Making the most of digitisation in the insurance sector: Sanjay Tripathy

Sanjay Tripathy, Senior Executive Vice President & Head - Marketing, Analytics, Digital & E-Commerce, HDFC Life, writes about the importance of digitisation in the field of insurance.

Business growth, efficiency in doing business and effectiveness through digital transformation are top business priorities for insurance companies today. Transitioning into a digital enterprise can help insurers develop new business models which will address disruptive changes occurring in the economic, social and technological environments and drive profitability and growth.

Digitisation is rapidly changing the urban, semi-urban and middle to small town landscape today. Right from determining key role political outcomes to influencing buying behaviour, to purchase & brand consideration both, digital plays an important support role in the lives of the customer. An off-the-cuff poll asking people the most important thing they would consider leaving the house with everyday would place their mobile devices on the top of the list. Every product purchase across every industry is preceded by a quick online research, other customer reviews and comparison to determine where one should invest their money in. Hence, it’s inevitable that a significant and involved investment like insurance mandates that the customer does his diligence before entrusting the hard earned money with the insurer. This rapidly changing consumer behaviour is reshaping the insurance industry and actually proving to be beneficial for them. How is that possible?

While it’s well known that going digital is cost effective and productive for insurers, let’s evaluate these three key outcomes from a customer perspective and figure out what’s in it for the consumer. Digital has a multi-dimensional role to play in the Life Insurance domain. There are three key ways that digital transformation or rather disruption will work:

• Consumer Focused Product Approach
• Enabling Direct B2C Connect
• Enhanced Customer Experience

Consumer Focused Product Approach
In the past, many consumers did not understand Life Insurance products completely as they would assume them to be overly complex and difficult to understand. Investment decisions would be driven by their friendly, related neighbourhood agent, who was actually selling products which were more distributor-focused and gave better commissions instead of products which were beneficial to the customer. Core insurance products like Term and Health Insurance were never up-front recommended given their small premium size and low recurring value to the agents. With insurance digitisation, an ever discerning consumer has demanded and got to know more and more information on product charges, where does his premium go, how much is actually invested towards core product and how much goes into expenses or distributor commissions.

Enabling Direct Business to Consumer Connect
Insurers have been innovating to provide customers with the option of reaching out to them and catering to their needs directly. Customers can research online, evaluate multiple products from different insurers, compare and decide the right product depending on their need and then go ahead and make the purchase online itself. This has forced insurers to evolve their online ecosystems and digital footprint rapidly to ensure that they provide the customers with the right kind of planning tools, easy to decipher product content and simple selling.

Enhanced Customer Experience
Enhanced customer experience through digital helps address three core customer challenges at the heart of life insurance:

1. Many consumers find it difficult to purchase life insurance on their own
2. Many consumers are turned off by the hard sell of the traditional face to face sales channels
3. Customer contact with his or her insurers can quickly reduce to a once a year statement breaking the continuous engagement.

Let’s start with most visible benefit of all:

Simplified product buying: Buying a Term plan online or through an assisted distributor online is one of the most simplified processes. Insurers are offering online quotations with few questions. Simplification is also built into the application process – minimal medical examinations via declarations or fetching previous records and fixing online medical appointment. Moreover, technology innovation in document submission and online underwriting is reducing customer pain points even further.

Even in the assisted sales process through a distributor using a laptop or mobile/ tablet device, the customers have all the information at their fingertips.

Post purchase, customers can access all their information via internet/ mobile and access their policy information on the go. To keep customers engaged, insurers are providing them with value-added features and information that customers might want to revisit. This reduces the instances of lapse and surrender. Simply put, online claims process helps take the customer experience on product delivery to the ultimate goal of customer delight.

Role of government and impact of digital eco-system on LI sector:
Governmental actions like Unified Payment Interface (UPI), e-KYC initiative, digitising insurance policies are resulting in a digital push. The government is committed to improving digital literacy. An enhanced e-governance environment has helped launch the Digital India programme aimed at transforming India into a digitally empowered society and knowledgeable economy. This initiative has created a positive inclination amongst consumers to become digitally active. Businesses having a strong digital presence are preferred to their offline counterparts. The insurance regulator, IRDAI, through the iTrex platform, has instructed the insurers to upload KYC information of its policyholders. To do away with multiple KYC formalities, IRDAI is pushing for a consumer to have electronic insurance account (eIA). This not only makes the life of a policyholder easy but also makes the work of insurers simple, cost effective and efficient.

(Sanjay Tripathy is Senior Executive Vice President & Head - Marketing, Analytics, Digital & E-Commerce at HDFC Life. All views are personal)