By: Calvin Terblanche, Executive Head of Buyer Experience at ExoSystems
The insurance industry has come a long way. When you look at how the traditional way of doing insurance has evolved, it is clear that there is no industry riper for disruption than this. As a result, we are seeing the pace of change and meaningful innovation in the insurance sector escalating and companies in the sector adopt digital strategies not just to achieve cost savings and operational efficiencies, but to improve customer communications and satisfaction. The insurance industry is particularly challenged by customer churn. Traditional insurers must compete with disruptive new players and to stay relevant in this tough market, they need to work harder than ever before to retain their customers. And the best place to start is with customer service – from onboarding, policy changes and dashboards to claims processing and query management.
If you use the simple case of banking where almost every aspect can now be done online without needing to visit a branch, then there is no doubt that this innovation can – and should be – mapped across the full insurance sector. The good news is that it has already started to happen but the possibilities for self-disruption, innovation and diversification is endless especially as consumer demand continues to shift and the industry remains in a state of flux.
Customers are embracing digitisation quicker than ever before, with less personal contact and more immediacy being demanded. Experts suggest that by the year 2025, 95% of customer interactions will be powered by chatbots. Not only this, but 88% of consumers are demanding more personalised insurance that meets their needs – a one-size-fits all strategy just won’t cut it anymore. And while the world has been ‘forced’ into a much more rapid transition into 4IR, as a result of the COVID-19 pandemic, we are likely to continue on this accelerated trajectory which means industry needs to keep up.
So, what is the driving-force behind needing digital and AI-based technology? In simple terms:
- A younger and more digitally informed consumer who wants to be able to choose the fastest, easiest, and simplest processes and have more control over their choices;
- Financial advisers who need faster and easier ways to secure new business. In fact, 68% of young insurance agents stating that the industry is too slow to adapt to new technology;
- And overall pressure on fiscals, forcing insurers to review their processes and operations in order to distribute their product faster and more economically to consumers, while driving customer experience and retention.
The insurance sector has a way to go to achieve this level of digitisation and optimisation, but strides are being made. In fact, some of the key areas we are witnessing this shift is through mundane, paper-driven, and time-consuming processes which are being transformed through digitisation. Furthermore, claims logging, processing and loss assessments are being automated as far as technology will allow, to ensure speedy processing and resolution for the customer.
The consumer of today is also now much more tech-savvy than ever. They are used to streaming, video-conferencing platforms, online shopping and the use of OTP pins serving as authenticator for remote acceptance, so why not incorporate some of these innovations into insurance?
The naysayers in the insurance industry might argue that not all clients or financial advisers are ready for this type of cloud-based insurance processing, but one has to realise that the client-seller interaction has expanded well beyond a face-to-face meeting or in-store transaction. Cloud-based solutions are now the order of the day. We see this especially being true in a post-Covid-19 era. In addition, one only has to look at how familiar the South African consumer has become with online banking, to know that non-digitisation, is not an option.
Digitisation is here to stay and it’s becoming a table stake within the insurance industry. The momentum to develop multiple distribution channels is becoming more important for the industry given the increased market reach. Direct-to-consumer online channels are on the rise – and with it, the crucial need to develop tech-driven underwriting, processing, profile management and claim processes.
In a time of rapidly changing customer needs, growing regulatory demands, capital pressures and technological disruption, time to market and customer experience is everything. The insurance businesses of the future will be ones that are agile, create multi-touch point experiences and are seamlessly able to implement changes to adapt to market requirements and customer need states. Resilience meets disruption. Optimisation meets customer satisfaction. Digitisation unleashes creative potential for tomorrow.