Life insurance in the digital age
Big Data, artificial intelligence, cognitive computing techniques ... The digital age is here and it's here to stay. Is the storage and processing of information composed of large volumes of data the new industrial revolution?
In the twentieth century, information control became a priority, we all know the phrase "information is power." This information was difficult to obtain and even more to process being only within the reach of the states and some large company, applying statistical and probability tools to data that today would be considered unreliable.
The sector is still in an early phase of transformation. Insurers are a key industry for developed economies because of their contribution to job creation and their role as investors, as well as accrued taxes. Fulfilling their role of mutualizing risks, insurers are key in increasing family protection, since through traditional life-risk coverage, insurance generates stability in the family economy, becoming a mechanism for the protection of wealth and social welfare .
How will digitalization affect life insurance?
Today the internet is an intrinsic part of our daily lives and it is a reality that new technologies will transform, whether we want to or not, the way to manage life insurance.
It will change our relationship with companies, the form and processes of risk selection and, therefore, pricing. But the internet cannot replace personal treatment with the insured and the beneficiaries, necessary for life insurance to fulfill its important social function of protecting the family.
We can take advantage of the incredible advantages that technology puts at our disposal and that will make our lives more comfortable, allowing the future management of our policy in purely administrative matters such as updating our contact information, obtaining contribution certificates or making changes in direct debit, but ...
Can you do without personal treatment?
The personalized advice, the solution of doubts, the fiscal planning that will allow us an additional saving, are some of the aspects that an online questionnaire can hardly offer us, the client does not know all his options and many coverages go unnoticed or simply does not ask because of them because we think that they are going to make the insurance much more expensive, when this is not always the case and in return coverage improvements that can be fundamental are achieved. Without adequate professional advice, it is more difficult to adapt our policy to the real needs.
The perfect adaptation is made based on personal interaction, sometimes over weeks in which a relationship of trust is created that allows to transform the needs into solutions, to design a “tailored suit”. Quite the opposite of answering a series of type questions that will probably result in the predesigned policy that best suits as we choose the answer between the different options.
If you have a question during the hiring process, you will end up making a phone call for clarification, a question that will have to be clarified by someone who does not know all your needs, will we hire the best insurance for us or the cheapest? We are building a safety umbrella for our family, probably several years away. Is an online questionnaire the best way to establish it?
Is the collection of large-scale personal data acceptable to establish the premium for life insurance?
The premium we pay for our life insurance is based on anonymous mortality and survival data tables, objective tables prepared by actuarial and statistical experts. At the same time, the digital world and its ability to collect all kinds of information have consequences for the client, on the one hand it allows you to obtain a direct and fast service but you must not lose sight of the discrimination that can be generated with this massive treatment of information .
All of us dump personal information on the web daily, searches, hobbies, trips, inquiries, contact information and a host of other data that can tag and classify us. Our displacements, economic and cultural level, geographical area, medical data, lifestyle, family history, personal relationships or employment, everything is likely to be integrated into the Big Data monster and could lead to clear discrimination for those who did not give the 'ideal' profile. Although it is obviously legitimate for companies to try to segment customers to better adapt their offers and products (and their prices) to the needs and circumstances of each type of customer.
Would they cause a change in the calculation of the life insurance premium?
We hope that the strict regulation of the sector will save us from discrimination when it comes to calculating the price of our life insurance policy, we have legal provisions on Data Protection, the right to privacy and privacy and, above all, non-discrimination. Let us not forget that, for example, the Court of Justice of the European Union declared in 2012 illegal the pricing of insurance based on gender. However, life insurance does allow the establishment of different prices based on objective medical and biological causes (such as age, or the existence of pre-existing diseases) that determine a greater probability of death.
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