The insurance industry has not been spared from seismic changes precipitated by the outbreak of Covid-19. The industry has witnessed accelerated digitisation and adoption of smart technologies and a gradual shift away from a product-driven industry to a sector that offers more bespoke, and personalised solutions to its customers.
While previously, digitisation was seen as a “nice to have”, now it has become an operational imperative for survival.
A growing trend in financial services is cross-industry collaboration and partnerships between different stakeholders within the sector.
So, how is digitisation changing the face of the insurance industry? How is this beneficial to the consumers? What are the new trends that are emerging? What does digitisation bode for the future of intermediaries and what are the barriers that need to be overcome to ensure that the inherent benefits that are being brought about by this new era are fully realised?
There is growing evidence that as consumers become more tech-savvy, correspondingly they also become more discerning and demand quick turnaround times. Armed with unfettered access to information, the scales of power have tipped in favour of the consumer.
This shift in power dynamics away from insurers to the consumers has created expectations for tracking visibility and quick turnaround times for claims processing.
So, the more insurance companies automate their processes, the quicker they can process claims which in turn improves customer experience. The digitisation of the insurance sector also gives insurers the opportunity to gain access to data which provides them valuable insights that allow them to develop tailored products that better meet their customers’ needs.
The outbreak of COVID-19 has marked a clear break with how the insurance industry has done business in the past. The industry is going to have to look at insurance differently and be flexible enough to adjust the cover to match their consumer’s peculiar risk profile.
For example, we expect to see the evolution of products such as day cover solutions that can provide short-term cover for a brief duration. This could be appliable to short-term cover when travelling. The introduction of such innovative products is possible if the sector has the actuarial models and the technology that supports them.
A growing trend in financial services is cross-industry collaboration and partnerships between different stakeholders within the sector. Insurance companies and FinTech’s are forging partnerships with retail stores which enables them to offer multiple services to customers when they are shopping.
Such partnerships between financial institutions, FinTechs, and retailers are going a long way towards fostering financial inclusion and facilitating access to financial services to millions of unbanked and underbanked people.
While digitisation presents many opportunities for the financial services sector, its impact on unemployment remains a pertinent question. In a country that is battling massive unemployment, there are legitimate concerns that the increasing digitisation of the economy may displace employees, and in the case of the insurance industry, nullify the need for intermediaries.
Digitisation can never be a substitute for face-to-face engagement. Research and anecdotal evidence show that there will always be customers that prefer to engage with a broker for advice, particularly on products that are complicated or require expert advice. By talking with a broker, these customers want a sense of comfort knowing that the business can assume its fair share of responsibility by sharing the knowledge of what they need to be covered.
Customers do not want to make important financial decisions all by themselves. They want to know that they have an expert that understands what the future might bring, and who will give them expert advice so that they make informed decisions.
It might be easier to buy funeral cover using digital platforms, but when it comes to products such as disability or retrenchment cover customers often require an expert who will guide their decision.
Digitisation is never going to replace our brokers, nor will it dislodge our call center agents because there is only so much information and possible responses that can be loaded on bots and other self-service channels.
While the road to digitisation is imminent, it is equally important that the industry should have the fundamentals in place.
Therefore, ease of use of self-service and digital channels should form the cornerstone of the systems that support digitisation. Self-service channels that are successful are those that have simplified the process and frees their customers to deal with the claiming process mentally and emotionally. The last thing a distraught customer needs is to navigate through an intricate and user-unfriendly maze of self-service channels when they wish to make a claim. Well-designed and seamless digital platforms can make or break their utility.
They can either encourage consumer adoption of these platforms and drive up brand affinity, or they can derail the digitisation process and inflict irreparable damage to your reputation.