School admissions have opened for the current Indian academic year. Most of you must have opted to pay fees online. Just like the Internet, online transactions have become ubiquitous too. And this is because India’s financial service providers have successfully digitised and simplified banking processes. But while technology has made other financial services hassle-free and widely accepted, the same cannot be said for insurance. In fact, India has one of the lowest penetration rates for insurance across the globe : 4% for life insurance and less than 1% for general insurance. This is in stark contrast to our internet penetration at 40%, where we are only behind the US and China.
At the recently held Business Today - Salesforce ‘Roundtable on Technology and Future of Insurance Distribution’ I had the opportunity to interact with industry leaders and brainstorm on how customer centric technology can help insurers solve some pressing problems that the industry faces.
Simply put, insurance is protection against risks. But the mindset in India is different. Here, the conversations do not revolve around risk assessment and protection against losses, but around premiums and sum assured. To change the narrative, we need to tie the decision to buy insurance to an individual’s ‘moment of truth’ around risk.
The ongoing COVID-19 crisis brings home this ‘moment of truth.’ Costs associated with COVID-19 treatment are high. Consider this: COVID-19 patients are having to pay for protective gear worn by the consulting doctor. Each PPE kit may cost around INR 4000. Total cost of treatment may be as high as INR 18 lakhs. Surely a cause for worry, given that a large section of the population remains uninsured or underinsured.
Why COVID-19 alone, look at your daily life. Consider someone who might have an ailing parent in need of hospitalisation or critical care - it is this ‘moment of truth’ that will lead them to seek protection. When insurance companies can align such moments of truth to the customer’s needs, and design products that are relevant, we will see an uptick in insurance purchases. And this focus on customer centricity will, in turn, help the industry address one of its key challenges: low penetration.
Low penetration is really an outcome of lack of customer centricity, personalisation, and a one-size-fits-all approach to products. Currently, there is a broad mismatch between the products offered and what the customer needs.
What we need is more customer centric innovation.
Insurers can create micro products that are closely aligned to the needs and moments of truth of the customer. These products can be bite-sized, low-ticket (low premium) products, yet address the requirements for large segments of the market.
And technology can help you offer such customer centric micro products at the right moment.
For instance, consider embedding an insurance product inside another financial product. A customer logs into a web aggregator and checks out home contents insurance. This is followed up with a call to an affiliated bank’s call centre seeking information on a mortgage product. The insurer can use the customer data, usually captured by the web aggregator, and provide a customised insurance product that bundles home contents insurance with mortgage. This is a win-win - the insurer can upsell while the customer gets a single product with a premium adjusted to the loan and coverage they need.
There has been a shift from pricing to quality of service – a sign of a maturing market – but a lot more can be done using technology. We need to focus the use of technology on:
1. How do you make the interactions easier for the customer?
2. How do you make the process smoother for agents and insurance companies?
On the customer side, we are using technology to simplify claims processes, provide better product understanding, and issue policies in real time.
On the agents’ side, API integration provides agents with real-time information, and the ability to disburse policies virtually. For instance, the insurer is able to partner with an ecosystem of partners such as cooperative banks and financial intermediaries to cross-sell and access markets that they would normally ignore.
Technology can also help address some of the complexities intrinsic to insurance. For instance, empowering the customer’s decision-making by being transparent about available policies, riders, benefits, and claims processes; and by simplifying the claims processes to such an extent that a policyholder does not have to jump through hoops to get what they paid for.
Mehmood Mansoori, President, Shared Services and Online Business, HDFC Ergo explains how HDFC has simplified its pre-authorisation process for cashless claims to less than 15 minutes across its health insurance portfolio. What this does is create a customer centric experience and and win customer trust. When the customer knows their claim will be disbursed without frequent, tedious follow-ups, they are more likely to extend the policy when it is time to renew it.
In this context, cloud service providers have brought the subscription model to the insurance business. Both cloud and insurance work on an annual subscription model where the user/policy holder evaluates quality of service offered by the provider when it is time for renewal, evaluates other products in the market by the competition, and either decides to continue with their existing provider or sign up with a new one.
What this means for insurance: your model must pivot from product and functional silos to a more customer centric model - to understand and anticipate their needs, enhance their experience, and improve quality of service. The day you take your eyes off the customer, the revenue stream stops.
With technology adoption, access to distribution is not such a challenge anymore. Insurers need to now focus on optimising distribution and enhancing efficiencies. Most insurers have digitisation embedded across the insurance buying cycle, right from API integrations that drive partner ecosystems around the insurer, to PoS systems available over mobile apps, web aggregators, agent aggregators, self-help chatbots, and even CRM-to-CRM integration. What this also means - insurance, like retail, is truly becoming omni-channel.
For an insurer like IFFCO, the primary customer base is the farmer in Tier 3 and 4 cities. Now, even if they do not have enough field agents, they can still reach the customer and sell more products at scale. According to Seema Gaur, Executive Director (IT), IFFCO Tokio General Insurance Co. Ltd., IFFCO has equipped its agents with preloaded tablets that have the product data and are integrated with the CRM. The agent, in turn, can provide accurate product information, disburse policies, and track claim status in real-time.
India is far ahead of the curve when it comes to digitising operational processes. The winning game will involve driving customer-centred innovations and growth on the shoulders of these digital processes. We will see a kicker effect as artificial intelligence penetrates even further into insurance in areas such as risk assessment and policy coverage.
Insurtech - the integration of insurance and technology - is at a tipping point and nowhere is it better illustrated than the current crisis. This is a wake-up call for insurers to accelerate digitalisation. Only then can they increase penetration and make universal insurance adoption a reality. As India begins to move towards a ‘new normal,’ insurers need to build upon the ‘moment of truth’ that we as a nation are facing right now.
Find out more about how insurers can use the customer moment of truth to make customer satisfaction the focus of every interaction.