Changes in the insurance sector are afoot.
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Insurance is typically something that is sold, not bought. However, as the world moves closer to fully embracing the digital economy, this too, is changing. Insurance products and services that were once only available face-to-face (like purchasing, updating or canceling one’s insurance policy) are now readily available via self-serve models. The increase and availability of such services echoes the changing consumer behaviors across sectors.
Consumers today want to be able to transact at their convenience, preferably without disruption to their hectic lifestyles. Recent lockdowns and safe-distancing measures due to the COVID-19 pandemic have built further momentum for this preference, as many consumers turn to e-commerce for everything, from buying groceries to purchasing insurance policies.
Other factors, which were present even before the pandemic, are also at play here.
For instance, the growth of the gig economy has given rise to the need for short-term coverage for employees. It is also not hard to imagine that, with economic uncertainties looming, consumers may look for bite-sized, sector-specific coverage such as travel or hospitalization insurance, instead of policies that cost more and require a longer-term investment. These changes in consumer purchase patterns highlight that insurers urgently need to transform and reimagine the ways in which they contract with online consumers, while being more agile.
The question then is if insurers are ready to evolve with the changing consumer demand. Surprisingly, despite over 81% of insurers recognizing how inextricable technology has become to the customer experience, many have only just scratched the surface of what is possible. It is high time insurers take a serious look at digital transformation and weave technology deeper and more seamlessly into their operations.
For a seamless all-digital experience, insurers need to ensure every touchpoint, from policy purchase to filing claims and receiving payouts, is digitized and secured.
Digital onboarding is the start of a user’s journey with the insurer. Traditional methods such as video calls and mail-in documentations are commonly used for verifying the identity of online customers. These processes are time-consuming, inconvenient and the amount of paperwork they require means longer wait times for approvals. This can be a major pain point for both parties, especially when customers are lost due to a complex and tedious transaction experience.
There is already an increasing adoption of Electronic Know Your Customer (eKYC) solutions in banking, payments and other segments of the financial sector. This has enabled the financial services industry to onboard new customers remotely and securely, and better cater to the needs of the digital generation. The insurance sector can utilize the same eKYC and biometric authentication technology to verify online users during the application process and subsequent transactions. All online users need to do is to submit a photo of their government-issued ID document and a selfie, to verify the validity of their identity, and prove that they match the person in the ID photo.
Digital onboarding and eKYC technology, when implemented correctly, also enable insurers to expand to overseas markets easily and quickly, and offers the flexibility to adapt operations and processes to comply with varying regulatory standards. As an example, insurance agents can engage with customers across geographical borders and close insurance transactions remotely and securely. Insurers can also offer their customers a 24/7, all-digital, self-help platform for their insurance transactions, where they can seek customer assistance and support online, anytime and anywhere. Providing consumers with this degree of flexibility and support will ultimately prove to be a strategic differentiator for any insurance company.
Today, regulators seem to be encouraging market-shifting innovations and are keenly monitoring the traction of the digital insurance sector. For the industry to pivot and keep up with customer demands, the onus is now on insurers to consider digital innovations that help them balance consumer convenience, while ensuring safe and secure transactions. Those who deliver this will be poised to lead the industry’s transformation efforts into securing an all-digital insurance future.
