Over the last few quarters, the COVID-19 pandemic that brought widespread disruption in almost every industry hasn’t spared Insurance industry either. It has certainly triggered a transformation where multiple aspects of Insurers are being re-examined - from product creation, distribution to operations. These changes are underpinned by the need to go remote, digital and contactless.

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The pandemic has also influenced how people now view insurance. As per a recent survey∗ of 1000 participants across Mumbai and Bangalore conducted by the leading reinsurance provider, Swiss Re Group, people are now increasingly cognizant of the need for life and health insurance.

The survey also found that 1 in 3 people now searched for new policies and 1 in 4 purchased a new policy during the three-month period from April to June 2020.

We can broadly categorise the transformations within the insurance business into five areas:

Products

Insurance products have always been perceived to be complicated with little clarity on what’s included or excluded for customers. Consumers now demand products that are specific to their needs and want to cover only the elements of risk that are relevant to them. In addition to an unexpected medical situation, recent business slowdown, job losses, event cancellation has got consumers to think on specific need-based policies than versus broad-based plans.

People are now paying greater attention to how the policy has been worded and are trying to understand the implications of the terms & conditions, exclusions listed, etc. In the future, customers will start seeking products that are more direct to their risks and needs, rather than being forced to buy a generic product that leaves room for interpretation.

This is putting greater pressure on insurance providers to revisit their product portfolio and offer simple relevant and on-demand protection products.

2. Distribution

Distribution being the ‘king’ is a no-brainer within the Insurance industry too, and Agency force has always been the kingmaker. Although we have been observing a small shift towards direct to digital channels over the last few years; yet Covid has certainly fast-tracked consumer behaviour to seek out products online. Insurers have now well-stocked the digital channels not just with simple auto-approval products but have included multi-risk product variants to the mix. Further, to keep Agency channels active and involved, new digital B2B2C tools with curated leads and customer data are now being harnessed for joint sales efforts. In the future, however, high-performance agencies may potentially demand privileged customer support services to differentiate and keep themselves attractive. Insurers will need to do a balancing act by managing both ‘traditional high performers’ and ‘data-driven digital’ channels.

3. Evolving digital-driven ecosystem

We’re seeing a certain degree of commoditisation of insurance products where customers may not be overly concerned about the insurance provider but will rather align with e-commerce or a digital distributor for ease of access, simple features and effective services. In the future, customers may gradually prefer buying Insurance products through platforms like Amazon, Flipkart, Practo, etc. Henceforth, Insurers will need to rely heavily on ecosystem partners to bolster their portfolio and will have to offer a broader range of services and privileges to customers.

4. Operations

Insurance operations have tested the rough waters during COVID. With Insurance classified as essential services, most Insurers had resorted to working from home model. Starting from Claims to Call centre, most of the operations were being managed remotely. There is a growing push for smart technologies to enable contactless services or near-real-time claims settlement. Mobile apps that allow customers to click photographs of a damaged car to uploading medical records, digital enablement is the need of the day. Of course, all these calls for integrations with robust fraud detection, cyber policing & waste abuse assessment tools.

5. Technology

Any disruption in the Insurance industry is only possible with strong technology platforms at the core. If we look at the technology adoption journey of a typical insurer over the past few decades, we can break it down into three distinct phases. In the first phase, insurance companies adopted computing to support their operations, product development and tools that could assist a simple hub and spoke operating model. In the next phase, insurers adopted technology to focus on enabling and connecting with agents, bank partners & customers – thus came data portals, e-communication tools and so on.

Now, in what we can call ‘Digital 3.0’, the sector has woken up to the potential of technology-driven by mobile digital technologies, data-driven ecosystem partners & automation enabled services. A seamless two-way engagement with all stakeholders is the order of the day. This has brought tremendous scope for high degree customization and co-creation of products, services, and offerings for their customers.

In all of these, technology is playing a key role in driving the renewed transformation of the insurance sector. With a greater reach of smartphones, digital literacy and customisation, Insurance may move slowly towards being a ‘buy’ sector than a ‘push’ sector, only time will tell.

—The author Pradeep Satya is the Founder & CEO of Synergy Strategic Solutions. Views are personal

—FE

First Published:Dec 31, 2020 10:16 PM IST