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May 2019

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The Robic-Yogic journey in insurance

Source: Asia Insurance Review | Dec 2016

To say that technology has changed our lives irreversibly, is stating the obvious. But along with the benefits, technology has ushered in significant consequences and implications. Mr Akshay Saigal and Mr Somasundaram Ramakrishnan of CSC elaborate.
 
Highlights
  • Many of the factors related to insurance are changing, but the single most important factor in insurance remains unchanged: RISK;
  • The digitally savvy customer demands instant response. The urgency of “now” has never been so intense; and 
  • The recipe for success will be a mix of relevant technology combined with an understanding of customers’ growing expectations.
 
As tech-savvy people have become aware of the lifestyle risks posed to a long and healthy life, they are turning towards traditional knowledge and techniques for their physical and spiritual wellbeing. Hence, disciplines such as aerobics, yoga and tai chi have gained more popularity in the past few years. The popularity of organic food and dietary plans like “Paleo” also point to movement in this direction - an eclectic mix of technology and tradition which can perhaps be aptly referred to as a Robic-Yogic movement.
 
   The insurance industry – which itself is intrinsically tied to human lives, health and property – cannot help but be affected by these trends. Moving forward, this journey would be Robic-Yogic too for insurers, as they employ technology for deep customer insights while maintaining strong focus on the traditional values of customer centricity.
 
   Currently, the industry is searching for a new normal – a new model of growth using technological advances to bring better products to customers and provide better coverage.
 
Insurance is changing
As shown in Figure 1, many of the factors related to insurance are changing, but the single most important factor in insurance remains unchanged: RISK.
 
Figure 1: Insurance is Changing – Rapidly and Comprehensively
 
   As insurers constantly try to identify and assess the various insurable risks, some of the questions they seek to find answers to are:
  • How do we gain relevant, actionable intelligence from voluminous data to assess risk better than before?
  • How do we engage millennials meaningfully and assess the risks expected from their lifestyle? 
  • Change in technology is rapid. How do we act on the technologies that will help identify, assess and mitigate risk for both our business and our customers?
  • Increased longevity means people live longer but not necessarily in good health. How can annuities and post-retirement products be designed and delivered to help this ageing population?
 
Leveraging Big Data
Today, technological trends like Enhanced Connectivity, Internet of Things (IoT) and Mobility enable us to store, access and analyse exercise, eating and daily habit patterns in much more detail than in past generations. 
 
   By some estimates, data created in the last two years numbers more than the data generated by the entire human history before that.
 
   With all the data from IoT, Mobility and Customer Transactional Systems, insurers can analyse patterns in health, accident, driving trends, buying habits, and more, leveraging the true value of Big Data. This combination of large amounts of data and the technology that helps in crunching these mountains of data to get meaningful, actionable intelligence can help insurers in targeted marketing by developing meaningful products, focused sales, better underwriting of risks and 360-degree views of their customers. They can then serve their customers better through accurate and quick claim settlements.
 
Digital trends
The digitally savvy customer demands instant response. The urgency of “now” has never been so intense. With more millennials becoming not only customers but also employees and sales people, it is very important for insurers to connect instantly to engage and retain them. As a result, it is inevitable that every part of the industry will be automated in the coming years. 
 
   The sales platform is going completely digital as we speak, and the role of the intermediary will undergo substantial change. Robot- and Chatbot-assisted buying – with data coming from multiple private and public sources to understand and assess the risk – will be common. Buying through multiple devices with enhanced mobility features will create an empowered distribution force, well-informed clientele and an efficient workforce. Seamless and paperless-driven sales, servicing and claims are aspired for, and very much achievable.
 
   As with any industry, there are innovators, early adopters, early majority, late majority and laggards in adopting these new trends. The following generic trends have been seen: 
  • Due to inherent difficulties in underwriting single entities and assessing risk exclusively, insurers tried to group risks based on parameters such as age, geography, nature of industry etc. Now the move is to rapidly provide customised, personalised risk coverage. This trend can be seen in Life, Health and General Insurance.
  • Insurers have to be nimble-footed. All aspects of the business should be able to react very quickly. A variety of products, engagement platforms, incentives, operational models and revenue models have to be thought through.
  • Insurers can no longer work in silos. Insurers will most likely have to be part of an eco-system where they partner with telcos, gadget manufacturers, health service providers, automobile service providers, data analysis companies etc. This will lead to a different revenue model. 
  • The technology boom itself has led to different risks like online fraud, identity theft, etc. which require special solutions from insurers. 
  • Reducing operational cost is a key priority for insurance companies, leading them to leverage Blockchain-based infrastructure. Cloud computing is trending to lower costs. 
  • Virtual reality tools and solutions have already found a place in the general insurance industry, where adjusters are trained about various building types, construction material etc. using a VR app. A VR tour of an accident site by an adjuster sitting in her office to assess damage may not be far off.
  • Most customer interactions can be handled through Robots and Chatbots assisted by artificial intelligence tools. These bots keep learning with each interaction and gain experience in identifying human emotions, taking cues from words and tonal modulations. Satisfying customer needs and requests in a predictable and consistent manner by machines is becoming a reality.
  • The health of an ageing population is a serious concern. With more and more people expected to live longer, the cost of managed healthcare is a big burden. Innovative products that combine annuities and health insurance are required.  
 
New IT trends an important part in Robic-Yogic journey
Applications can be promoted by insurers who now are not waiting for a claimable event to happen, but are acting proactively to minimise the risk of such happenings. Capturing driving patterns and incentivising safe driving, providing wearable gadgets incorporating IoT and encouraging healthy lifestyles are all part of this proactive approach.
 
   But this is only the start. The realisation of the full potential of all that we have discussed will unfold rapidly in the days to come. New IT trends like Blockchain-based Infrastructure, Mobility, Enhanced Connectivity, Internet of Things, Cloud Computing, Big Data, Augmented Reality/Virtual Reality and Bots will keep evolving to play an important role in the Robic part of the Robic-Yogic journey.
 
   As part of this journey, the Robic part will constantly quantify and figure out new technological ways to measure and predict the physical nature of man, his health and his physical properties. 
 
   The Yogic journey of an insurer will be guided by a heightened awareness of customers’ aspirations and the relentless focus on the traditional values of customer centricity, empathy and overall well-being. The recipe for success will be a mix of relevant technology combined with an understanding of customers’ growing expectations.
 
Mr Akshay Saigal and Mr Somasundaram Ramakrishnan are Technology Evangelists in CSC. 
 
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