An increasing number of insurance customers are terminating unit-linked life insurance policies early and investing their money with neo-brokers instead. A frequently cited reason is the lack of transparency and flexibility in fund selection and combination within unit-linked policies. 

Moreover, BaFin is increasing regulatory pressure. The financial supervisory authority recently announced that, starting this year, it will closely scrutinize life insurers with high cancellation rates. One key criticism is that unit-linked policies often fail to adequately meet the risk protection needs and return expectations of policyholders. 

Given this context, insurers are now faced with the challenge of efficiently and compliantly supporting advisors and sales representatives in making unit-linked policies more attractive, adaptable, and optimally aligned for policyholders. What measures can insurers take now to effectively address these challenges? 

Providing Greater Flexibility in Fund Selection and Composition 

To keep up with the highly flexible offerings of neo-brokers, life insurers need a modern digital solution. This should range from creating risk profiles and generating suitable investment recommendations to enabling seamless fund switching to adapt unit-linked policies to changing market conditions and risk protection needs. 

Currently, many insurers’ digital offerings still lack essential features regarding policyholders’ existing fund holdings, combination options, and fund switching capabilities. One effective solution to this issue is integrating financial-mathematics-supported Shift & Switch options into digital advisory processes. These tools can be utilized by advisors and sales representatives, as well as by new and existing customers themselves. 

Optimizing Unit-Linked Policies with Shift & Switch  

By combining a transparent investment overview with digital tools for searching, selecting, and assembling the right funds, policyholders gain access to a modern customer journey for Shift & Switch processes. With real-time information on conditions and fund performance, unit-linked policies can be optimally aligned with customers’ risk profiles and performance expectations. 

Seamlessly Integrated into a Fully Digitalized Insurance Policy Process 

After analyzing the current insurance policy and selecting suitable alternatives via user-friendly digital tools, fund switches (Shift) or strategic realignments (Switch) can be executed as quickly and efficiently as in investment vehicles without an insurance wrapper – within just a few digitized steps. 

An ideal digital advisory process, provided via a central portal, would look like this: 

1. Risk Profiling & IDD Compliance

   A digital onboarding process with personal risk assessment, integrated tax calculator, and IDD compliance check. 

2. Fund Selection with Fund Finder, Fund Comparison & Fund Profile

   Guided fund selection based on risk profiling and recommendations from the Fund Finder. 

3. Transparent Portfolio Overview

   Real-time tracking of selected fund performance, including all relevant key metric

4. Shift & Switch Optimization

   Guided fund reallocation during the Shift & Switch process based on selections in the Fund Finder. 

5. Conclusion of Contract

   Digital contract signing with e-signature, including all relevant fund documents such as factsheets, PRIIP KIDs, ESG reports, and integrated KYC, due diligence, and anti-money laundering processes. 

In most cases, these steps are conducted together with an advisor. To maximize customer benefits, it is crucial that advisors actively inform clients about flexible fund-switching options within their policies. However, fully digital and compliant online solutions that allow policyholders to complete all steps independently can also be implemented – making them a future-proof option, particularly for digital insurers. 

cleversoft´s Insurance Solutions 

Embedded in a digital end-to-end system, the Shift & Switch function provides life insurers with an effective tool to enhance their offerings and retain existing customers. Policyholders can seamlessly switch funds within their policies in just a few digital steps and rebalance their portfolio according to modern portfolio theory principles. This allows unit-linked life insurance policies to be more flexibly tailored to individual risk profiles and return targets, making them a more attractive investment option. 

Do you have questions about Shift & Switch or digital advisory solutions for life insurance distribution? We are happy to assist you personally. Contact us via our contact form.