Voice AI in Insurance: Improving Renewals through Automation

With the increase in insurance penetration and the surge in demand, companies are turning to AI and automation that can help businesses scale.

Health Insurance (Getty via IE)
There was a marginal improvement in India’s insurance penetration in FY21, according to the latest data from the Swiss Re sigma world insurance report. (IE)

By Sourabh Gupta

The emergence of the coronavirus disease has resulted in a health crisis, upending healthcare infrastructure and economies worldwide. Till now, the virus has infected more than 3.45 crore people and claimed over 4.65 lakh lives in India. More and more people are starting to consider a health insurance plan as essential. There was a marginal improvement in India’s insurance penetration in FY21, according to the latest data from the Swiss Re sigma world insurance report. Insurance penetration (premiums as a percentage of gross domestic product) stood at 4.2 percent in FY21 compared to 3.76 percent a year ago, according to the report.

With the increase in insurance penetration and the surge in demand, companies are turning to AI and automation that can help businesses scale in an efficient and cost-effective manner. However, in order to sustain growth, renewal of policies and repeat purchases are imperative.

Persistency ratio – An important metric for insurance companies

Persistency rate is the proportion of policyholders who opt to pay their renewal premium. Insurance companies need to maintain a high persistency ratio in order to stay profitable from both a customer retention and acquisition point of view. A high persistency ratio also demonstrates credibility and gains customer trust. Retaining a customer is one of the most significant as well as challenging aspects of a business today and just like most things in life, there is no quick-fix solution to the problem. Simple policy renewal reminders have proven to be ineffective and a holistic approach to customer engagement across the entire lifecycle needs to be adopted as a long-term solution.

Factors affecting persistency ratio

A. Mis-selling the policy: A large number of customers fall prey to mis-selling every day. The main reason is the front-loading of agent commissions—insurance agents make unrealistic promises to sell insurance policies and they try to make the most commissions instead of identifying the right policy for every customer’s requirement. There is also a lack of need-based selling and segmentation that leads to dissatisfaction among policyholders and discourages renewals. Customers also suffer from financial illiteracy, depending heavily on their agents.
B. Lack of customer engagement initiatives and communications: Insurance Industry leaders need to rethink the way they see persistency; and for that to happen, they need to change the way their customers perceive and experience the benefits of an insurance policy. It is important that customers understand the role insurance plays in their financial security and this can only be done by engaging with them throughout their lifecycle.
C. Inability to identify risky customers early: Conventionally, channels like emails and SMS are used by insurance companies to remind customers about upcoming renewals. While they may work to some extent, they are unidirectional and do not capture the intent and inclination of the customer towards renewal, their overall satisfaction, complaints or concerns. And since most insurance companies only start calling customers a few days before the date of renewal, there is no time for them to understand and resolve issues or gaps in understanding, significantly impacting conversions.

The Solution

Here are some strategies insurance companies can implement to tackle the above challenges:

A. Preventing mis-selling: Insurance companies can incentivize agents through commissions specifically for renewals. They can also leverage AI in running customer education programs for a better understanding of the policies they have bought. Once a customer opts for an insurance policy, an automated verification call (PIVC/PCVC) can be made to every customer explaining the benefits and the terms and conditions of the policy. Voice AI enriches this process by streamlining it, engaging large numbers of customers in a proactive and proficient way while remaining cost-effective.
B. Effective customer communication and engagement: Insurance companies can initiate programs to make sure that the policyholders always feel secure and engaged. For example, during times of crisis like the global pandemic, insurance companies could reach out to their customers informing them about precautions to be taken, complimentary mindfulness programs, containment zones near them etc. Insurance companies can deploy a voice AI-powered bot to place attribute- and event-based automated calls to interact and engage with their customers.
C. Identify and segment your customer early: There are many benefits of identifying and segmenting customers based on their propensity to renew the policy earlier than the due date. Rather than relying on voice channels late in the renewal process, insurers should make calls early in the lifecycle based on the propensity model. Personalized communication, human agent calling and customized offers should be designed and implemented for propensity-based customer segments. Implementing this solution has already shown quicker renewal campaign cycles and resulted in higher persistency ratios for some of the leading insurance companies in India. Multilingual voice bots can come to the rescue of insurers by giving them the power to make these calls at scale and automate the entire renewal communication process.

All across the globe, insurance companies have come to understand that the only way they can keep up with customer expectations is through technology adoption, and will increasingly use voice AI to improve persistency ratios, engage customers more effectively and improve profitability. Insurance companies must adopt voice AI as part of their digitization strategy for the benefits that it brings in terms of increasing operational efficiency and saving costs, helping both the company and the customers.

(The author is CEO and Co-founder of Skit. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.)

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First published on: 28-02-2022 at 15:08 IST