The digital impact on the insurance industry is palpable. For American International Group, Inc. (AIG), the market forces and digital transformation that are reshaping the industry are creating plenty of new opportunities. The challenge is to capitalize on them. In this Q&A, AIG’s Jeff Scobee, chief operations, underwriting and systems officer for life insurance, shares his views on the new opportunities in insurance, how the industry is changing and just where insurtechs fit in.
Q: For life insurers, what’s the key to digital transformation success?
A: When it comes to digital opportunities, we don’t have to worry about low-hanging fruit; we’re already stepping on fruit left and right. And that’s across the board. A lot of the discussion centers on new business, and that’s certainly the area most visible to consumers. But there’s also a lot of opportunity in overall administration, including self-service administration, e-policy management and e-payment capabilities. We need to improve the life insurance interaction all the way through.
Q: How might that improvement look?
A: To start, we need to simplify the process. With digital capabilities, we can automate that process, get forms in real time and interact reflexively with information. Also, at times we go into this black hole that makes it very difficult for a consumer — and even producers — to understand. We need to gain transparency so customers know where they are in the process.
Another opportunity is the gathering of evidence. That means having the ability to engage in dynamic questions. For example, “Are you a tobacco user?” And: “If yes, then what type of tobacco? And for how long?” Automating those kinds of questions is important.
Underwriting itself can be highly digitized, too. We need to consider the entire process in an automated way. That can speed up the process dramatically so decisions are made as quickly as possible.
Q: What do you see as the role of outsourcing?
A: We’re focused on outsourcing our closed blocks. We’re not putting new product there, but these blocks are still important in terms of profitability and, of course, the relationship with our customers. However, these blocks are complicated and inefficient to run. And over time we’re losing subject-matter expertise. So, outsourcing helps there, to maintain service levels and contain costs. It also lets our team refocus its energies on go-forward strategies.
Another approach to outsourcing supports the development of new ideas for products. An outside partner can be leveraged to run the administration while the insurer focuses on building the front-end side of the marketplace. Both strategies are solid.
Q: How about the role of artificial intelligence and analytics?
A: I could talk about this one all day. Data is fundamental to the way we run our business. Analytics can show when and where we’re seeing policy aberrations. That allows us to be proactive, versus waiting for something to become a problem.
Another area is closing new business. Across the industry, only about 75 percent of cases actually place, even when you do everything right. So, we’re using analytics to determine where we have the most likelihood of a positive outcome and so we can focus our attention there.
Software robots can help with efficiency. We’ve got a robot that checks 100 percent of the individual premiums on a policy. Previously, these had to be spot-checked, so we couldn’t validate everything. Now the reduction in errors is significant, because we can leverage a robot to get 100 percent coverage.
Q: Digital talent can be hard to hire and retain. What’s your approach?
A: While there is a talent shortage in life insurance, here at AIG we’ve got a lot of really talented technology professionals working with us. One thing they find attractive is the opportunity to transform an industry in a digital way.
The other aspect that is important here is making a connection to the products and services we provide and what that means to people. If you’ve ever had an opportunity to watch a testimonial of how life insurance was the thing that saved somebody’s financial position in their time of greatest need, it really brings what we do home.
Q: Insurtechs: competitors, suppliers, partners or acquisition targets?
A: All of the above. They can help us fill a huge insurance gap — for example, people who need and can afford life insurance but don’t have it. Insurtechs and other start-ups are designing new forms of digital marketing to reach that group. Insurtechs are also making the process simple enough that you can engage customers and get the transaction processed.
Note: This Q&A was repurposed from a previously published interview with Jeff Scobee in Forward, a DXC magazine for AIG.
Policies issued by American General Life Insurance Company (AGL), except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG).