The pandemic helped force the insurance industry to adapt and improve, speeding up much-needed technological advancements.
In the last two years, customers could finally submit claims and interact with carriers through mobile apps, largely borne out of need. So what comes next?
All-in-one policies and coverage options that address the growing retirement crisis in the U.S., according to industry insiders at EY’s Insurance Executive Forum, as well as balancing customers’ socially conscious mindsets.
“The next product is customer experience, shifting the dialogue to goals-based financial planning,” Justin Singer, Americas retirement leader at EY, said last month while moderating a panel.
‘One-price new policy’
The most innovative idea was a new policy “that provides all of a customer’s coverages for just one price,” according to Chetan Kandhari, senior vice president and chief innovation and digital officer at Nationwide.
“It reinvents insurance products altogether and bundling is out the door,” Kandhari said. “Most people get benefits from their employer, but as the gig economy grows, there needs to be a place for them to access retirement plans, healthcare, and financial readiness in one place.”
The consumer could have different carriers for homeowners, auto, health, and life insurance with one point of contact that connects to the other partners to handle claims. Customers wouldn’t have to call multiple carriers for a loss.
“It’s changing the insurance relationship from transactional to more of a risk advisor,” David Connolly, global insurance tech leader at EY, told Yahoo Money. “For the growing sector of gig workers, it would give them access to carriers who provide an ecosystem or microservice of partnerships for various options. What wealth managers do for clients is what insurance can do for customers.”
The end goal is that financial wellness, emergency savings, retirement and health are centralized with regular check-ins about the status of your financial wellness.
This “one-price new policy” Kandhari envisions is based on telematics with users giving their provider access to their data — a potential hurdle if customers believe that will result in increased premiums.
Closing the retirement savings gap
“There will be a $240 trillion retirement savings gap in America by 2030 and women will have 30% less income than men when they retire,” Singer told attendees. “We need to stop thinking about it as retirement and looking at it as life long self care.”
The gender pay gap and pay inequalities for minorities exacerbate the problem because money saved is compounded on smaller pay.
“A third of the public has no access to a retirement plan, making access critical so people can retire with dignity,” Colbert Narcisse, chief product and business development officer at TIAA, said. “The recent stomach-turning volatility in the market highlights a critical reason people need a source of guaranteed income in retirement — simply having a certain dollar amount saved is not enough to ensure you won’t run out of money.”
Insurance providers are partnering outside the industry to provide customers with retirement security.
“Americans number one fear is outliving financial savings with only 20% of people 60 and over retirement ready,” Anne Ackerley, managing director and head of retirement at BlackRock, said in the future of retirement session. “BlackRock isn’t an insurer but if you want to give financial security to clients this can’t be solved solo…BlackRock has partnered with BrightHouse Financial and Equitable to provide LifePath Paycheck.”
LifePath Paycheck offers financial security in the form of guaranteed income through target-date funds, so participants can use part of those savings as an income stream for retirement.
The hope is that an expansion of the Secure Act along with partnerships within and outside the insurance industry will allow all Americans to retire with dignity.
ESG and climate’s impact on insurance
“On average, 50% of customers were ready to change insurance brands for another brand more committed to environmental, social and governance (ESG),” Isabelle Santenac, global insurance leader at EY, said in the ESG risks-opportunities session.
The concept of corporate social responsibility has expanded over the years. Consumers and investors want to know about companies’ stance on social justice and investments in companies impacting climate change.
“Now is the time to make change because we don’t have the liberty to wait on decision-making regarding pay equity, gender equality, and going green,” Francis Bouchard, managing director of climate at Marsh McLennan, said in the ESG session. “Social should go beyond internal to communities around us holistically — like working with communities vulnerable to climate damage.”
“Employees and consumers are looking for companies who do good and do well,” Wayne Peacock, CEO and president of USAA, told attendees in his Friday keynote address. “To remain relevant to consumers and retain and attract talent requires knowing who you are and being purposeful in your mission.”
The Great Resignation and pandemic is requiring companies to rethink their stance on ESG principles.
Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda