The new-age customer is demanding tailor-made insurance solutions. The second episode of the virtual panel discussion series – ‘Driving Innovation in Insurance’ – shifts the focus to the role of technologies like AI and ML in improving customer experience in the Insurance sector.
Circa 2030. You will be able to buy an insurance policy for yourself at the click of a button and a chatbot embedded in the digital interface of the insurer will offer instant redress to all your queries. Your policy will be tailor-made for you, seeing your history and other risk parameters.
The insurance industry is at the cutting edge of innovation and the Covid-19 crisis has accelerated the need for this digital transformation. As the modern-day customer seeks value and ease of use in every aspect of their lives, the Insurance sector has also embarked on their digital journey and even areas like customer acquisition – where face-to-face contact was considered essential – are being digitized. Tech tools are being deployed to reimagine processes of filing claims or applying for renewals.
The latest episode of virtual panel discussion series – ‘Driving Innovation in Insurance’ – puts the spotlight on reimagining customer experiences in the Insurance sector by leveraging AI/ML driven decision-making.
Here are a few highlights from the session:
Complete digital makeover on the cards
The pandemic has accelerated the digital journey in the Insurance space by leaps and bounds. While a lot was happening on the digital side in the sector, Customer Experience was not the area of focus. A complete shift is expected by 2030 when a digital makeover will redefine the way customer interactions are defined.
“We have taken to digital not by our immediate voluntary reaction but on the rebound. But the way we have scaled up over the last few years is very interesting. We have tried to create a digital superstore on SBI’s app and you have to see how different the experience is on that. Customers are ready to accept digital, even through intermediaries as they get value and it makes their life smooth and easy," said Pushan Mahapatra, Director, Strategic Investments and Digital Initiatives, SBI General Insurance.
A majority of the Insurance business is driven by offline channels like brokers, intermediaries and banking agents. But a shift to digital has been noticed globally and has caught up in India too, which seems to be getting accelerated due to people’s no-contact attitude during the pandemic.
“In 2020, there is a domination of digital channels in Germany – 84 percent is phone, 70 per cent email and 49 per cent through intermediaries and agents. But an overarching change is predicted for 2030 when digital will dominate. The trend is very similar for India and every insurance company will have to go through the journey from the offline to digital world," said Oliver Borner, Transformation Lead, Financial Services, SAS (DACH region).
Understanding changed customer expectations
In the age of one-click digital experiences offered by the likes of Amazon and Google, customer expectations have changed. Traditionally, selling insurance in India has been about the push and not about a need felt by the end consumer to buy such a product. But a shift is being witnessed to offer the customer an end to end experience, which is made seamless with the advent of digital technologies like AI and ML.
“General insurance companies are bleeding paying customer claims and still the general perception is that the claims are not paid and the processes are cumbersome. The problem has been that the consumer expectations have never been there from a front-end. We have always been focussed at the backend," said Sourabh Chatterjee, President and Head, Technology, Digital Sales and Travel, Bajaj Allianz General Insurance.
It is about adding value to the customer journey beyond just acquisition, which accounts for 60-70 per cent of the insurer’s cost.
“The real customer experience is around all parts of the value chain, from onboarding to claims and renewals. Insurers need to look beyond the direct to consumer channel and create value for the traditional channels too, where a bulk of the business comes from. It is critical to deliver customer experience which is the best in class," said Prasad Lad, Partner, McKinsey and Company.
Using technology to enhance customer experience
Insurance companies have the tough task of delivering a “good" customer experience at your worst hour, be it a life event, health exigency or even a car accident. But as the modern-day consumer seeks value in every aspect of their lives, the insurance sector is reinventing its ways.
Over the last couple of years, a lot of work has happened to digitalise the operations in the Insurance sector and use technology to bring about efficiency. A lot of AI/ML solutions are being used for media buying and even customer acquisition. But, insurers need to venture into new horizons of customer experiences.
“For customer onboarding where you can use a lot of third-party data or ride on the Jandhan-Mobile-Aadhaar trinity which is available, AI/ML solutions can be used for purposes of underwriting or deciding the nature of underwriting that an application needs to go through. On the other hand, it can be introduced for complete application processes without the need for a face to face interaction," said Vishal Subharwal, Executive VP, E-commerce and Digital Marketing, HDFC Life Insurance Co Ltd.
Changing role of intermediaries
Digital platforms like Policy bazaar have made insurance much easier for people to consume and buy online and compare. The future is to personalise the experience for the customer and offer an end to end solution.
“We have a privilege of collecting data from the customer right from the time he comes onto the portal to purchasing the policy and take him to the level where he can be serviced for a long time. This data will be our focus area and we want to use it to personalise the experience for the customer," said Saurabh Tiwari, CTO, Policybazaar.
Intermediaries are looking at collaborating with insurers to build the right solutions tailored to the individual needs of their customers. “The product that we are building for the consumer can’t have a one size fits all approach. We need to innovate on building the product construct and that is the area where we can partner with companies to offer all the information they need to build these products. It’s not just about bringing customers but also serving them well," he added.
Using AI and ML to break the silos
Insurance companies have a whole pool of data available at their disposal which can be processed to derive solutions for improved customer experiences. Technologies like AI/ML are game changers in the efficiencies they bring about as they take away some of the aberrations which happen in human processes.
“Our solution is a central decision engine which connects to all the different kinds of data which is available – inventory data, external data about customer demographics, events, triggers. You need to apply analytics on the vast pool of data that is available. Without tools of AI and ML, it is very hard to find the solution that offers the best balance between customer satisfaction on one hand and revenue on the other," said Borner.
But these technologies must be backed with the right vision to deliver the desired results. There is, therefore, a need to synchronise basic processes before the switch to digital is made.
“We are seeing a large transformation right from chatbots to customer servicing channels. But it is important to have the basic processes set right in the organisation to deliver optimisation as AI and ML learn from them. These technologies also develop biases easily making it imperative to review them from time to time so they don’t lead to wrong conclusions," said Mahapatra.
Building digital trust
Today, every organisation is adapting to digital and using new tools to engage with customers. But building digital trust and at the same time ensuring that customer privacy is not threatened is critical to this process of transformation.
“If you look at the framework around data privacy, it is all about what is in it from a consumer standpoint. We must deliver that at each and every part of the value chain with a clear consent," said Chatterjee.
The customer must be at the heart of all the digital innovation and it is important to explain why you want the information. “As long as the consumer knows what’s in it, they will provide whatever you need. AI and ML will help to get all the relevant information from the vast pool of data that we have. But it is not like a magic button. The understanding of the information to provide the right answer is very important," said Borner.
Proactive risk management is the future
The future? Actuaries see insurers play the role of proactive risk managers rather than merely providing compensation for loss. Value driven sales is fast becoming the new norm and insurers are not just mitigating risks for an individual’s health or vehicle or life, but want to be viewed as risk managers who are offering something of value.
“The paradigm shift is already happening. Instead of doing asset-based underwriting, we are offering a risk solution. Traditionally, we were selling one product at a time, say for a fire, or shopkeeper’s policy in the SME space and underwriting only one risk at a time. Now, we have to look at the inherent risk of that individual plus their family, and their business," said Chatterjee.
Insurance companies need to invest into the intermediary networks and provide them with the technological backup needed to boost customer experience. “Historically, in India and across markets, the intermediaries were the source through which insurance companies interacted with customers. For them, they were one level away from the customer. The agent is supposed to deliver the customer experience and companies should help them in doing so. If we look at 2030 as a benchmark, insurance companies can really turn this around," Lad added.
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