19 November 2020

Rethinking insurance in an online-only world

The ongoing pandemic is prompting carriers to improve customer engagement, speed-up digital transformation, and deliver holistic, personalised solutions to policy holders

Photo: Pexels.com

By Howard James

With almost every industry having been upended by the ongoing economic crisis, for insurers, however, there is a touch of silver lining.

Not the opportunity to increase premiums. Nor to decline the myriad of businesses claiming against the financial damage brought about by enforced lockdowns. But rather, the chance to ramp up customer engagement and supress the negative views held about the industry by consumers globally.

Only the pharmaceutical industry fairs worse in the court of public opinion, studies by the Institute for Public Relations find. Speaking at the recent Insurance Connect, Sara Costantini, Regional Director at CRIF, highlighted the detrimental effect such opinions are having.

“Disputes have arisen in relation to business continuity cover and COVID-19, and the perceived unfair rejection of claims,” Costantini explained. “These complaints are aggravated by the general belief that insurers are reluctant to pay out for claims, despite market-wide evidence to the contrary. I think it is an opportunity for insurers to show empathy and know their customers better to regain trust and face this new phase.”

Improved customer interaction

Unlike banking, for instance, customers typically only interact with their insurers once a year, when policies are due for renewal. For less sophisticated products, like most life insurance and general insurance policies, customers are informed of their premiums via mail or email. The sudden news of having to shell out hundreds of dollars on a policy that is quickly about to expire is a rude awakening for many.

There is an opportunity to transform the customer experience — particularly in light of today’s COVID-19 lockdown, where both customers and insurance representatives are restricted in who they can meet in-person.

“If we look at other sectors, like for example retail and banking, the level of personalisation and the focus on a seamless customer journey are far more advanced,” Costantini said. “But today, with the difficulty of making any short or medium-term plans, more than ever before consumers will be looking to buy only what they need and possibly only when they need it. So, insurers should be able to respond quickly to these new and emerging insurance needs, and equip themselves to rapidly design and bring relevant products to the market.”  

Digital transformation key

In a study recently published by Moody’s, carriers are ramping up their digital capabilities as face-to-face sales for insurance products and services plunge.

Increasingly, smartphone apps and online portals are being used to sell new policies and voice health messages to customers. And for insurance staff and distributors, video conferencing enables employees and executives to connect for sales meetings, virtual marketing, agent seminars and wholesaling.

However, not all carriers are as technologically advanced. “The losers will be those with rigid product and business models that fall technologically behind their peers,” warned Moody’s Vice President Laura Bazer. “Although we do not expect rating changes due to technology alone in the near term, firms that are the least tech-savvy will likely have weaker credit profiles over time.”

The move to an online-only market has nonetheless prompted a hiring flurry among carriers. In Singapore, the insurance industry made 368 new hires during the first half of 2020, a 4% increase year-on-year, according to the Straits Times, citing data provided by Life Insurance Association Singapore.

Many of these recruits are digital specialists familiar with the cutting-edge technologies that are currently transforming the industry. Increasingly, carriers are adopting use of e-signatures and biometrics, such as face recognition and fingerprints, to ratify policies and verify customers.

However, not all policies can be sold in a virtual world. More complex products and some markets favour more traditional face-to-face engagement, especially in countries and sectors that are not technologically advanced, Moody’s noted.

Evermore customer-centric

By design, policies are typically siloed. One policy covers a customer for one risk, and another policy shields the same customer from a different threat. There is an opportunity to approach insurance differently, believes Dr Hak Hong Soo, Regional Head of Health at Generali Asia.

Citing the health insurance market, the onset of COVID-19 has brought about three significant changes to the way consumers think about health and well-being, Soo explains: a switch in focus from treatment to prevention; a healthier lifestyle; and greater demand for healthcare products and services.

“Without a readily available vaccine, people are being forced to think about their health proactively, in terms of prevention, as opposed to reactively, in terms of treatment,” said Soo in an interview with Insurance Business Asia. He added that the second shift included increases in healthy eating, home cooking and online wellness coaching, among others. While the third shift includes greater demand for health insurance, along with healthcare delivery innovations.

The establishment of ecosystems that create shared value is helping insurers do more for their customers. This allows industry players to be more proactive in designing personalised products and bundling them with relevant healthcare support services to better meet customers’ needs. Insurers are also developing more ways to connect with their customers. These increase the ability of carriers to listen to customers and obtain a better understanding of their needs throughout the healthcare journey.

Health insurance is therefore transitioning from a single product to a holistic solution: increasingly insurers are adjusting their approach, seeing their customers’ health and wellness as a journey that covers everything from prevention and diagnosis to treatment and post-recovery.

“Although COVID-19 has ushered in unprecedented uncertainty, it hasn’t removed the need for innovations in the provision of health insurance. In many ways, it has accelerated the development of new solutions and challenged insurers to be evermore customer-centric,” Soo said.

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