Steve Cover, CTO at iPipeline talks about the impact of AI on Insurtech in this chat with GlobalFintechSeries:
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Tell us more about your fintech journey and observations so far.
Having spent the last 30 years in the trenches of technology, I have witnessed how digital transformation has completely altered a range of sectors. The life insurance and annuities (L&A) industry has had a long-standing reputation for being slower to adopt technology in the past. Now, we are in a particularly exciting time in that industry as we see firms move away from manual, slow processes and focus on a dedicated commitment to embark on a digitization journey. Several factors drive this acceleration, including customer expectations, competition fueling a need for speed and efficiency, and an increase in regulatory demands. Additionally, technologies like AI and large language models (LLMs) are poised to transform the pace of the industry in the near future, so firms that integrate these tools early have a valuable opportunity to get ahead. In the coming years, I would expect to see a great deal of technologically powered changes taking place in the L&A space.
How is automation and AI changing how insurance cycles work today for providers and end users?
Speed is at the core of every end-user experience, and automation can ensure that speed is on par with expectations. If back-end operations are bogged down by disjointed, inefficient processes, the result is often abandoned workflows and a flawed user journey. With this in mind, distributors and carriers should strive to remove lengthy and manual processes, wherever possible. One key area of focus is on customer onboarding, as firms need to offer e-applications and e-signature solutions that align with the customer’s digital expectations. Another area that is being transformed by automation is underwriting. As more data is collected digitally and passed through the insurance value chain, accelerated underwriting can significantly reduce cycle times – from weeks down to minutes. With technology that can generate accurate and personalized recommendations, customers can learn – upfront – about the expected process and timescales, as well as quickly understand what they may or may not be approved for. This ultimately serves to keep customers engaged in the process while funneling them in the right direction faster.
Moreover, by tapping into digital processes, distributors of L&A products can track client history and leverage data and AI to support gaps in individual financial planning. This is an opportunity to build a competitive edge by harnessing data that will help foster long-term loyalty among customers.
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What can providers across fintech and insurance do better to drive end user experiences using enhanced fintech?
Financial security is top of mind for most consumers, and ongoing factors such as Peak 65 and the interest of younger generations in setting up long-term financial wellness, generate an appetite for financial planning. There is a notable education gap, however, regarding the information customers receive and rely upon to make confident decisions. Without this knowledge, they lack understanding of the various available options, and subsequently turn them away.
Technology plays a vital role in this process, since tech enables distributors and advisors to make financial products more manageable while making it easier for their clients to understand. A prime example of this is the use of digital illustration software. This technology uses imagery that simulates real-time scenarios, in addition to predictive analytics to make policy information easier and clearer to understand. This then enables advisors to make L&A products more personalized, clear, and far more approachable for potential buyers. Further, tools such as LLMs can transform the customer experience by offering support to agents and advisors, helping to provide quick and almost instant responses to even the most complex financial questions.
Ultimately, implementing digitally-led tools and solutions will be one of the main differentiators between advisors who are well-positioned to support the financial planning needs of their customers and those who fall behind.
What are some of the regulatory rules that global fintech and insurance providers need to use new age technology more of to ensure they comply effectively?
As regulatory demands continue to evolve to meet today’s customer needs, insurtechs must stay alert. Regulation reporting and compliance requirements can be vast and burdensome, modern technologies like AI can help bolster compliance to provide better real-time insights or flag any gaps.
Regulatory and compliance issues, such as the Department of Labor’s fiduciary rule, remain top of mind for the annuities industry. Since its release earlier in 2024, the rule’s components have been widely discussed, both by industry stakeholders and various industry groups. Although the rule is not currently in effect and is under a national injunction, it is in the best interest of financial institutions to familiarize themselves with the potential regulation that may be coming in 2025 or beyond. Education is only part of the challenge. The ability to lean into modern-age technology and tactfully leverage its ability to modernize compliance processes will play a crucial function in ensuring that companies have controls to manage risks as they arise.
Some myths around the use of AI in finance / insurance?
One of the most popular and common misconceptions is that AI will take over the role of advisors. In reality, AI is simply an ally, and one that can propel the L&A sector forward. We should look at AI as a tool that increases the effectiveness and success of advisors, rather than as a substitute. AI-powered solutions can pinpoint the specific products an end-user might need or flag any challenges early for more efficient management. AI and advanced data analytics can also provide distributors with a granular understanding of sales performance, including where they are losing business, where cart abandonment scenarios occur, and what information or processes need to be corrected.
AI will allow advisors to better and more thoughtfully support their customers.
The future of AI, fintech and insurance in your view?
We are just at the beginning of recognizing how AI can be used to evolve the fintech and insurance industries. As the insurance industry moves towards increasingly digitized processes, automation and AI will begin to play an even more significant role in the sector’s growth. By using data and digitization first, we can discover where changes are needed. For example, how speed impacts customer journeys, the result in process changes, or the impact of changes in personalization and education. Then, AI will use that data to step in to play a key role in identifying the gap and provide solutions or action plans for creating efficiencies and improvements.
AI is the hot topic in the industry right now. We are constantly discussing the use of AI-powered solutions – with our customers, prospects, and industry groups – to ensure that we are committed to supporting the sector in this transition phase.
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[To share your insights with us, please write to psen@itechseries.com ]
iPipeline is a leading global provider of comprehensive and integrated digital solutions for the life insurance and financial services industries in North America, and life insurance and pensions industries in the UK. iPipeline couples one of the most expansive digital and automated platforms with one of the industry’s largest data libraries to accelerate, automate, and simplify various applications, processes, and workflows – from quote to commission – with seamless integration.
Steve Cover, is CTO, iPipeline
