for carriers. These new requirements can delay an already exhausting process for the applicants, potentially deterring them from returning to finish their application.
With the constant connectivity of our world today, it should theoretically be easy to reach the applicant to alert them of any hiccups in the process. But despite life insurance carriers’ attempts to digitize these processes, any necessary communication continues to rely on manual outreach via intrusive channels. In most cases, finding out about additional requirements will put an application on hold and require an employee to call the customer to refile their application.
With no-code development, it becomes easy for carriers to deal with these hiccups by adding new functionalities and third-party integrations to their applications. Instead of allowing the whole application to be filed, rejected, and then relying on an employee to call the customer to start the process all over again, carriers should be finding ways to reach customers on natural channels in a timely manner.
For example, a no-code developer can easily automate this process so that no time is lost. As soon as new requirements present themselves, the app should fire off a text that allows the customer to reply directly with the necessary information and finish the application then and there. By making it as simple as possible for the applicant, the carrier capitalizes on the moment when the insurance application is top of mind and reduces the chance that the application will fall to the wayside.
3. Leveraging Data-Driven Insights
Filed life insurance applications are split into two categories: Ready to Be Underwritten, and Not in Good Order (NIGO). Any application with the smallest error is considered NIGO and all work on that application grinds to a halt. Current processes mean that there’s often no way to detect mistakes or prevent them until they’re already disrupting operations and causing costly delays. What’s more, historical data is typically locked up in paper files and legacy systems that don’t support broader analysis as to how the process can be improved.
Innovative technology can help. Digital platforms can make it easier to detect if an application is NIGO before it’s submitted, allowing companies to communicate with applicants and correct erroneous information at a much faster rate. In fact, Deloitte suggests this kind of acceleration can increase the odds of a customer purchasing an accepted policy by 70-90%. And the fastest, simplest way to effectively create such digital platforms is with no-code development.
Using these digital platforms to bring the power of AI and machine learning to the application process can also accelerate — or even automate — underwriting. In addition, accessing and analyzing this data can have transformative effects on life insurance applications in the long-term. By unlocking legacy systems to study old data in combination with new data, carriers can begin to better understand the impact of specific questions and rules on the overall underwriting outcome. This data can illustrate whether certain questions may actually have little to no impact on the final decision, allowing carriers to remove unnecessary questions and optimize information collection in a meaningful way.
Simplifying Life Insurance With No-Code
Up until now, the complexity of life insurance as a product has required exhausting and outdated application processes — processes that no longer reflect the streamlined way most consumers do business. These processes have been especially difficult to simplify on traditional software platforms, which are extremely time-consuming to develop and fail more often than not at the enterprise-level.
With no-code development platforms, carriers have another option. By making information collection more flexible, communicating with customers where they are, and leveraging data-driven insights to change industry practice, enterprise no-code development can accelerate the life insurance process to everyone’s benefit.