Neelesh Kripalani, Sr VP and Head – Center of Excellence, Clover Infotech explains the new digital innovations in the Insurance sector during an interview with Himali Patel.
Growing customer needs and demands are encouraging the insurance industry to embrace technology and transform their offerings. However, successful digital transformation requires more than just technology innovations. It requires a proper roadmap with clear-cut objectives. Digital transformation shouldn’t be treated as a one-time project. It’s a journey that involves the following stepping stones along the way.
Transforming the underwriting function with Artificial Intelligence (AI) - Bots enhance the underwriting function by collecting and going through massive customer data to provide the underwriter with a targeted set of metrics to accurately assess the risk index of an individual.
Applying and utilising telematics to enhance customer engagement – Use of ‘telematics’ allows insurers to enhance the frequency of interaction and proximity with customers to offer extra services, boost profitability through customised premiums and develop a better understanding of risks and customer behavior.
Data Analytics (DA) for better risk mitigation – The Internet of Things (IoT), social media channels and mobile apps gather contextual information. Additionally, real-time data feeds from a digital ecosystem provide visibility into potential risks, which paves the way for a superior customer experience across the customer lifecycle.
Artificial Intelligence (AI) powered chatbots are transforming the customer service – Chatbots enable the customer service teams to create a single point of entry for queries, especially when customers need fast responses in real time. For example, a whopping percentage of Zhong An, a leading Chinese online-only insurance company, customers communicate via chatbots only make communication fast, immediate and accessible. Chatbots’ powerful digital capabilities allow the company to settle claims immediately. For example, if a flight has been delayed, it will settle the customer’s claim while they’re still waiting for the flight.
According to the Global Trends Study 2017, the insurance industry invests an average of $124 mn in new-age technologies, as compared to a cross-industry average of $70 mn. Further,, InsurTechs are changing the way insurance companies function and interact with the customer.
Insurers need to focus on personal, digital and immediate insurance offerings. It needs to reach out to customers on new-age digital channels. For instance, Singapore life, a leading digital life insurer in Singapore, has launched the SingLife chatbot that operates on Facebook Messenger and guides customers through a simplified process to get life insurance coverage. With the increasing use of voice assistants such as Siri, Google and Alexa, several insurance companies have started to offer services on these devices.
According to Pew Research, millennials will outnumber baby boomers for the first time in 2019. Hence, this doesn’t come as a surprise that transformation to ‘digital-first’ business models is led by millennial customers. Millennials grew up in the digital world. They are more comfortable with new-age digital solutions that are available at the click of a button on their smartphones. Additionally, they only like to pay for what they use. This insight is perfectly captured by Zhong An’s Micro Premium Insurance Model. The model is based on the insight - customers have many pain points in everyday life such as a delayed flight, mobile phone screen cracks or return of an online purchase. Instead of charging an annual lump sum covering all such events, customized policies can be created to cater to each event. Hence, the concept of pocket insurance got introduced; the premium of which can be easily paid out of pocket money.
Given the ubiquity of pain points in consumers’ lives, insurance can become a repeat-purchase product rather than a one-off annual expense. Customisation is the need of the hour, insurers need to diversify across product lines and ecosystems, they need to constantly innovate and create new products in the larger segments of the insurance industry.
New-age technologies such as Artificial Intelligence (AI), Internet of Things (IoT) and Internet of Everything (IoE) are being utilized to collect user’s demographic, geographic and lifestyle data. Besides, AI-powered bots are being used to gather and analyze behavioral data of users. This facilitates creation of the granular individual risk profiles. This, in turn, helps insurers to offer “scenario-based” personalized policies, which makes insurance a ubiquitous and need based offering than a routine annual purchase.