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Is Home the Next Prize for Insurers?

By :
3 minutes, 15 seconds read

As work from home is proving to be efficient and productive, people are beginning to make their houses more comfortable to make it conducive to good work results. 69% of Indian employees believe that their productivity has improved while working from home. The creation of an organized space and additional expenses on equipment for professional needs are some of the requirements that Indian employees might need to do. As people are slowly adjusting to the ‘better normal’, it is paving a way for a connected living. Even though connected living was in its nascent stage before the pandemic, people will witness its necessity now. As most homes would transform, people are most likely to get home insurance now, therefore homes can be the next prize for insurers. 

Existing gaps between home insurance and customers

Home insurance penetration is just about 1% in India and barely 3% of houses are insured. Despite going through financial tension of repairing and reinstalling certain contents of the house, people are unwilling to buy home insurance. Houses older than 30 years are not insured and coverage for loss of Gold deems unsatisfactory among the customers. These are the most commonly cited reasons for people being hesitant to buy home insurance. Apart from this, one of the common misconceptions is the lengthy claim settlements. As people are gradually adopting more digital-enabled services in the ‘better normal’, home insurance is likely to witness a fundamental shift.

Home Insurance is the next prize for insurers

With remote working, newer risks are likely to prop up. For instance, while using the Zoom platform, a lot of people suffered security issues. Cyber risk and cybercrime coverages are not usually included by most standard home insurance companies but are slowly becoming popular. For instance, State Farm is the only major home insurance company that offers personal cyber insurance in addition to a standard homeowner insurance policy. 

Insurers are recognizing the significance of smart-home services that can help them enhance their offerings and personalize the customer experience. Installation of smart home devices would lead the insurers to become watchdogs of the contents of the house. Connected security systems and smart-home devices also mean low premium, thus allowing insurers to change the value proposition.

The world of connected living will also bring the opportunity of partnerships. For example, AXA partnered with connected device manufacturers to enhance its offering. It has developed a mobile application “MY AXA” with which it can control the smart-home devices. MyFox, Kiwatch, Philips Hue, Orange My Plug are some of the manufactures with which AXA has partnered. Owing to this, customers can get policies at a lower premium. 

Work from home has made people realize the necessity of a conducive environment to work smoothly. A comfortable space and installation of technologies and equipment at home for professional demands are being recognized by people. Owing to this, home insurers can expect calls from their customers who might want to know the coverage of assets. Few contents can also require extra coverage such as electronics, depending on the level of usage. For instance, Lemonade’s contents insurance covers contents with extra coverage on assets such as bikes, jewellery, etc. If a customer wants extra coverage on their camera, they would be required to send pictures of the receipt and camera. In the case the receipt is misplaced, insurers can determine the replacement value based on the current value of the camera. 

Conclusion

People have seen a change in their lifestyle, and are buying products to make their houses comfortable to work in. Content insurance can ease lifestyle by providing extra coverage on valuable assets, and act as watchdogs for physical assets. As priorities are meant to change in the ‘Better Normal’, people are likely to consider home insurance. With the ‘Better Normal’ and modification in work culture, the insurance sector is also likely to transform its services to cater to customer needs.   

Further Readings:

  1. The State of AI chatbots in Insurance 2020 Report
  2. Mantra Labs joins the third annual Insurtech100 list
  3. Contactless Solutions in Insurance
  4. The CIO guide to keeping operations up during pandemics
  5. COVID-19 Lockdown Effects: A Paradigm Shift in Indian Edtech
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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.

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