The traditional consumer view of insurance as a commodity is changing and the insurance industry is bracing for the challenges of a rapidly evolving market place. The world is inter-connected like never before and this shift presents insurers with greater opportunities in the guise of challenges.
The evolving view
The end-objective of insurance as defined by the traditional view has been protection against risks attached to negative incidents that may occur in the future. Largely a passive approach – waiting for something bad to happen and to mitigate the impact. But this view is now undergoing a sea change.
With the advent of digital technology and social media, insurers have an opportunity to make themselves more relevant and demonstrate greater value by repositioning themselves as wellness-providers.
Gone are the days when customer engagement was limited to product information and premium payment reminders. The digitally-savvy customer now expects insurers to engage and respond in real time just like the other service providers.
The expectation is to understand the customer needs, pre-empt the risks of the future and share insights in advance to prevent incidents. The task is to assure the customers’ well-being as opposed to the traditional role of a silent observer waiting to respond once the incident has occurred.
Seamless access of customers an opportunity for insurers
The business paradigm is changing rapidly with the customer exercising seamless access through digital devices and the Internet of Things.
Read smartphones, iPads, wearables and so on. These technologies enable service providers to access a vast amount of data related to the customers’ behavioural pattern and lifestyle choices.
Thanks to digital technology and data analytics, insurers are today empowered to offer insurance as a wellness product that offers to an individual, peace of mind, health and financial stability. The time now is for the insurers to make a choice; embrace and define the new order, or risk their own existence.
Most of the answers to this evolution however lie outside the organisation and here is where the outside-in approach can help. The need is to identify the right solutions, technology and innovations from outside, change the dynamics of customer engagement and stay ahead in the game.
The connected prospect & rules of engagement
Any life insurer’s wish-list for a new customer or prospect today is
• Young
• Accessible.
The way insurance is purchased is changing and insurers need to have the reach in terms of accessibility and product set to win business.
Younger customers are reaching out through digital media which is becoming the norm of communication and purchasing decisions. Purchaser’s short attention span necessitates reliance on data analytics for predictive analytics to recommend product fitments.
Customer wellness quotient
Insurers’ wish list for better customer satisfaction and profitability is
• Healthy customers
• Customer stickiness
• Customer referrals.
The customer wants to be engaged at all times in a constructive manner. The key is to share critical health insights in a timely fashion and prevent incidents. This presents a win-win proposition between the insurance company and customer.
Claims are also reduced and the money thus saved can be diverted to further improve the products. If the insurers get this right, the incremental business through cross-selling and customer referrals is sure to follow.
Here are some of the approaches being actively considered by proactive insurance companies.
• Delivering an omni-channel approach that includes online, mobile and social media, in addition to the traditional call centre and in-person experience
• Offering do-it-yourself (DIY) services that enable customers to research offerings and carriers before they meet with an agent
• Participating on social media, where customers share advice, ratings and reviews
• Offering self-service claims, often facilitated via mobile and online applications.
Insurers can make a difference
Let us consider this example. AIA offers its customers a science-backed wellness programme that helps them make a real change to their health. The programme includes significant discounts on membership for gym and yoga classes; cashbacks on purchase of healthy food; products assistance to quit smoking and access to fitness devices at attractive discounts.
Sharing data from the fitness programmes entitles the customer to reward points. A perfect example of an insurer incentivising customers to share data and using insights from that data to modify their behaviour to mitigate risk. It is a fantastic model for the insurance industry, one that offers greater transparency and value for all stakeholders.
Wearables taking hold
Quoting an article in the Insurance Journal, 50 years after Captain Kirk began using his wrist communicator on the television show “Star Trek”, wearable technology is taking hold. From Fitbit and Nike Fuelbands to Google Glass and Golden-I, the technology is influencing how people live and work.
Millennials are leading this consumer market, with more than 50% estimated to purchase fitness bands next year, while 23% to 40% say they will purchase other wearable devices.
Wearables can also capture data and provide feedback about the wearer. A Canadian court ruled that FitBit data that revealed a change in activity after a personal trainer was injured in car crash could be used in a personal injury lawsuit.
An SMA Survey highlighted wearable technology as a game changer for the insurance industry with the benefits of using wearable devices appearing in the areas of risk management and return-to-work.
“All of these wearables are really fascinating from the standpoint of helping to manage or reduce risks. It’s helping to restore people’s health in a faster way by being able to remotely, in a real time basis, monitor them and get them back to work, and then also to be able to manage the overall risk of the individual.
Connected customer has higher stickiness
Digital is a catalyst and accelerator for “Total Customer Centricity”. Insurance paradigm has changed from product to customer centricity.
This creates stickiness as the insurer delivers what the customers genuinely value. Unless insurers keep in touch with the customer and evolve their products and services on a continual basis, they risk losing customers to competition.
Digital customer feedback is a strong influencer
Customer referral is based on online chats and feedback through social channels and is crucial for customer stickiness.
Here are some statistics that clearly show that bad customer feedback is a strong influencer in digital channels.
Take away
The time is now to move away from the passive role of an insurer and adopt the role of a risk manager and adviser.
This enables insurers to remain relevant in the face of increased customer expectations. Huge changes are happening outside the walls of the insurance companies and insurers who do not adapt to these changes risk their own business existence. Insurers need to adopt the outside-in approach, bring in those innovations and use the digital medium as a conduit to incorporate the change effectively.
With the virtual world shrinking and with advent of players like Google and Alibaba coming in with innovative business models in insurance, insurers need to constantly adapt to digital innovations placing customer engagement at the core.
This digital journey will also help the insurer to be in touch and contribute to consumer wellness which is and should be the ultimate objective of insurance.
Mr Balaji Bhakthavatchalam is Client Services Director and Head Pre-Sales, Insurance & Healthcare at CSC Asia Middle East & Africa