Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Brand Stories / An insurer’s digital IQ can hugely impact the consumer journey, here’s how
BackBack
PROMOTIONAL

An insurer’s digital IQ can hugely impact the consumer journey, here’s how

Enhancing the digital IQ of an insurer can make all the difference for an organisation making a virtual shift. Read on to know more.

Episode 3 of ‘Driving Innovation in Insurance’Premium
Episode 3 of ‘Driving Innovation in Insurance’

The upheaval caused by the pandemic across various industries has resulted in one common ground: the rapid adoption of digitisation. This transformation has been imperative at a time when consumer demands, lifestyles and choices are radically shifting. Needless to say, the same applies for the insurance industry.

At the crux of this virtual shift lies the digital IQ of insurers, enhanced further by analytical tools, empowering them to provide tailor-made solutions to their consumers.

Episode 3 of ‘Driving Innovation in Insurance’ – a series of high-powered virtual panel discussions revolving around the insurance sector – talks about the right tools needed to enhance the digital IQ of an insurer, thereby improving efficiencies and enhancing customer experience.

Technology brings big gains

“By using traditional and advanced AI, $1.1 trillion in value can be realised for the insurance industry globally. That is what insurance companies stand to gain in the data and AI process. This number is pre-Covid, from January 2020. It would have gone up substantially because of all the digital transformations that organisations are racing towards," said Deepak Ramanathan, Vice President, Customer Advisory, Asia-Pacific, SAS.

This digital wave is the need of the hour for this sector, which relies on volumes of data especially in the general insurance segment. So the thought to operationalise it was always there. The digital drive has picked up tremendous speed for the last six months, for all the right reasons.

“Digitalisation was a necessity in the Indian insurance sector because of the kind of volumes we deal with and more so in the general insurance segment. At HDFC ERGO, we have issued 1.5 crore policies. With such volume and the low-ticket sizes, it really becomes important to digitalise and decisions have to be made at the speed of lightning. Humans have to evolve to design transactions, not do them and machines have to take over," said Mehmood Mansoori, President, Shared Services and Online Business, HDFC Ergo.

He further added: ‘In the month of March, we launched WhatsApp communications and had 60,000 people interact with us. The volume & customer engagement got multiplied immensely. In such a scenario, consistency across all platforms is very important which is what makes the role of AI & ML so crucial.’

Technology as part of business strategy

As the insurance sector is evolving, technology has a key role to play. But what role technology plays in this process of evolution needs to be seen – the key question being asked is this: Are the insurers of the future enabled by technology or are they becoming part of tech organisations that sell insurance?

In a recent analysis of 200 insurers globally, BCG benchmarked their maturity on the digital scale across many parameters. “A synthesis result revealed that the digital champions outperformed the digital laggards or even the middle guys, on every dimension, be it customer experience, growth, cost or even value issues. And that is the way of the future," said Pallavi Malani, Managing Director and Partner, Boston Consulting Group, India.

The difference between the leaders and the others was the way in which the tech function was perceived within the organisation. Increasingly now, technology is deeply embedded in the business strategy.

BCG looked at the success stories and emerged with six key factors as a common thread across digital transformation - “It has been seen that barely 30 percent of organisations that undertake these transformations are successful. And within this 30 per cent, six key factors emerged. Those who got these right, reported success rates of 80 per cent in their transformation journeys," she added.

These are: having an integrated and clear strategy of what the organisation wants and making sure it is business-led, making sure that leaders are committed to the transformation, deployment of high-calibre talent, having an agile and adaptable governance, effective monitoring of progress and business-led modular technology and data platform.

The pandemic: a catalyst for change

The Covid-19 pandemic with all its unpleasant attributes is being seen as a digital transformation agent. The current crisis has accelerated the digital shift across organisations in this sector.

“Things that took 5-6 years to happen are now taking place in months. That’s a very critical scenario that we are seeing. The drivers for this are increased competition, consumer expectations and technologies like AI and Cloud. These will help you optimise your operations, provide an extraordinary customer experience and finally, empower their people to rely on these automation processes to provide a lot more value to the organisation," Ramanathan said.

Companies that slowly embarked on their digital journeys have hit top-gear and are seeing results. “The digital transformation that we started 2 years back has started producing its output. The core will complete sometime next year, but this will go on. What happened in the last 6-8 months is the additional part that has come up. Now, we also had to cater to aspects of performance, trust and transparency when our executives are not going to see the customer face to face and are closing transactions online," said Goutam Datta, Chief Information and Digital Officer, Bajaj Allianz Life Insurance Company Limited.

But as organisations have adapted fast to the change and turned processes digital, the big question being asked is are the changes here to stay? “At Max Life, we are very clear that this has to be a permanent muscle in all facets – how we sell, how we interact with customers, how we make decisions," said Manu Lavanya, Director and Chief Operations Officer, Max Life Insurance Company Limited.

So, how are we going to see the insurance space 3-5 years from today? “The physical touch points across the business – be it in terms of sales or processing – will simply start disappearing slowly. It is all going to turn digital. And the most complex part of the business, of servicing, is far beyond data science. How to build human intelligence to make it touchless, faceless and still accurate facet. A lot more innovation is needed there and things are only going to get more complex," said Mansoori.

Key challenges

So, what are the key challenges in this journey? From a mindset shift to data being tech-ready, there are a lot of loose ends that need to be resolved. Some grey areas include:

a. learnability - “One of the key challenges that we have experienced in this journey of transformation is digital learnability, which has more to do with digital mindsets than training," Lavanya said.

b. Refining the data architecture - Technology is only one part of digital transformation. Enterprise data structures that were built 10-15 years ago, need to fit into tech to deliver results. “The data was not built with the intent of analytics, but just for transaction processing. This data architecture has not transformed at the pace that technology has. According to a McKinsey research, hardly 23 per cent of total enterprise data available today is actually usable for analytics," Lavanya added.

c. Accountability & Ownership -. ‘We need to make sure that top leaders as well as members of the middle management are completely engaged and committed to digital transformation. There needs to be strong ownership & accountability across all levels,’ said Pallavi.

Last but not the least, decision-making remains a challenge for insurance companies. They make hundreds and thousands of decisions every day – whether it's checking the authenticity of a claim, the propensity for a premium, the right premium rate to offer a customer and so on. Insurers today are asking one key question: How can we automate some of these tasks?

Ensuring data security in the new-normal

The Insurance sector is a highly regulated industry which deals with all kinds of private and sensitive data. Even customer support center teams are working from home amidst the pandemic; this begs the question: How are organisations enabling data decisions and ensuring customer information is not misused?

Technology has come to the rescue here, with only access to necessary information being granted to the concerned staff. “For me, the key to success when it comes to information security is the data availability has to be on a need to know basis. Building a culture that information is sensitive and that you are being watched, helps. The industry had to move to this culture almost overnight," said Mansoori.

“The question became a little more relevant during Covid because the business model changed a little bit in terms of how you handle data. Apart from security of this data, another dimension that comes into play is transparency. All insurance companies have data security built into their structures. But technology came into play and ensured this," added Dutta.

From risk assessment to data security, as technology takes over every aspect of the insurance value chain, enhancing the digital IQ of an insurer becomes even more indispensable.

For more information & insights on this topic, watch the full episode here.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 09 Oct 2020, 06:19 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App