Over the last decade, amidst challenging conflicts faced by the insurance industry — upheavals in financial markets, phenomenal losses from the onslaught of natural disasters, low interest rates and regulatory changes to name a few — the global insurance market has not suffered from waning growth potential, be it in the developed or emerging regions across the globe. Today though, the wave of digital disruption has transformed consumer behavior to drive massive changes in their expectations of fulfillment.
Call it a challenge or opportunity, this transformative market force calls for radically different professional skills and business models. Considering that the industry by itself lags behind others (banking, telecom, retail, media and entertainment), insurance can no longer afford to sit on the digital fence.
A Changing Paradigm of Consumer Engagement and Experience
Digital technologies, niche and emerging, have changed the way consumers engage with their insurers. Undeniably, the biggest driver of embedding a digital strategy is to enrich customer experience and relationship; this leads the other drivers (attracting new buyers and enabling sales) by a long mile. Customer retention is a critical necessity, especially as customer acquisition costs continue to spiral.
The digital route to customer-centricity revolves around transforming operations to enhance customer loyalty and advocacy. It is easy to understand why. Loyal customers stay longer with their insurers, may most probably buy more, but above all, end up recommending the insurance company to their friends. This serves the triple advantage of customer service, retention and acquisition at lower cost.
The digital channel enables customer-centric companies to interact regularly with their customers — be it for making premium payments easier or renewals less painful; providing better value-adding options and enhancements; or simplifying updates and modifications. The equation is simple: every single customer touch point is another step to cementing stronger loyalty. Digital footprints provide insurance companies direct and indirect feedback from customers; by leveraging analytics they can identify patterns, segment audiences and take insight-led actions to further enhance customer experience.
Beyond supporting and automating internal processes, digital technology also accommodates customers’ priorities to delight them. From a contact center perspective, incentives and processes may be aligned to provide customers with a superior experience. For example, the insurer may measure the performance of their contact center on the criteria ‘first time right’ call resolution instead of average handling time.
Sharpening Digital Customer-centricity with Analytics
The insurance industry is a strongly data driven industry with huge volumes of structured and unstructured data residing in their systems. This is a boon to the customer-centric insurer for whom the digital model kindles the following questions:
- How do we consolidate and parse the available data to understand diverse customer segments?
- Which customer segments do we target?
- Which touch points may be considered most effective for earning loyalty?
- Can we extend the idea of digital channels for transactions and communications too? Will it improve or mar the customer experience?
Here is where analytics capabilities (in the form of customer segmentation, data analytics and visualization and predictive modelling) play an important role.
With the customer as the central focus, insurance companies need to consolidate and analyze the huge amounts of customer data that reside in their systems to understand their customers more intimately than before. There is a big benefit to this type of thinking. Better customer knowledge opens up avenues for Omni-channel experiences that in turn provide insurers up-sell and cross-sell opportunities, while enhancing consumer delight.
Catching the Millennial Attention — Portals, Mobility and the Social Media
When we talk of improving digital capabilities the roles of portals, mobile applications and services, and social media are never far behind.
It is time to bid websites goodbye if the industry is serious about wooing millennials and Gen Xers. For them, websites are just too inconvenient to use. In fact, these are the customer segments that will not only be channel-agnostic, but will dictate the channels they prefer to use at any point of time.
For the same reason, ignoring the mobile and social media factors is like bidding goodbye to future opportunities. In truth, the immense value of social media lies in its inexpensiveness as a marketing tool, its ubiquity in engaging with, and its influencing power over digitally savvy customers.
Social media is all about connecting people. Leveraging social media tools can provide just the right connects between insurance companies and consumers, consumers and agents, and between consumers themselves to collaborate and share information. For insurance companies, social media tools can improve relevant decision-making with active social listening.
Automation of repetitive business processes that require minimum decision-making skills across the insurance value chain is not new. It paves the way for enhancing efficiencies of back-office functions with quicker, transparent, and error-free transactions. What is emerging is the move to automation of more complex and risky processes.
The automation of business processes and back-office tasks needs to be looked at using artificial intelligence (AI) and applications such as robo-advisors, machine learning, computer vision, and natural language classification. Chatbots that provide personalized customer interactions may be used to resolve customer queries.
With insurance being a highly regulated industry, there is a critical need for insurance carriers to embed regulatory compliance into their business processes. Maintaining processes in compliance with changing regulations is a challenge that can be addressed effectively through automation of regulatory compliance. This will enable insurance companies to have real-time access to information and ensure that their processes are compliant. Reports and documentation can also be customized for specific requirements, thereby minimizing the risk of non-compliance.
Standardizing data across the transaction chain allows automation systems to communicate seamlessly and streamline operations for enhanced cost savings.
The Way Ahead (Scope & Future of Digitization in Insurance)
Simplicity, transparency and speed—these are the unequivocal demands of customers today. Additionally, there is a push towards direct interaction of consumers with insurance companies across personal lines and individual life insurance sectors. With the online world becoming increasingly mobile, the demand for localized, anytime and anywhere information will only increase.
The scope and opportunities are tremendous today for insurance companies to digitize their operations. With most insurers believing that they have not transformed themselves to reach anywhere near being digital, there is significant scope to close the gap that exists today.
The challenges are real: legacy technology, slow pace of delivery and culture constraints. The good news is that these are controllable internal slowdowns and not crippling external factors. The time has come to focus on pushing the pace to digitization; else it will not be long before they will find themselves at an increasingly competitive and functional disadvantage.
The near future thus needs to be more transformative than it has been so far. Insurers need to stay focused on their customers and grasp digital business opportunities as they arise.
Kshitij Jain, Managing Director and CEO, Exide Life Insurance Company Limited writes this piece for FICCI-BCG publication ‘The Changing Face of Indian Insurace’