The latest article of Dr. Imran Batada ‘Digital insurance’ was been published in “The News” on Thursday, September 09, 2021. It can be read through this link: www.thenews.com.pk/print/889740-digital-insurance
Many countries are moving towards digital insurance. Changes in the modes of living due to the Covid-19 pandemic have led to an increase in customers contacting their insurers to understand various terms. Less physical interaction meant an increase in use of digital tools to access products and services, and get certain merits.
This led to an increase in customer care services which help people find the right insurance option. Digital insurers achieve this growth through integrity, resolution, meeting expectations, easy access of information, personalisation, and empathy to understand customers’ needs.
Digital insurance has slowly been adopted to provide paperless transactions and services. In digital insurance, insurers have increased their communication with customers through motor insurance, health insurance, life insurance, business insurance, and other services to help people access services easily at affordable rates. New products have been launched that can offer help to individuals in case of severe issues like global pandemics.
The ever-evolving Covid-19 pandemic changed everything drastically. Another great innovation through digital insurance is usage-based insurance. The premiums payable are based on the extent to which an activity is performed. Hence, a customer is charged by how often they access the service. It is advantageous for dormant insurance covers.
Digital insurance will enhance how insurance products are sold and the use of customer data. These changes will lead to greater levels of personalisation and bring about a better customer experience. With an increase in the need for insurance, companies need to know how to handle the high demand. Hence, they should review their channel strategies. This means more investment in creating digital pathways on an end-to-end basis. Ultimately, insurance companies need to enhance their interactions at the point of sale. Better digitalisation and use of data will be the key to the transformation of distribution channels. This is possible through the omnichannel approach to ensure that both individuals’ and insurers’ needs are catered for.
Digital insurance will lead to many benefits. Its major advantage is that it will improve accessibility as many customers, these days, prefer things when they are instant. This is in terms of communication, payment, and services. Hence, digital insurance will help make the process smoother through self-service portals, live chat, and other functions. With automatic processes, it becomes easier for customers to get their needs met. Digital insurance will help make fraud detection easier. The customer management software will be able to detect any malicious issues and solve them. Another major aspect is that digital insurance will help in cost saving for both insurers and the insured.
The digital tools including user-friendly dashboards and SaaS applications and unified data systems will help make the insurance process much easier. Insurance companies that are adopting, or have adopted, digital insurance are at a level ahead of those which are still using the old systems.
The adoption of digital currency will lead to better insurance services. However, it is a major milestone the insurance companies are going to pass. They face issues like the ongoing digital commoditisation, replicating innovations, macroeconomic uncertainties, decreasing loyalty, customer approaches, and various digitalisation challenges. Some insurance carriers may struggle to handle requests that include inputs from different communication channels to provide the relevant response instantly.
In Pakistan, digital insurance is being adopted at an impressive pace; the country is embracing Insurtech, which is the use of technology in insurance transactions and processes. This entails creating awareness, solving issues, and risk management. The major products used are smart devices and sensors. These products are designed to allow Millennials access the insurance coverage they want. The distribution processes are narrowed down as the middleman is removed, leaving just the insurers and the customers. Big data and data analytics are helping to segment underwriting decisions including pricing and risk assessment. Blockchain and distributed ledger are being used for data sharing, customer information, and fraud prevention. The use of these new-age technologies is effectively helping in tracking insurance covers.
The major insurance companies in Pakistan cover life insurance, property insurance, fire insurance, liability insurance, guarantee insurance, and social insurance. These companies include Jubilee Life Insurance, EFU Life Insurance, Adamjee Insurance, Alfalah Insurance, and State Life Insurance.
Recently, the Securities and Exchange Commission of Pakistan (SECP) approved the new tech-based life insurance product. It is equipped with insurance technology features such as artificial intelligence and data analytics. With this, insurance companies will be able to track the health performance of policyholders. As time goes by, more Pakistan-based companies will readily embrace digitalisation in insurance companies for the benefit of the whole region.
Digital insurance will also lead to the formulation of data-driven services. In this, new data streams will be used to turn to insights and, eventually, new services. Insurance carriers need to go beyond to solve various issues.
There is also the aspect of invisible insurance. This is the kind where a customer buys a product that is already insured. This occurs in banks, online stores, and even in some car businesses. The insurance is easily activated by the customer. Customers are provided with an overview of various insurance options. Take the example of Qover, which is an insurance platform. It is a digital wholesaler of white-label insurance. It allows people to integrate insurance into their products using an open all programming interface (API).
In digital insurance, there are also upstream platforms. It is all about solving the need behind the insurance solution. Insurers need to be upstream and present in specific life events. The platforms make it easier for people to sell and make purchases with the help of certain insurance platforms – like Abracar. This will also lead to an increase in the adoption of digital tools. Digital insurance will increase low code development when it comes to the IT tools the insurance businesses use. Additionally, no code and low code tools will allow companies to improve their productivity. It will also increase the speed of the market and empower employees to take control of their work.
The writer is CTO & director, Centre of Information Technology at IoBM.
He tweets @imranbatada.