Disruptive trends set to transform the traditional insurance landscape

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By Mamta Rodrigues, Divisional President of Banking Financial Services & Insurance at Teleperformance

Mamta discusses the seismic changes taking place in the fast-evolving insurance industry and the power of customer – centric solutions, leading to loyalty and essential tenets to remaining competitive.

COVID-19 has undoubtedly been the biggest test to insurance resilience to date. The global insurance industry suffered a loss of approximately $4.2 billion as of May 2020[1] - a magnitude of premium losses comparable to the global financial crisis. Whilst trying to navigate large claim exposures and simultaneously deal with the downturn of equity markets, insurers are now scrambling to adapt operations to mitigate cascading losses. With global insurance premium volumes not expected to begin recovering until next year, traditional players will need to develop tunnel vision for emerging technologies and customer-centricity in order to survive and grow in the highly disruptive, post-pandemic market.

All segments of the industry have now succumbed to dominant market forces, creating an innovative, fast-moving environment that has rendered traditional insurers irrelevant. The shortcomings of companies – historically resistant to change – are increasingly being exposed against agile competitors born on the cloud. COVID-19 is now prompting insurers to pivot in a matter of months and embark upon digitalization – the complete transformation of their existing business models.

To steer a path through the ongoing uncertainty, insurers should take informed steps to recalibrate their business strategy and deploy innovations that will endure beyond the current crisis.

Accelerated, consumer-led digital transformation

Insurance companies are experiencing a staggering increase in customer contact rates as a result of the pandemic, and are amongst the sectors experiencing the highest contact volumes post-pandemic. With a primary focus on risk, non-life insurers are particularly struggling to understand their customers and engage with them on their preferred channel. Characterized by limited integration between channels and lengthy form-filling needed for claims and policies, the non-life sector is susceptible to disruption. Simply checking an insurance claim status can require multiple calls, emails and extended wait times, adding friction to the customer’s journey and hindering satisfaction.

As a result of heightened virtual living and subsequent lifestyle changes this year, today’s touchless and digital customer is demanding change. Consumers are craving better, simpler, and clearer customer experience engagement, with insurance being no exception. 61 percent of insurance customers prefer checking their applications via digital tools; therefore, insurers are having to explore new ways to reach customers to encourage new business, loyalty from existing (now brand-agnostic) customers, or to reduce churn during renewal periods.

With capabilities ranging from viewing claims and their status, and an overview, AI-powered chatbots are poised to play a primary role across the insurance value chain. Chatbots will engage with nearly twice as many users in the next two years and have the ability to transform the process of buying a policy or processing a claim into a fast, simple, and error-proof experience – providing insurers with a golden opportunity to eliminate the frustration typically associated with the sector. For P&C insurers, in particular, digitizing the claims function is valued by customers and can increase their satisfaction by 20 percent[2].

Self-service options: empowering the customer

More than 80 percent of consumers say they are willing to use digital channels including web chat, mobile apps and video to[3] replace one-to-one contact with insurance brokers. Tapping into online channels such as self-service apps can help insurers create an empowering environment for digitally-native customers, whilst simultaneously addressing their needs for convenience. By leveraging self-service dashboards, insurers have an opportunity to shift routine transactions from human agents and brokers, to the customers themselves – effectively placing power in the consumers’ hand. New capabilities in online self-service claims are unlocking a new level of personalization in the sector. Through these mobile applications, powered by personally-relevant data, customers can access targeted features and information autonomously, thereby freeing up human agents to review more complex, sensitive cases in detail. Insurers have an opportunity to build in chatbot support to underpin these self-service tools and provide another layer of support in case customers need it.

Providing round-the-clock experiences is crucial, but customer service interactions do not produce the same results across all channels. Making life easier for customers impacts loyalty, therefore insurers must have an understanding of which channels customers want to be met on when resolving differing issues. According to a survey by Collinson, 63 percent of respondents are willing to receive further communication from their insurer[4], highlighting that consumers want more updates, but on their terms. A hybrid approach to customer service in the insurance industry will become the norm. By complimenting bots with the emotional intelligence of human agents, firms can create an end-to-end experience where no question is left unanswered and customers receive expert guidance where necessary.

Power of algorithms 

Unpredictable factors, beyond the pandemic, are intensifying the wave of disruption for already-overstretched insurers. The resurgence of wildfires across California and Oregon is calling for an efficient means of managing and insuring risk, so distressed customers can attain the right Property and Casualty (P&C) insurance in wildfire-prone parts of the West Coast. In 2017 and 2018, California wildfires cost insurers more than $24 billion, pushing some major insurers to insolvency[5]. Disasters such as these are shining a light on algorithm models to accurately and quickly predict catastrophe losses. By estimating risk losses, AI-driven catastrophe models are allowing insurers to determine policy pricing for certain regions, and a more comprehensive view of risk in the new normal.

The future of insurance 

Insurers are now fast-tracking their digital transformation journeys, having succumbed to the disruption of COVID-19 and the changing needs of consumers. Customer priorities and preferences will continue to evolve long after the pandemic is over, signaling the need for a hybrid customer service approach. Moving forward, companies will need to embrace change and adapt their digital offerings accordingly to remain relevant in the post-crisis era.    



[1] https://www.statista.com/statistics/1117231/covid-19-global-insurance-losses-estimates/

[2] https://www.mckinsey.com/industries/financial-services/our-insights/claims-in-the-digital-age

[3] https://www.carriermanagement.com/features/2019/04/08/191787.htm

[4] https://www.nsinsurance.com/analysis/why-insurance-customers-want-more-communication/

[5] https://www.wsj.com/articles/no-one-can-agree-on-how-to-price-california-home-insurance-for-wildfires-11568649298#:~:text=Many%20residents%20of%20fire%2Dprone,billion%20in%202017%20and%202018.

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Posted by Mamta Rodrigues

Mamta Rodrigues is the Divisional President of Banking Financial Services & Insurance at Teleperformance. She is an innovative, hands-on, commercially driven, results-oriented Fintech and payments executive with a record of leading strategic decisions, driving incremental revenue and developing key innovative products and solutions for the global payments ecosystem.

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