The Technology Gap Costing Life Insurers Millions in Lost Revenue and Policy Lapses

Highlights

5% of life insurance carriers achieve “best-in-class” customer experience, meaning they consistently deliver exceptional service and satisfaction for their policyholders ~ Capgemini

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38% higher Net Promoter Scores (NPS) for best-in-class life insurers, reflecting greater customer loyalty and advocacy ~ Capgemini

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11% lower expense ratios for best-in-class life insurers, demonstrating more efficient operations compared to their peers ~ Capgemini

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6% higher revenue growth for best-in-class life insurers, indicating stronger financial performance driven by superior customer experience ~ Capgemini

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Leading North American life insurers have discovered a powerful truth: strategic technology investments can deliver measurable competitive advantage. But according to Capgemini's World Life Insurance Report 2025, only 5% of carriers actually achieve “best-in-class” customer experience. That designation is based on deployment levels of digital initiatives across onboarding, servicing, and claims processes. These elite performers capture remarkable returns, including 38% higher Net Promoter Scores (NPS), 11% lower expense ratios, and 6% higher revenue growth than their mainstream competitors.¹

Technology adoption tells the story. Best-in-class North American carriers have deployed customer self-service portals at adoption rates of 78% vs. 13% for mainstream insurers². The difference is similarly stark when it comes to agent portals for policy management (56% vs. 21%), and digital claims submission (67% vs. a mere 7%), according to Capgemini. Yet only 41% of transformation initiatives meet their goals, according to Capgemini.³ Such challenges stem largely from the cost and complexity of legacy system upgrades, replacements, and custom integrations.

However, insurance payment modernization and transformation through pre-built integrations to life insurance core systems offer accessible entry points that deliver immediate profitability gains while building the digital experience capabilities that distinguish best-in-class performers.

The Profitability Advantage

Elite performers have cracked the code on balancing customer experience with operational efficiency. According to LIMRA’s 2025 Facts About Life Insurance, 92% of consumers research life insurance online and 25% would research and purchase online.⁴ Further, more than half say they'd use AI tools like ChatGPT to understand coverage options.

Leading insurers have responded by modernizing their technology infrastructure with investments to meet these digital expectations while reducing operational costs.

The challenge, according to Datos Insights' What We're Hearing, Q2 2025: L/A/B Insurers, is that legacy modernization remains a pressing concern, with organizations grappling with aging infrastructures that constrain innovation and increase operational expenses.⁵

Legacy platform upgrades also frequently carry prohibitive risk and cost. The Celent Dimensions North American Life Insurance IT Pressures & Priorities Survey 2025 found that external IT spending now consumes 56% of budgets, up from 42% the previous year,⁶ and challenges also persist around legacy systems integrations.⁷

However, the opportunity is enormous; 100 million Americans know they need or need more life insurance coverage⁸, yet they're not buying. The carriers that thrive will be those that adapt to meet consumers online and successfully deliver digital-first experiences.

Payment Modernization: The Strategic Catalyst

Many life carriers recognize that digital transformation may not require wholesale system replacement. Instead, they’re prioritizing high-impact initiatives that deliver immediate returns while building the foundation for broader modernization. Payment modernization frequently emerges as a strategic catalyst for achieving the expense ratio and competitive advantages that separate the best from the rest.

One benefit of payment modernization is an increase in policy persistency. Life insurance economics depend on long-term retention. The combination of digital payments and autopay directly reduces policy lapses. A large North American life insurer and One Inc customer found that payment modernization became its number one strategic priority because even a 1% reduction in lapses generated tens of millions in annual net earnings, a far greater financial impact than all other operational improvements combined.

Payment modernization also unlocks adjacent digital adoption. According to Digital Insurance, adding opportunities to enroll in paperless billing and automatic payments during payment interactions helps drive broader digital adoption.⁹ Modern payment portals and payments encourage policyholders to subsequently adopt electronic statements and policy management tools, thus generating even more savings.

The Pre-Built Integration Advantage

As mentioned, the complexity and cost of custom legacy systems integration are the primary reasons some transformation initiatives are delayed or falter. Modern platform partnerships, however, can eliminate this friction.

Verisk's FAST platform, a flexible, configurable solution for life insurance operations, now offers pre-built integration with One Inc's PremiumPay for inbound payment capabilities.¹⁰ According to Saurabh Khemka, president of underwriting solutions at Verisk, this integration enables carriers to "accelerate their modernization efforts, reduce complexity and deliver improved customer experiences without the time and cost associated with updating their existing platforms."¹¹

With FAST implementations averaging one-tenth the cost of typical system upgrades,¹² the combined platforms approach can dramatically reduce financial and timeline risks. A North American carrier with plans to double its business in 5-7 years selected Verisk and One Inc to transform payment processing, targeting significant reductions in call center volume and leveraging recurring payments to reduce policy lapses.

Strategic Imperatives for Closing the Gap

First, assess your technology capabilities against best-in-class competitors with the understanding that digital-first self-service and agent portals, claims submission, and underwriting soon will be table stakes.

Second, prioritize payment modernization due to its proven ROI. Best-in-class carriers start with capabilities that deliver immediate operational improvements and drive policy persistency. Industry evidence consistently demonstrates that expense ratio advantages stem from modernization initiatives that reduce call center costs, eliminate checks and manual processing, and improve policy retention.

Third, leverage technology partnerships and pre-built integrations that reduce implementation risk. Look for partnerships between insurance and payment platform providers to avoid custom development barriers, accelerate deployment timelines, and significantly lower costs. With strategic focus, the technology exists today to quickly deliver best-in-class capabilities and differentiate yourself from the competition.

Are you ready to shift your organization’s treasury operations into high gear? Get in touch with the One Inc team to discover the driving force automation can bring to your insurance company.