Why Your Digital Life Insurance Platform May Be Failing Modern Insurance Customers

Having a digital platform doesn't mean you have a modern platform. And in today's market, that misconception is costing carriers both market share and future growth potential. Even with some transformation projects in the books and investments in insurance technology solutions, some life insurers are still failing modern insurance customers. Here's how:

The customer experience gap 

When we talk about digital insurance transformation in life insurance, we often focus on the technology itself; the APIs, the cloud infrastructure, the shiny new interfaces. But the data reveals a different story about what customers actually experience.

A study by J.D. Power reveals significant gaps between customer expectations and reality, particularly when life insurance is purchased and serviced through local agents or financial advisors. D2C customers report satisfaction scores 57 points higher than those who purchase through agents or advisors. That’s not because agents are the problem. Indeed, they’re still the key to sales growth. The issue is that centralized digital channels consistently outperform on key metrics like digital experience and problem resolution.

The agent and advisor experience reveals another dimension of the problem. Only 19% of customers describe their relationship with an agent or advisor as trusted. When agents deliver top-tier service with regular communication and best practices, satisfaction surges. But your digital life insurance platform needs to enable that level of service, not obstruct it.

Failing to meet new generations where they’re at

The life insurance market is experiencing fundamental shifts in who's buying and how they want to buy, but accessing those customers is easier said than done. Although 54 million Gen Z and Millennial adults recognize their need for life insurance, barriers in how carriers present and sell coverage keep them from taking action.

The knowledge gap is particularly striking. Studies show many Millennials and Gen Z adults lack understanding about things ranging from how underwriting works to how much coverage they need, or even what type to buy. Translation: the coverage gap isn’t for lack of interest, but a failure of education and transparency.

Where younger generations shop also differs dramatically. 80% of Gen Z and Millennials use social media to research financial products, with YouTube, Facebook, and Instagram as their top platforms. This is where younger customers form their first impressions of your brand and begin their purchasing journey. Yet many carriers still funnel them toward phone calls and paper applications the moment they express serious interest. 

The challenge isn't choosing between digital and human. The real problem is that carriers often lack the infrastructure to deliver a seamless omnichannel experience that serves the varying needs of many generations, including the emerging younger markets. When a Millennial researches on Instagram, gets a quote online, but then has to start from scratch when connecting with an advisor, you've lost them in the gap.

Legacy systems can be an anchor

The same technology carriers have built up over decades may now be weighing them down. 74% of insurers acknowledge that legacy systems hinder business growth, yet only 28% have developed a comprehensive insurance platform modernization plan. This gap between recognition and action comes with real costs.

“The conversations I have with folks inside carrier organizations really highlight the challenges legacy tech creates for them,” says Carly Fetzer, Solutions Engineer at Bestow. “For starters, these systems are often inflexible — and that can make adapting to evolving markets a lot harder than it needs to be.”

“And while many leaders know that digitalization needs to be a priority, scaling those initiatives can also be challenging. The result is analysis paralysis, with many carriers feeling stuck in an impossible spot.”

The operational reality is stark: the majority of insurance IT budgets are spent maintaining legacy systems rather than driving innovation. When customer data is spread across disconnected systems, simple changes (like updating a beneficiary or adjusting coverage) can require manual interventions across multiple platforms. Product updates that should take weeks stretch into months. Integration with modern tools becomes a custom development project rather than a straightforward API connection.

The challenge is clear: it's about the fundamental limitations of trying to build modern experiences on older foundations, and with limited resources.

Why best-in-class means better business results

The performance gap between digital leaders and laggards isn't subtle. Digital leaders in insurance achieve five times the growth rate and eight times the profitability of their peers, according to McKinsey research.

Another report identifies that only 5% of life insurers globally deliver “best-in-class” customer experience. Those that meet that higher benchmark report 11% lower expense ratios compared to mainstream insurers. 

So, what sets them apart? They've moved beyond treating customer experience as isolated touchpoints. Best-in-class insurers have established ecosystem-wide processes that capture data from multiple sources to create unified customer views and deliver personalized insurance buying experiences through preferred channels. 

For example, when a customer updates their address through a self-service portal, best-in-class platforms immediately sync that change across CRMs, agent dashboards, billing platforms, and claims databases. A mainstream carrier with siloed systems? That customer might update their address online only to receive mail at their old address weeks later, or worse, have a claim delayed because different systems show conflicting information. 

The technology gap isn't merely about having digital tools. It's about integration, intelligence, and execution. Leaders leverage digital claims processing, automated life insurance underwriting workflows, and self-service portals that genuinely empower customers rather than creating new frustration points.

Moving forward: what modern platforms require

The path forward demands more than incremental improvements. Modern life insurance technology platforms need:

• Unified data architecture that eliminates silos and enables real-time insights across all customer touchpoints. An insurance customer experience platform with APIs that allow legacy and modern systems to communicate seamlessly.
• Strategic automation focused on removing bottlenecks in underwriting, claims, and servicing while enabling human expertise where it matters most.
• Cloud-based infrastructure offering the scalability and flexibility to integrate new technologies without wholesale replacement.
• Embedded intelligence that enhances risk assessment, streamlines fraud detection, and enables personalized policy recommendations.
• Mobile-first design that treats mobile as the primary experience, not an afterthought — a must for the growing digitally native demographic.
• Phased modernization approaches that start with high-impact areas, demonstrate value early, and minimize operational disruption. Transformation doesn't require ripping out everything at once — but it does require a clear roadmap and commitment to execution.

Ready to meet the future of life insurance?

Even inside carriers where digital transformation has been underway for a few years, it’s nowhere near finished. Having digital channels doesn't constitute a modern platform when underlying systems, workflows, and customer experiences still reflect pre-digital thinking.

At Bestow, we've seen what's possible when carriers partner with the right cloud-based life insurance platform. Our solution addresses these challenges, from unified data and automated workflows to genuinely omnichannel experiences and embedded intelligence. But more importantly, we take a collaborative approach that centers individual carrier needs rather than assuming a solution is one-size-fits-all. 

If you're ready to have a conversation about what a truly modern digital life insurance platform could look like for your organization, we should talk. Email [email protected].