Why Legacy Insurance Companies Must Adopt Fintech And Insurtech To Enhance The End-To-End Customer Experience
The insurance industry, prompted by the phenomenal rise of fintech and its increasing role in banking and financial services, is on the cusp of a technological revolution. Insurance technology or insurtech, is quickly picking up steam, as consumer expectations and behaviours continue to evolve with each passing day. Steering past the initial uncertainties, the banking and financial services sector in India is leveraging fintech extensively through new business models and partnerships, which can also guide incumbent players in the insurance sector to effectively adapt to digitization.
By adapting to fintech and upgrading their operating models through digital tools and technologies, banking institutions have seen significant improvements when it comes to aspects such as customer service, experience, and retention. A major role in this transformation is played by mobile-based solutions that not only enable access to financial services for customers, but more importantly, are user-centric and relevant to the needs of customers. Hence, it is imperative that the insurance sector and incumbent players capitalize on the fintech and insurtech opportunity quickly, in order to strengthen their value proposition in an increasingly digitized financial ecosystem.
Leveraging fintech and insurtech to build the efficiencies of the insurance sector
Mobile and digital are at the heart of the technology-driven disruption, owing to the ubiquitous role they play in consumers’ daily lives. As a result, consumer demands are evolving constantly, driven by a need for greater speed and convenience in accessing banking or insurance services. Concomitantly, the demand for standalone products and services has been replaced by that for mobile insurance solutions with end-to-end assistance on a single platform. Moreover, today consumers seek digital interfaces that offer them relevant customised or personalised solutions for a smoother experience of choosing the right insurance product for their specific requirements.
One of the pain points experienced by consumers is the lack of transparent information on various products when buying insurance, which is where fintech can help. Selling insurance through online can help providers deliver transparent information to consumers, but also digitize the entire underwriting process using the latest technology. Online or digital platforms enable insurance providers to capture and store rich, insightful and reliable consumer data, and run them through automated algorithms powered by machine learning, data analytics, predictive modelling, etc. All of this is data is critical to efficiently personalizing products through underwriting them with the help of customer-specific data, but also for providing the right advice, or even assisting customers with processing claims.
The benefits of adopting fintech or insurtech, then, are not limited to customer acquisition or retention, but also help reduce costs for insurance companies. It has been seen that digitizing back-end processes can reduce costs by up to 10-fold as compared to insurance providers that rely entirely on mainframe-based technologies and databases operated by physical agents. Managing large volumes of data from multiple sources can be made easier through end-to-end digitization, wherein sales persons and managers can access data remotely to assist customers better and ensure the best pricing of tailored products.
Another main issue is to align your operations using your technology to have a straight through processing after you originate a policy. So, everything claims administration and management over how that process can be streamlined using the available technology.
Enhancing the customer experience
Financial service companies understand the demand for mobile. According to PwC’s FinTech Survey, there will be a substantial growth in customers using mobile applications by 2020, and customer-centricity will command a higher position among the key focus areas of fintech. In order to serve consumers better, insurtech players are increasingly adopting the marketplace model. Through partnerships with established insurance companies, such marketplaces are driving major changes in the customer experience and lifecycle. By employing automation and analytics, these marketplaces offer customers a view of personalized products and services from multiple insurers, multiple options with policies to meet their requirements, in a single window.
Thus, by partnering with fintech and insurtech providers or marketplaces, insurance companies their lever age their technological capabilities to deliver such value propositions like:
• Seamless connectivity and customer journey: Using AI and automation effectively can help create customer touch points like chatbots that can serve as a primary interface for customers, thus simplifying their journey. Chatbots can assist customers with their queries and act on them, by accessing and analyzing the data they provide. From the discovery of products to giving them specialized advice on selecting products, chatbots leverage deep learning and analytics all through the customer journey, while sentiment analysis models can identify when to connect them to a human agent for further assistance.
• Personalized products: Yet again, AI and automation can play a critical role in personalizing insurance products and policies for customers. This will offer them the flexibility to choose the best offers from among various insurers.
Incumbent legacy insurance companies are still playing catch-up with both new fintech/insurtech players and older competitors who are already using technology to proactively target a new generation of digital native consumers. However, besides upgrading their technology and back-end process, they also need to define their messaging strategy to convey their value and the relevance of their products/services, especially if they operate in a specific segment with high competition. At the same time, a technology-driven and customer-centric approach will be crucial in positioning these incumbents as a future-ready companies equipped to lead the charge of revolutionizing the insurance industry through digitization and fintech.