Authored by Akash Anand
The coronavirus pandemic has triggered many structural changes in various sectors. The insurance industry is no exception. As retrenchments, salary cuts and furloughs have forced many people to curb discretionary spends, the environment has become more competitive for insurance players.
On the brighter side, lockdown and other pandemic-related restrictions have fuelled greater demand for digital transactions, including insurance policies. As customers are cautious of either stepping out or meeting insurance agents in person, online insurance buying seems safer, without compromising on conventional benefits.
Even before the pandemic, digital disruptions were affecting insurance operations and offerings. For all players, innovation is now the name of the game. Although insurance is founded on the premise of helping customers avoid major losses from unexpected happenings, this traditional way of operating is built on a reactive model.
Thanks to digital innovations such as big data, predictive analytics, automation and cloud computing, among others, tech-savvy insurers are shifting towards a more proactive model. This is based on more accurate risk assessment and providing greater insights that help in preventing losses in the first instance, rather than compensating for them later.
Such innovative products will be driven by the growing availability of big data and the capacity to analyse this speedily and accurately. Due to rising digital innovations, a Research and Markets report expects the insurance analytics market to have a 12.6 percent CAGR between 2020 and 2025.
The shift towards greater digitalization also means that insurance companies will be dealing with ever-growing mounds of data. Yet again, automation and AI-enabled technologies will help turn the tide in decoding these massive mounds of data via the 4 Vs of variety, volume, velocity and veracity. Machine learning, predictive data analytics and process mining tools can now offer faster, better and more productive outcomes.
Predictive analytics will help in anticipating potential risks and new trends scrutinizing customer data quickly and efficiently. This will include evaluating customer behaviour and preferences. Anticipating and understanding potential market disruptions and policy or environmental changes. Recommending new or innovative products that help in addressing evolving business requirements.
AI (artificial intelligence) and ML (machine learning) will provide intelligent insights across all end-to-end insurance processes. These tech tools enhance customers’ digital journeys by boosting efficiency, lowering turnaround times, negating the need for physical interactions and proactively reducing risks.
Moreover, ML offers contextual customer services by understanding their needs and recommending customised solutions. Additionally, the chances of human error are curtailed by providing 24x7 interactions and responses via chatbots run by ML and AI. Properly programmed, chatbots can offer accurate and up-to-date responses in varied scenarios.
The other tech tool minimising human error is RPA (robotic process automation). With RPA, repetitive processes and transactions, including document verification and claims processing, are performed safely and without higher chances of errors by avoiding any human intervention.
Virtual collaboration systems are another digital tool advancing online sales while lowering the cost of customer acquisitions. Insurance teams can connect with customers via virtual innovative channels such as tele-calling and video KYCs and calls. Besides, cases can be shared digitally. Also, tools such as blockchain can ensure any information or documentation is stored securely. Dependence on physical files and personal interactions can then be eliminated or minimised.
Another ongoing trend is greater usage of AI-enabled devices such as smartphones and smartwatches. By monitoring, tracking and analysing such data, insurers can gain better insights into the behaviour of their customers. These insights can then be deployed with predictive analytics and other AI tools to eliminate risks and underwrite claims ensuring healthier bottom lines.
Similarly, social media is another avenue for capturing and maximising insights about the present and prospective customers. Taken together, all the above insights garnered through digital means can facilitate more robust, safer product innovation and development, better marketing strategies and risks assessments while promoting greater fraud detection. As per IBM, insurance companies implementing advanced analytics solutions are outperforming peers by 76 percent.
Considering the circumstances, customers seeking the best insurance products and better services will benefit from digitally-savvy companies such as BimaKaro. Apart from the digital benefits stated earlier, such insurance players offer faster claims processing ascertaining higher customer satisfaction.
Undoubtedly, the pandemic will accelerate the shift towards digital in the insurance industry in 2021. Companies deploying new-age tools will be well-positioned to assess and address customers’ coverage requirements. Consequently, these entities can augment their insurance penetration while tapping new opportunities – more safely, securely, sustainably and profitably even as they keep improving customer satisfaction levels.
Akash Anand is founder and Managing Director at BimaKaro. Views are personal
First Published: IST