End-to-end digitisation of the process means lower costs, time-to-market.
by Pranay Mehrotra and Pallavi Malani
Digital tech is disrupting business models across industries. In insurance, it is challenging traditional insurers to re-imagine their business models. Today, most customers’ experience with their insurer is defined by a complicated buying process, an ambiguous underwriting procedure and, then, an uncertain claims process. For customers whose experiences are increasingly getting shaped by their interactions on Uber, Paytm, Amazon and other such platforms, this experience is sub-standard. Insurers with pure-play digital models in other countries (e.g. China) have created end-to-end journeys that give a frictionless experience to the customer and are thereby challenging traditional insurers.
The opportunity at stake for insurers in India by digitally transforming their business models is significant. Digital driven re-imagination of customer journeys across the value chain of issuance, renewals, servicing and claims, can dramatically cut turnaround times by 60-80%, reduce customer complaints by half, optimise costs by 30-40% and build a business model ready for the future.
For example, the issuance process for a health insurance policy can be made near-instantaneous through the thousands of agents selling these policies. This includes:
> Intuitive digital front-end for agents, data validations built in to avoid re-work and few simple fields for fast form-filling. Overall, with less than three fields, a quotation can be provided in less than a minute, and with less than 10 fields, a policy can be issued in under five minutes. In addition, e-sign/ OTP-based customer consent (in future, possibly enabled through Aadhaar) can completely make the process seamless. BCG’s study with insurance agents shows that more than 70% are willing to adopt such digital tools.
> Automated underwriting with data-driven rule engines, automated checks and decisions, “swim-lanes” based workflows on policy issuance. Over time, this can be further enhanced with use of non-traditional data sources to increase accuracy of risk assessment leading to higher quality portfolio. Alternate data sources include, for example, wearables and IoT data, data from other platforms such as healthcare platforms, and data on social footprint.
> End-to-end digitisation of processes with minimal-to-no manual touch—even in scenarios where health tests are required—can significantly reduce turnaround times. For instance, OCR-based reading of test reports and AI interpretation of the results can reduce the time consumed.
Other innovation such as facial analytics can minimise the need for physical health examinations. While the efficacy of these technologies is still to be tested at scale, an innovation pipeline that factors in potential developments is critical for sustained transformation.
While several Indian insurers have initiated digital transformation programs, the impact is less than required. So, what does it take to successfully drive digital transformation?
> Re-imagine customer journeys, not re-engineer: Take the customer perspective as the starting point, define the art of the possible (including learning from outside the industry), ensure end-to-end digitisation.
> Create agility @scale through cross-functional teams working with a minimum viable proposition based approach. In our experience, an agile approach shortens time to market by half, reduces development costs and drives higher employee engagement.
> Leverage partnerships: Companies need to recognise that they cannot build everything in-house and need to leverage partnerships for data and technology to scale up faster.
> Insurers need to continuously move towards a flexible, micro-services based IT architecture. The right culture and value proposition to attract the right IT talent is critical.
> Change the terms of measurement: Build a dis-aggregated (e.g. step-wise turnaround times) but end-to-end view, move beyond averages to 90th and 99th percentile.
> Sustained commitment to the transformation program from senior leaders. This cannot be delegated.
Digitisation is already starting to transform the insurance industry. The challenge—or opportunity—for insurers lies in determining the concrete steps to drive this revolution. Insurers successfully undertaking digital transformation programmes will capture a large share of value in the future.
(Mehrotra is Leader (insurance practice), BCG India and Malani is principal, BCG Views are personal.)