New Trends in Life Insurance sector
The advent of the crisis provided an urgency that exponentially increased the adoption of digital and the speed of innovation from both ends of the demand-supply spectrum
The insurance industry in India has been changing fast over the last couple of years. The current crisis has further provided a ‘digital-first’ push. The industry that was for years driven by traditional business models has evolved driven by a change in customer behavior, data, disruptive technologies, artificial intelligence and innovation.
The most relevant example of today’s time is the rise in the numbers of Internet users and the smartphone users. As of 2020, there are an estimated 697 million Internet users in the country. As the result of widespread high-speed Internet availability, the usage of smartphones has also widely increased. The forecasted numbers are shown to cross 970 million-plus smartphone users and Internet users in next five years.
The insurance sector was already on an evolution trajectory driven by technology even before the crisis set. The advent of the crisis provided an urgency that exponentially increased the adoption of digital and the speed of innovation from both ends of the demand-supply spectrum; replacing the original ‘business as usual’ norms.
Insurers have irreversibly transformed their workforces and cultures to operate in a digital world. This has re-instated some trends for the sector and introduced new trends for the future as well.
The current crisis has had a strong impact on the financial planning priorities of customers placing insurance at the forefront. The perceptions, needs and concerns of customers with regard to insurance have also undergone a change with more sensitivity towards stability for themselves and their families.
This has naturally led to a shift in what customers look out for when they source insurance increasing the need for a more need-based and personalized products.
In addition the need for better and quick service has also taken a forefront as there is a shift towards ‘self-service’ requirements.
Being future ready for a ‘virtual life’
The digital/innovation demand is driven strongly by customers now. From a marked shift towards paperless and penless processes for buying insurance to expecting virtual assistance during service requests; digital processes are no longer a differentiator but a survival requirement.
Though the need for human intervention is expected to continue as customers would still need guidance on suitable products but would rely heavily on digital aids. The current situation has hastened the customer migration towards a ‘virtual life’ where most interactions are driven by digital and social media.
This also provides insurers the opportunity to develop competitive advantage by evolving further to provide solutions that adapt better to the ‘virtual life’ future that most customers are migrating towards.
Data driven automation and AI
Data has been on the forefront of the latest digital technologies. Insurance has always been a data intensive industry with the possibility of utilizing that data for analytics and automation expanding in the last few years.
These trends will continue to dominate and even disrupt the industry further as more customers become comfortable with sharing additional information for better value and quicker services.
Disruption from tech-based companies
Lifestyle apps have the potential to re-imagine the insurer-insured relationships. Application programming interfaces (APIs) will enable the creation of insights-driven offerings as they integrate data from multiple sources. Many mobile applications have already become an integral part of daily interactions and have disrupted a sizeable portion of financial services sector.
In addition many insure tech companies have shown significant growth over the years. This will continue to stimulate insurers to acquire technological capabilities and partner with insuretech companies.
Overall this would lead to a win-win situation especially when the innovation is driven by the evolving customer demands for personalized services. Traditional insurers would be able to drive faster results and get access to larger customer bases whereas insure tech companies would get further insights on historical customer behavior and funding for further growth.
The demands for a more fluid workforce for insurance would increase. At present there is a strong need for underwriters and claims investigators to work with data scientist and analysts. By having a liquid workforce component companies can have a right mix of internal employees, freelancers and technologists. This helps drive faster innovation and change within the company. This trend has been gaining popularity across industries and we expect it to become prevalent in insurance as well.
‘Work from home’
One of the biggest offerings from the new normal has been the adoption of the ‘work from home’ culture across industries. Many companies have invested in technology infrastructure to enable work from home to ensure continued services. There have been reported benefits of the work from home culture and over the last few months employee behavior has also adapted. Work from home also provides companies with the opportunity to deploy its resources better and help in flexible expansion across geographies.
India is largely an underinsured population with the insurance penetration amongst the lowest in the world. Thus the un-explored potential in the country remains high. The current insurance industry is largely focused on the urban organized sector. This segment is most vulnerable to the financial loss from the untimely demise of the bread-winner and has unique needs.