Dr. Pallavi Seth
Although insurance industry is going through the transition phase towards digitalisation, one must not forget that the financial literacy and awareness in India is quite low as compared to other developed economies. Face to face interactions can’t be replaced by digital solutions completely especially in case of complex insurance policies.
Insurance companies should not forget that insurance is helpful when people are already in distress, empathy shouldn’t be lost in the process of digitalisationespecially at the time of claim payments.
Insurance companies should come up with insurance literacy programs in which they make people aware about the insurance products as well as insurance solutions. This would help in increasing the insurance penetration as well as changing perception towards insurance products.
New distribution models
Agency channel is still the dominant channel for life insurance industry. Using the combined power of predictive analytics, and AI in the insurance industry, agents can gain access to the full profile of customers and prospects. This data can be further analysed to generate mature insight, accurate predictions on customer preferences and what exact products or offers should be added in their marketing activities. This way insurers can move towards need based selling.
Around 70% of India’s population resides in rural areas with very less insurance penetration. Insurance companies should tie up with normal mom and pop stores in rural areas. These store owners can be trained, and insurance product can be sold through them,as this may increase the penetration in rural areas and insurance can reach to the persons who really need it the most.
Personalisation in Insurance- Need of the Hour
Due to Covid -19, insurance industry has already accelerated the digital journey and even customers have also become used to the digital tools and solutions. With the help of appropriate technology, insurance companies can also understand the customer better. There can be a customised solution for every customer. Sachet insurance products with small premium, small sum assured can increase the insurance penetration of our country especially for millennials and Gen Z.
Protection for Millennials and GenZ
Gen Y or millennials are people born between 1981 to 1996 while Gen Z are people born between 1996 to 2010. India has the largest GenY population which is around 33% of the total population and this is also around 47% of the working population.As per a survey of a leading life insurance company around 20% of millennials have bought term insurance plans and only 45% of them had heard about term insurance plans.This generation believes in Do It yourself -DIY approach, and accordingly solutions should be provided. So that, these people can compare and buy the insurance policies themselves without any hassles anywhere and anytime.
As per Earnest and Young, only five new product classes are created by insurance industry in the past 30 years. Because of the covid-19, insurance companies are reimaging product development seeing the changing and emerging needs of customers. Many people have lost their jobs because of pandemic, there can be unemployment insurance because of pandemic and lock down type situations. There can be policies for short term disability including home quarantine period. There should be innovative products seeing the needs of micro businesses and SMEs. GIG workers have also faced many problems as they don’t have employee benefit schemes. As per the report of BCG group, people working in gig economy in India is going to triple in the next 3-4 years to 24 million from existing 8 million. Insurance companies can provide innovative insurance products to the people working in GIG economy.
Digital investment across the value chain:
Insurance industry has seen much change in the last 10 months as they have seen in the last 10 years. This has brought a shift in the way businesses are done and there would be more disruption in the future. This would bring more digital transformation- automation and optimization of core processes, customer experiences, customer interaction etc. Companies must invest in digital tools like AI, machine learning, deep learning, blockchains so that the complete purchase cycle can be automated. Insurers must reimagine the entire journey of customer acquisition, retention, and servicing.
Insurers should also invest in cyber security tools as massive shift to digitalisation can lead to cyber risk. There should be adherence to security protocols and cybersecurity tools as otherwise breach of data can lead to mistrust in people towards insurance industry
Reskilling:As per National Skill Development Corporation (NSDC), over 1.6 million jobs would be available in BFSI sector by 2022. And 20% would be new roles, while 50% would be requiring reskilling on new technologies. With the advancement in technology and need of providing innovative solutions to the customers, BFSI sector should prepare itself to reskill its employees.
(Dr Pallavi Seth is Assistant Professor, Amity School of Insurance Banking & Actuarial Science, Amity University, Noida)