There is a significant opportunity for insurers to grow their pre-need and final expense product revenue arising from the coverage gap that currently exists in the age 50 and above lower-income demographic.
According to the Global Pre-Need Death Care Market Report by Absolute Markets Insights, the Global pre-need death care market was valued at USD 28.09 billion in 2022 and expected to reach a value of USD 41.17 billion by 2030.
Yet, while the size of the pre-need market is expected to grow by more than a third, industry association LIC research reveals that “74% of sales were submitted via paper applications, 22% electronic applications, and 4% “other” (mostly fax and email).” These inefficiencies currently continue through downstream processes like service and claims.
This level of manual processing inherent in the system is going to make it very difficult for companies to scale their pre-need business profitably. Clearly, there is a very large opportunity to find efficiencies in the application process, but several challenges must first be overcome.
Administration challenges unique to Pre-need policies
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The unique nature of pre-need policy sales and administration creates some very specific challenges for insurers to consider:
- Pre-need is a low margin business
- Gains in pre-need sales need to happen without significant investment, new resources, or high transaction costs
- Transactions need to happen quickly through straight-through-processing at point-of-sale
- The traditional, often paper-based sales process needs to be streamlined, digitalized and automated
- Digital self-service for funeral home providers and policyholders is necessary to keep costs low while providing the service clients expect. However, digital adoption can be difficult to achieve when both providers and policyholders tend to belong to older less digitally adept demographics
- Fragmented point-of-sale and self-service experience for funeral home networks. There is a strong need for a policy admin system that can automate processes and handle the volume of business from large funeral home networks.
- These policies are unique because they are often sold through funeral providers. The provider becomes the beneficiary of the policy and claims are automatically paid to their funeral homes (as long as the policy meets the criteria.) Often, customers don’t even realize they have purchased an insurance policy, they just think they have paid for their funeral expenses.
- Low customer satisfaction – funeral homes often wait days or weeks to be paid after submitting claims
Legacy PAS challenges #
Legacy Policy Administration Systems (PAS) create real challenges for insurers looking to grow their pre-need business. These older platforms are less flexible and feature less automation, resulting in the need for slower, more expensive manual processes for policy issuance, claims processing, and policy servicing. They are also harder to integrate with modern digital sales and service tools, making it difficult to deliver the kind of experience customers expect.
Solutions for insurers seeking to boost Pre-need sales growth #
Insurers looking to significantly grow their Pre-need business without increasing headcount and budget will need to leverage digital technology to ensure all aspects of servicing new applications, policies and claims can be done automatically, with minimal manual intervention.
This means implementing modern policy admin systems combined with digital eApplication and self-service portals. Modern PAS have API capabilities that enable them to connect to external providers and share data with the front-end tools that improve agent and customer experience. They streamline the application and approval process and also provide digital self-service capabilities to empower clients and reduce call center loads.
Automation and Integration: #
A PAS should offer high levels of automation to minimize manual tasks, such as policy issuance and claims processing.
User Experience: #
Modern PAS enable insurers to prioritize the user experience. Removing outdated interfaces and manual bottlenecks can substantially enhance customer satisfaction and agent productivity, leading to increased sales opportunities.
Speed to Market: #
Leveraging pre-built product foundations can significantly reduce the time required to launch new pre-need products and deliver best-of-breed automated processes, thereby accelerating growth and increasing responsiveness to market trends
Scalability: #
The ability to manage an increasing number of policies without a proportional increase in overhead is vital.
As well, it is important the solution includes digital portals branded for large funeral home providers, allowing them to manage insurance policies and commissions efficiently. This system streamlines operations and improves the financial management of funeral services.
Cost Management: #
It's critical to choose a PAS that provides operational efficiency without escalating costs. Technology solutions should balance business value, usability, and maintainability, ensuring cost-effectiveness.
Data Accessibility: #
Real-time access to accurate data is a cornerstone for informed decision-making and tailored customer service, which can distinguish insurers in a competitive market. Making legacy data available through migration or data modernization greatly enhances an insurer’s insight into their business and their customers.
Ideally, any new technology implementation should deliver the business value and enable significant growth while keeping overall unit costs in check.
Equisoft’s pre-need and final expense insurance expertise #
Equisoft has implemented many pre-need and final expense products on Equisoft/manage (PAS) for insurers around the world. In conjunction with front-facing solutions like /apply and /sync it provides carriers with state-of-the-art sales and service capabilities in the pre-need market.
Pre-built foundations #
Specifically, Equisoft has leveraged our experience in implementing pre-need and final expense solutions to create pre-built foundations for pre-need products that leverage straight-through-processing for claims and new business.
These pre-built foundations capture the best configurations and integrations for pre-need and final expense products. They include baked-in understanding of regulatory and assignment rules specific to pre-need as well as the complexities related to how processes are implemented on policy admin systems
Starting with these foundations results in far faster PAS implementation times and lower costs, while delivering best-in-class solutions.
Unique and specific pre-need product capabilities #
The Equisoft/manage Policy Admin Platform has a range of unique pre-need product capabilities, including:
- Maximized automation & reduced overhead for this lower margin business
- Scalability: the two largest pre-need/final expense providers using Equisoft/manage, tested for over 1M policies
- Improved CX for users (removal of legacy screens, elimination of complex and manual processes)
- Optimized access to data for digital tools.
- Integrated self-service capability for agents and policyholders in the Equisoft/sync digital engagement portal
- Automated claims via straight-through-processing
- Out-of-the-box Foundations for pre-need and final expense mean faster implement of the PAS
- Equisoft/design gives carriers autonomy over configuration and product innovation
- Cloud and SaaS model
- Third-party integration to all leading services: including USPS, LexisNexis, PeopleSoft, DocuSign, ACORD and many more.
Wrap up #
The pre-need and final expense markets represent great growth opportunities for insurers over the next decade. But given the product’s tight margins and carrier’s legacy IT landscapes, organizations will have to move carefully to capitalize on the potential new sales.
Insurers will need to implement modern policy administration systems that deliver excellent customer experiences, and enable efficient, scalable operations. Those carriers who implement and integrate the right technology and data solutions will find meaningful competitive advantage in these growing markets.
