Covid-19 is expected to have a long-lasting impact on the insurance sector as a catalyst over time, leading to a digital transformation of the industry.
By Vaidyanathan Ramani
The Covid-19 outbreak has a significant impact on the revenues of insurance companies. While health and term life insurance has shown resilience, demonstrating continued growth, sectors such as motor insurance have significantly affected new business as new car sales have dried up and people whose insurance policies need to be renewed Most have been parked in their garages.
At the same time, investment returns are under pressure due to declining interest rates – there are segments where the promised returns to customers are much higher than the cash flows generated from such investments.
Static digital operation
Covid-19 is expected to have a long-lasting impact on the insurance sector as a catalyst over time, leading to a digital transformation of the industry. The crisis is also expected to transform the insurance organization, which will require the workforce to re-skill in order to remain relevant and competitive in the future. The need for practicing social disturbances and the compulsions of working remotely has ensured that enterprise risk management and business continuity planning are priority areas.
With the emphasis on contactless behavior, the share of agents, brokers and other offline channels in the distribution of products will decrease and improve to adapt to the new balance.
In the next few months, insurance companies will need to take a closer look at their two key stakeholders – the digital employee and the customer. They have to instill more trust with customers and enhance the role played by insurers in their lives. Insurers will need to strengthen digital communication as well as digitalisation of the claims process, including a considerable share of authorization, approval and processing. They will need to be more transparent in their coverage and communication, and strengthen trust in the idea of a true and hassle-free financial security.
Purchase behavior change
There will be many positive changes globally in the behavior of everyone associated with insurance. These changes will significantly alter the balance between products and between channels for insurance companies and adversely affect some and adversely affect the remainder. We can expect that in the coming months, insurers will have a new dimension in risk assessment, pricing and associated underwriting.
Going further, insurers will increase the use of their websites, portals and self-service apps with a simple, user-friendly and easy-to-navigate interface. They will also identify processes that may be fully or partially digitized, beginning with documentation and payment and renewal related to policy and claims. Insurance processes such as fraud detection, risk assessment, claim collection and policy renewal can advance the next level of digitization and will involve AI. In addition, using AI-powered chatbots 24 × 7, insurers will seek immediate feedback and engagement with customers, reducing their dependence on customer service staff.
The author is Head, Product and Innovation, PolicyBazaar.com