Using Technology to the Benefit of Insurance Customers

The insurance industry, typically considered to be a laggard in technology adoption, has turned several corners in digital transformation over the last few years. Insurers have long imbibed the cost and efficiency gains arising from simple rule-based automation across various processes in their value chain. The adoption and implementation of digital tools for insurers has been traditionally pivoted around reducing manual errors and processing times, improving process efficiencies, and consequently saving costs.

However, with the profuse uptick in the adoption of digital transformation came a concurrent focus on improving overall customer experience. And insurers were quick to realize the inherent need in the industry to address this shift and focus on the multiple touchpoints in the customer’s journey. Becoming omnichannel entities, raising the bar on customer engagement, improving customer’s accessibility, deploying customer-focused tools and apps, and turning towards technologies such as Cloud, AI, and ML to offer innovative and tailored services were some of the aspects insurers began building into their corporate DNA.

Today, the insurance industry is strewn with examples which are a testament to the fact that enhancing customer experience is tantamount to customer retention and business growth. The following examples put the premise in perspective:

Telematics: A relatively less-known concept, it is a group of innovative auto insurance products which is an amalgamation of communications, location, and in-vehicle electronics. Insurers typically install a smartphone-sized device in the policyholder’s vehicle which includes a GPS system, motion sensors, analytics software, and at times a SIM card. The device can track speed, location, time, crash accidents, driving distances, breaks, and other driving data on behalf of the insurer. Analysis of this data allows the insurer to offer discounted premium rates to responsible drivers – tying insurance pricing thus to customer’s driving behaviour encourages responsible driving and mitigates risk. The device can also send breakdown and maintenance reminders to drivers to further reduce risks of accidents.

• Bajaj Allianz, in 2016, introduced a telematics car insurance product in India with a ‘Drive Smart’ service that offers discounts on premiums based on driving patterns of policyholders.
• In 2020, Nationwide Insurance partnered with Cambridge Mobile Telematics for its ‘SmartRide’ program, providing additional feedback to drivers aimed at reducing distracted driving. It also allows drivers to earn a discount of up to 40% for safe driving behavior.

Health Insurance: As with cars, so it is with policyholders’ health. Insurers have begun linking health insurance premium rates to how well policyholders take care of their health. Today, many personal health insurance products offer discounted pricing subject to achieving certain defined health goals by the policyholder – for instance, total steps taken during a 12-month period leading to policy renewal – typically monitored by some form of wearable tech (gadgets, apps). In addition, insurers are also increasingly using AI and Blockchain technology in claims processing, leading to better customer experience due to reduced wait times and improved accuracy.

• Max Bupa (now Niva Bupa) Health Insurance announced a partnership with GOQii (a fitness technology firm), Practo and 1mg in 2018 to introduce a digitally enabled health insurance plan ‘Max Bupa GoActive’. It uses GOQii’s health coach services to track users’ behaviour and offers discounts to those who lead healthier lives based on their health scores.

Life Insurance: Life insurers are also leveraging AI technologies including vision, speech, and NLP to develop predictive models and cognitive applications to provide a hyper-personalized and improved customer experience.

• Max-life has an AI-based campaign engine, Suraksha (built with banking partners) that provides customized ‘Pre-Approved Insurance Offers’ (PASA) for customers by identifying the need, upfront risk prediction, and recommending the most suitable product for the customers which will ultimately improve customer experience and save cost.

Property & Casualty (P&C) Insurance: Insurers are implementing technological solutions (AI, chatbots and ML) in the P&C segment as well. Today, using a mobile app, customers can take photos and videos of damages, which are then processed by the insurer using AI-based technology, thereby expediting the claims process, and improving customer experience and ease. Similarly, chatbots are allowing customers to report incidents anytime without the need for human intervention. This 24×7 accessibility allows the claims process to begin sooner and reduces waiting time for the policyholder.

• Lemonade (a US-based InsurTech firm) offers property & casualty peer-to-peer insurance that leverages AI-powered claims analysis. A total of 18 anti-fraud algorithms are run on image-based and video-based claims, which absorb information from the customer and provide a response within minutes.
• A US-headquartered insurer, Trov, also uses AI-based chatbots for handling customer interactions. Customers can instantly insure their valuables with almost a swipe on their smartphones.
• Nearly 30% of policyholders at IFFCO Tokio General Insurance were not satisfied with the assessment of their claims. The insurer recently implemented an AI-based Claim Damage Assessment Tool (CDAT) that uses advanced computer vision and deep neural network-based techniques to assess vehicle damage from images that customers upload using an app. The insurer is now able to settle claims in 15 mins as opposed to c.4 hours earlier.

Although insurers have largely come within the folds of adopting technology, they still have a long way to go before it dominates traditional customer interactions and processes like underwriting and claims processing. Uptake and deployment of automation, AI-based technologies etc. are still happening in silos among insurers. In fact, the transformation is becoming tangible only inside pockets in some large insurers with global operations, policies, and requirements.

From one perspective, the trove of customer data forms the bedrock of such digital transformation. And where there’s data, there’s data privacy – or the lack of it. In the digitalization frenzy of sorts, insurers need to be mindful of how they collect and store such copious amounts of customer data. This automatically creates the imperative need for compliance to various data protection regulations such as the GDPR. However, this entire premise becomes trickier for insurers in countries like India – which do not have well laid out data protection laws for its citizens yet – as the thin line between useful business-related data and personal information can be conveniently blurred.

Author: Prithwijeet Mukherjee

Sr Consultant, Strategy Consulting

Image credit: Dataquest India