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Building Digital Dexterity in Insurance

Nidhi Agrawal
6 minutes, 18 seconds read

The years 2018-19 are banner years for insurers. Economic growth and higher investment income played an important role in setting the stage for customer-centric development in the insurance sector. 

But, are insurers dexterous enough in deploying technologies to enhance customer experience & improve operations? 

According to Gartner – “Digital Dexterity is the ability and desire to exploit existing and emerging technologies for better business outcomes.” Here’s an outlook on building digital dexterity in insurance workplaces.

Why Insurers Need Digital Dexterity?

Accenture reports – 42% of the digitally active customers & 22% of the quality seeking customers are willing to use computer-generated advice for buying insurance. Reason – it’s fast and convenient. 

Surprisingly, less than 40% of insurers have a holistic digital transformation strategy, World InsurTech Report 2019 states. Furthermore, the gap between Insurer awareness of the need for ‘change’ and their digital maturity is significant.

WITR-X-Capegemini-2019-report-on-digital-maturity

Source: Capgemini Financial Services Analysis, 2019; WITR 2019 Executive Interviews, 2019.

The point is – the world is shifting towards the digital model. The sooner Insurers harness AI-based technologies to streamline their operations, the higher their chances of acquiring new-age tech-savvy customers.

How to Achieve Digital Dexterity in Insurance?

Betting on technology and expecting a serious outcome is not the solution, especially in the insurance industry which is highly customer-facing and experience-oriented. There needs to be a thorough strategy to eliminate resource wastage and increase back and front-office operational efficiency. 

For instance, Amazon uses its data capabilities for the benefit of consumers. By harnessing Machine Learning technology, the company provides personalized product recommendations to consumers. Through well-informed customer service interactions, Amazon contributes to employee satisfaction and productivity. 

Being dexterous can help Insurers achieve a mean & lean business model.

#1 Automation

The traditional process requires poring over lengthy documents, handwritten notes, and more to keep up with the ever-changing regulations. Also, most insurance customer-facing processes, such as policy renewal, go through several stages.

Eliminating dependencies and automating routine processes can help the insurers scale without adding staff. For example, AIA HongKong has reduced the average claims handling time by 40%.

Read our Case Study: How AIA HongKong saves 60% through Claims Automation.

Automation in insurance can solve some of the most pressing operational challenges like agent onboarding, claims settlements, underwriting, policy distribution, and document processing along with data entry and migration.

#2 Enterprise Mobility

With the growing number of smart devices in the workplace, determining how to integrate technology with work processes and business objectives can improve operations. Enterprise mobility involves several technologies like – 5G, blockchain, AI, cybersecurity, mobile device management, wearables, cloud, and IoT. 

According to Oxford Economics Maximizing Mobile Value Report, 80% of Executives believe — workers cannot work effectively without a mobile device

The ease of communication, resource accessibility, and affordability are the prime reasons for the wide-spread use of mobile devices. That’s why organizations are open to employees using their mobile phones for calling customers, accessing emails, file transfers, and much more. Executives agree that the real benefit of mobility lies in solving operational challenges.

Millennials spend at least two hours a day on their smartphones, with 78% of the time in apps. Reaching the customers where they are and in a way they prefer is indeed a great operational catch.

Also read – How AI can improve 5 front-office operations in insurance.

#3 Value Added Services (VAS)

Considering insurance as a commodity, customers cannot differentiate the products that are available at the same price and insurers who offer similar services. By definition, a value-added service can be any offering at little or no cost to promote the primary business. 

According to McKinsey, the estimated market for insurance VAS (especially in Europe & North America) is $2 billion. VAS holds enormous potential in the risk mitigation sector. Predictive analytics, knowledge sharing, risk training and reporting, self-insurance, and crisis advisory are some of the additional services that insurers can leverage utilizing data and analytics.

How Digital Dexterity Can Benefit Insurers?

While 90% of corporate leaders consider digitization as their top priority, 83% of them struggle to make meaningful progress on digital transformation, according to Gartner. Insurers can profit from digital dexterity in the following ways.

#1 Employee Productivity

With streamlined workflows and automating mundane tasks, insurers can improve their employee productivity to a great extent. McKinsey’s Building a Culture of Continuous Improvement in Insurance, states that “…Taking advantage of a new focus on problem-solving, the back office made a few changes to standard operating procedures that reduced the number of incomplete applications, speeding completion time by 45 percent for new customers..”

digital-dexterity-for-employee-productivity

#2 Enterprise Agility

Agility in insurance corresponds to instantly accommodating the multifaceted demands of customers & responding rapidly to opportunities and disruption. According to Accenture’s Transformation GPS study, Agile firms are twice as likely to achieve top-quartile financial performance

The agile align the entire organization to a set of lightweight, shared processes because of which, it can adapt quickly to market changes.

Also, the Gen Z are par work-life balance mindset and count on deliverables more than logging time. That’s why organizations are leveraging SaaS and cloud technology to create an agile workspace. 

#3 Cognitive Capability

Data is a greater by-product of Insurance. Processing huge amounts of Big Data can be both times consuming and complex to manage at large scale. By leveraging distinct technologies like NLP, Machine Learning (ML), and Automated Reasoning — Insurers can process huge volumes of complex data, affix intelligent insights to structured data and communicate these insights clearly to all relevant stakeholders.

With the cognitive cloud, meaningful data insights are always present irrespective of device and location. For example, IBM Watson Explorer is an ML tool for cognitive insurance with deep-analytical advice, exploration, and mining capabilities. It is still learning and maturing interactions, rules, and processing logic that can apply to policies. Currently, employees can assess claims 25% faster with the help of Watson.

What the ‘Digital-Future’ Holds for Insurers?

At this age, digital technology is a strategic priority for every insurer. Accenture envisions DARQ power, understanding customers, human+ workflow, security, and on-demand experiences to rule the insurance market. 

  • DARQ power: combining the capabilities of Distributed Ledger, AI, Extended Reality, & Quantum Computing.
  • Understanding the next generation of customers and delivering individual products
  • Human+: each worker is empowered with his skills + tech-driven capabilities.
  • Security in terms of user data and privacy in the entire insurance ecosystem.
  • On-demand experiences: customization and real-time delivery can bring a lot of competitive advantages.

We’re a new-age InsurTech, providing AI and NLP based solutions to improve digital dexterity. Feel free to drop us a line at hello@mantralabsglobal.com

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The insurance industry is changing and experts predict — nearly one-third of existing insurance models will disappear within this decade. The fierce competition, new opportunities with technologies like AI, and on top of that millennials’ changing preferences sum up to the call for more flexible and consumer-facing business models. Here are four new business models to set the insurance archetype.

Source: The Deloitte Global Millennial Survey 2019 

Social Good & Transparency as a Business Model

Currently, AI is being used to strengthen the capabilities and knowledge of insurers and not consumers, creating information asymmetry. But, the question is — for how long will the consumers accept being a victim of ignorance. 

A possible solution to this situation is bringing information transparency. It’s not like traditional insurers don’t share policy information with their customers. They do. However, lengthy policy documents and customers’ reliance on agents for information shadows the actual coverage, terms, etc. In a way, the information that customers receive becomes dependent on the agents’ knowledge and intentions.

Translating policy, terms and conditions documents into consumable bits of information with a clear distinction between what’s covered and what’s not will help in achieving transparency between insurers and customers.

For instance, Lemonade — the American Insurtech for renters and home insurance, disrupted the industry lately with their instant and transparent end-to-end insurance process. Their consumers are better aware of coverage and claims thanks to simplicity in the user experience. 

Moreover, Lemonade donates the unclaimed premiums to social causes their consumers care about. From its inception in 2015 to date, Lemonade has sold over 1.2 million policies, in complete transparency and all through their AI bot — Maya!

Nearly 46% of millennials are willing to make a positive impact on the society/community. Lemonade has partnered with 92 charities and has donated $8,46,849 from unclaimed premiums. Hence, the answer.

Similarly, Swedish InsurTech Hedvig has successfully deployed it’s “nice insurance” services, giving back 80% of the unclaimed premiums to charities chosen by the customers.

More insights on — millennials and their expectations from insurance ‘beyond’ convenience.

B2B2C or API-based Model

When user acquisition is the top priority, B2B2C or API-based model comes into action. Also known as an open-source platform solution, this business model connects people and processes with technology infrastructure and assets to manage user interactions. 

In the API-based model, apart from traditional distribution channels, 3rd party apps also become a medium for customers to buy/access insurance policies. Automation plays a key role in this insurance model. Here, any other customer-centric digital application can install the API without manual/human intervention.

For example, in January 2018, Allianz announced that it will offer parts of its Allianz Business System (ABS) to other insurance companies for free. Interested organizations can simply install the API (Application Programming Interface, which is nothing but a chunk of software that connects two different apps) and start selling Allianz policies to their customers.

Lemonade — after disrupting the insurance space through transparency, has now stepped into this model. In October 2017, the company launched its public API, allowing anyone to distribute Lemonade’s policies through their websites or apps.

“It takes years to pull together the licenses, capital, and technology needed to offer insurance instantly through an app, which is why it’s almost nonexistent. Today’s API launch changes that. Anyone with a slight familiarity with coding can now include these capabilities in their app, in a matter of hours.”

  • Shai Wininger, Co-founder, President & COO, Lemonade

P2P Insurance

Unclaimed premiums also contribute to conflicts between insurers and policyholders. What if a customer is not interested in donating to charity, unlike mentioned in the above case? 

Peer-to-Peer (P2P) insurance is perhaps an answer to eliminate premium settlement conflicts. It is also an emerging business model to access insurance coverage at lower costs than most of the traditional insurances. 

This insurance model pools the individuals who share at least one relation — friends, family, or interest (community/clubs) and it serves two-fold benefits-

  1. Every member knows other members, funds available, and claims initiated/processed. Therefore, irrespective of the information shared by the insurer, there’s a transparent collaboration among peers.
  2. Since the members know each other socially, there’s a negligible chance of fraudulent claims. For instance, in the US alone, insurance frauds amount to nearly $80 billion/year.

Also read – how behavioral psychology is fixing modern insurance claims

The notion of financial protection for the community has been prevalent in our societies since the 1600s. In the middle ages, the tradesmen followed the guild system (an association of craftsmen and merchants), where participants paid fees as a kind of insurance safety net. Though, the successful conceptualization of P2P insurance in the modern business models dates back to 2010 with German InsurTech — Friensurance. However, the P2P insurance model has credited the success to many more InsurTechs like Guevara, Axieme, TongJuBao (P2Pprotect), and PeerCover

Microinsurance

The greatest limiting factor for the success of microinsurance is distribution. For example, in the US, 18% of the premium represents the distribution cost, set aside marketing and advertising costs. Availability isn’t the issue for microinsurance. 

The new business model for microinsurance focuses on outreaching and distributing policies at scale. Workflow automation solutions like document processing, automated customer query resolution, etc. make microinsurance models more effective. 

  1. Aggregator model: Instead of traditional agents, retailers, utility or mobile network operators, etc. can be intermediaries for the distribution of microinsurance policies. They provide access to a very large consumer base and even more with free and freemium coverages. For example, Check24, a European aggregator together with HDI insurance developed AurumPROTECT that is available exclusively through aggregators channels. 
  2. Harnessing proxy insurance sales force: Banks have been the ideal partners to distribute microinsurance policies at scale for ages. But, for short-term policies, this is a good time to utilize the agents of other products to offer insurance as an ancillary product. For example, Ola — an Indian cab aggregator provides a number of travel-related microinsurance underwritten by Acko General Insurance. 

The Bottom Line

The effectiveness of each of these models drills down to the smart use of technology in their implementations. Moreover, most of these business models are automated, thus, eliminating additional human resources for implementations. For instance, in India, an agent can charge up to 20% of the premium amount as fees, which can reduce significantly if the distribution is automated. Investment in technology for automating operations is also worth it because it makes customer outreach simpler and faster. 

Also, read – 5 Front-office operations in Insurance you can automate with AI.

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As Albert Einstein said — only a life lived for others is worth living. Following the Nobel trail, Mantra Labs conducted a blood donation camp in association with the Indian Red Cross Society on January 9, 2020. 

According to WHO (World Health Organization), blood donation by 1% of a nation’s population can meet the minimum basic requirement. As per this norm, India requires 13.1 million blood units annually (1% of 1.3 billion population). However, since 2013, only 7-9 million units of blood are collected annually, which is much lower than required.

Mantra Labs’ humble contribution to save the lives in danger and encourage its people towards humanity was seen in their active participation.

In this virtuous initiative, more than 38 tech enthusiasts from the company’s headquarter at Bangalore, donated blood and many more registered themselves for emergency requirements. 

Blood Donation Camp at Mantra Labs

Donating blood was an excellent feeling in itself. I was not only motivated by the fact that I’ll be saving lives but also it made me feel like a Marvel Avenger. However, it’s the only way at your workplace to get some “me” time: relaxing totally guilt-free, all while saving lives! 😛

Tuhina Chattopadhyay – Marketing Associate, Mantra Labs

Take a glimpse of the blood donation camp at Mantra Labs office

About Indian Red Cross Society: Founded in 1920, the Indian Red Cross Society (IRCS) is a humanitarian organization to protect human life and health. In India, the first blood bank was established by IRCS in 1942 in Kolkata, WestBengal. The organization aims to phase out replacement donors and achieve 100% voluntary blood donation in the future. The Indian Red Cross Society collects approximately 25000 units of blood annually.

Website: Indianredcross.org

About Mantra Labs: Mantra Labs is an AI-first products & solutions firm providing innovative applications in InsurTech and Consumer Internet domains. With over 150 technology tinkerers and experimentalists, the company has been leading technology initiatives for clients like Religare, Aditya Birla Capital, Myntra, Ola, and many more.

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