Bigger isn't always better: survey reveals large life insurers are slowest to process applications

Speed is one of the most competitive differentiators in the life insurance business, sometimes even more important than the terms of the policy coverage itself. But a recent survey by Iron Mountain revealed that large life insurance companies are slowest to process applications - and highlights what causes the delays and how the process can be improved.

Life insurance has long been a mystery to most people. The topic of death is uncomfortable to discuss, and the common belief that life insurance is strictly about death benefits dissuades people from learning about the many other potential benefits to the policyholder.

Each life insurance company has its own way of computing premiums and terms, and the process can appear opaque. Processing times also vary; the lag between the receipt of a customer's application and the issuance of a policy can range from less than a day to several months.

Because cycle times can be so long, many customers apply to multiple insurers at once and choose the one that delivers the fastest. This makes speed one of the most competitive differentiators in the life insurance business, sometimes even more important than the terms of the policy coverage itself.

"Long cycle times may decrease the likelihood that the applicant will be converted to a paying policyholder," wrote business process improvement consultancy OpsDog, in a recent post on its website. Legacy workflows, often involving multiple handoffs serial processing, are factors in extended cycle times.

Lengthy approvals are also at odds with customers' growing desire for self-service and instant gratification. This phenomenon is especially true among younger customers, who are comfortable with fully automated processes and who are the most reluctant to buy life insurance in the first place. The percentage of Americans covered by life insurance fell from 63 percent in 2011 to 52 percent in 2021, with the largest drop among people under 40. COVID-19 only heightened the need for speed as customers went online for nearly everything.

What's more, established insurers are feeling pressure from a large crop of financial technology(fintech) startups that are born in the cloud, highly automated, and don't have the burden of legacy processes. The business directory Crunchbase, lists290 fintech insurance companies that have been founded in just the past five years. The speed with which many of these companies operate is resetting customer expectations about convenience and processing times.

Understanding application-to-issuance

In an effort to learn more about how the application to-issuance process works at companies of different sizes, Iron Mountain commissioned a survey of US life insurance executives, managers, and professionals. The goal of the research was to answer several questions:

• How fast is the average application-to-issuance time frame?
• What percentage of the process is manual?
• How is information collected and exchanged among applicants, customers, and brokers?
• What are the most significant factors in delays?
• How many people and systems are involved?
• How could the process be improved?

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Speed is one of the most competitive differentiators in the life insurance business, sometimes even more important than the terms of the policy coverage itself. Making the application-to-issuance process fast, seamless, and self-serve could go a long way toward transforming the process of buying life insurance from a grind to an impulse purchase. But there are certain factors that hinder this progress. This whitepaper shares results from our recent survey of US life insurance executives, managers, and professionals on the challenges of processing applications, reasons for delays in processing, and ways to improve the system.

Understanding application-to-issuance

In an effort to learn more about how the application to-issuance process works at companies of different sizes, Iron Mountain commissioned a survey of US life insurance executives, managers, and professionals. The goal of the research was to answer several questions:

• How fast is the average application-to-issuance time frame?
• What percentage of the process is manual?
• How is information collected and exchanged among applicants, customers, and brokers?
• What are the most significant factors in delays?
• How many people and systems are involved?
• How could the process be improved?