Insurance: In the digital world

Vineet Arora

The insurance industry has undergone a series of transformations in the year 2017. Be it the implementation of GST, listing of insurance companies, rapid use of digital advancements or the regulatory changes, it is making the industry more customer-centric, lucrative and transparent.

Increasing customer awareness is leading to change in customer behavior which in turn is challenging the conventional business models. The customer is more aware of his needs, he wants to understand what he is buying and due to this awareness and past experiences his decision is now a more involved decision. With change in customer behavior the process of buying has undergone a change and digital now plays a significant part in his decision making.

According to the IRDAI (Insurance Regulatory and Development Authority of India) Annual Report 2017, the insurance industry witnessed tremendous growth in direct selling. It has taken a leap of 4.15 percent in 2016-17 compared to 0.4 percent in 2006-07. Though the number in absolute term is still small its growth is indicative of changing customer preferences.

Being close to the customer these days is more significant than ever before. With their genuine feedback, companies innovate, improve and reinvent. This explains the need for agility to adapt to the rapidly changing preferences of the customers today. Going digital has been a key priority and focus for insurers. Growth in digital is also being enabled by the governments digital push, electronic know-your-customer (e-KYC) are few of the game changing enablers.

While there are several factors to be considered for success, there are some key challenges which need to be addressed:

1) Adapting new technologies

Technology advances are transforming different industries and sectors. Disruptions of these advances have already entered the insurance space. These will have widespread implications across insurance business including underwriting, sales, customer service, claims etc. To adapt to the changing technology, insurers have been investing in digital platforms that strengthen relationships with its stakeholders, mainly the customers. All the efforts taken are only to empower customers to buy insurance online, make products more transparent and simpler to understand.

Various technologies like chatbots, machine learning, artificial intelligence and Internet of Things (IoT) are helping in understanding the customer better and making the buying process smooth and hassle-free.

2) Customer centricity

In this digital age, customers prefer insurance companies to match the same standards set by digital e-commerce giants in terms of customer service. They require shorter response times; seamless interaction; simple, understandable, and personalized products and service; the best possible quality; and more transparency.

This is a real challenge for the insurance companies. Nonetheless, they are making constant efforts to provide need and value based insurance solutions by ensuring they receive swift and efficient services. Be it the on-boarding processes, claim settlements, renewals and underwriting, insurers have taken necessary steps in accelerating and making processes simpler with improved customer experiences, thanks to technology and digitalisation.

3) Improving data and security systems

Digital buying is picking up at a slow pace due to fear. Even today, online transactions leave some customers apprehensive. But with technological advancements and more secure methods, insurers have taken steps to ensure the buying process is safe and secured. Reliable cloud systems and data security applications have ensured a total protection of data, hence maintaining privacy and safety.

4) Embedding a culture of innovation

Innovation is crucial for an organization’s success. It takes two factors to make innovation real at any organization: concepts and culture. These are the elements that will assure positive outcomes. To understand the customer’s ever evolving mindset and serve them better, an innovative culture in an organization is the need of the hour. One way to stay relevant in customer’s mind is through constant innovation and continuous improvement. Organizations have slowly reformed workplaces and fostered imaginations which have helped solve numerous customer issues.

Customers along with insurers have now stepped on to the digital drive. Insurance companies do understand the need to embrace digitalisation and have taken the initiative to nurture their transformation roadmap for the welfare of their customers. Whether it is buying insurance or choosing your pair of glasses, digital is taking customers by storm. The fear of buying a financial product online should be a long-gone statement in the coming years.

The writer is MD & CEO, Aegon Life Insurance