Insurers must strengthen digital communications with their customers as well as digitise much of the claims process.
By Vaidyanathan Ramani
The Covid-19 outbreak has had a significant impact on the revenues of insurance companies. While health and term life insurance have shown resilence, continuing to demonstrate steady growth , new business in sectors like motor insurance has been significantly impacted as new car sales have dried up and those who have insurance policies to renew have gone slow on account of their cars remaining mostly parked in their garage.
At the same time, investment returns are under pressure due to falling interest rates—there are segments where returns promised to customers are significantly higher than the cash flow being generated by such investments.
Stabilised digital operations
Covid-19 is expected to have a long-lasting impact on the insurance sector as a timely catalyst that led to the digital transformation of the industry. The crisis is also expected to transform the insurance organisation that will require re-skilling of the workforce to stay relevant and competitive in the future. The need for practising social distancing and the compulsions of remote working have ensured that enterprise risk management and business continuity planning remain priority areas.
With the emphasis being on contactless dealings, the share of agents, brokers and other offline channels in the distribution of products will reduce and reform to adapt to the new equilibrium.
Over the next few months, insurers will need to take a closer look at their two key stakeholders — digital employee and customer. They will have to build more trust with the customers and enhance the role played by insurers in their lives. Insurers will need to strengthen digital communications as well as digitalise much of the claims process including authorisation, approval and a considerable part of processing. They will need to be more transparent in their coverage and communication, and reinforce trust in the idea of a true and hassle-free financial protection.
Changes in buying behaviour
There would be many positive changes globally in the behaviour of everyone associated with insurance. These changes would significantly alter the balances between products and between channels for the insurance companies by favourably impacting a few and adversely driving down the rest. We can expect that in the coming months, the insurers will have a new dimension added to risk assessment, pricing and associated underwriting.
Going forward, the insurers will enhance the use of their websites, portals and self-service apps with simpler, user-friendly and easy-to-navigate interfaces. They will also identify processes that can be wholly or partially digitised, starting with policy and claims-related documentation, payments, and renewals. Insurance processes such as fraud detection, risk assessment, claims collection, and policy renewals may drive the next level of digitisation and will involve AI. Further, using AI-powered chatbots 24×7, insurers will look for instantaneous responses and engagement with customers while reducing their dependency on customer service employees.
The writer is head, Product & Innovations, Policybazaar.com