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May, 2021

The Opportunity Within Insurance Ecosystems

May 27th, 2021

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Table of Contents
01   The Opportunity Within Insurance Ecosystems
02   The Insurance Monthly Roundup
03   Analytics in Insurance: Why demand will go up in 2021
04   Virtualizing‌ ‌Insurer‌ ‌Customer‌ ‌Service‌ ‌Operations‌
05   Customers are overwhelmed by their Health Journeys. Here’s Why

The Opportunity Within Insurance Ecosystems

Many insurance companies are struggling to deploy successful ecosystem strategies because of the limited resources that compete for priority with current core-business activities. 

 

How to design & build new value streams:

  1. Creating value through unique interactions. Where Insurers are currently missing out, is the ability to offer event-driven and contextual value propositions. For example, preventing strokes before they happen through remote monitoring, is a better risk prevention approach.
  2. Shifting from Goods-dominant to Services-dominant. The product only approach misses out on offering customers holistic risk services. For example, health management and new touchpoints with caregivers is seldom included with a typical health insurance product, 
  3. Value co-creation is the key ingredient. This is how Big Tech companies perform really well in ecosystems. For example, some insurers provide customers with an Apple watch which comes built-in with a HealthKit — where data from the device can be used to create incentives for healthy behaviors, thereby lowering premiums for customers and costs for insurers.

 

Digitization offers insurers an opportunity to provide value outside the actual use of products. However, to offer additional services themselves, they also need to set separate priorities away from their core businesses. To this end, insurers need to be open to collaboration in order to augment their digital capabilities, as well as open to the inclusion of others’ services into their customer journeys.

 

The State of AI in Insurance

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The Insurance Monthly Roundup

A quick roundup of the month’s insurance and insurtech news.

(India)

  1. With the rising number of cases in India, COVID-19 is becoming an unsustainable situation for insurance —- which is forcing Insurers to raise premiums by almost 25% this year.
  2. The non-life insurance market is expected to reach INR 3,662.94 Bn by 2024, expanding at a CAGR of ~14.79% during the 2020-2024 period.
  3. New entry: Mumbai-based financial conglomerate Choice group has launched a fintech aggregator platform — ISMOS offering life, health and general insurance. Customers will be able to extract a quote directly and buy the insurance policy directly from the platform.
  4. The IRDAI plans to boost insurance penetration in rural India, by asking insurance companies to set up Model Insurance Villages (MIVs) — where insurers will work towards covering the local populace, their properties farms, machineries, vehicles and other village-level services. 

 

(Global)

  1. Insurtech firms raised $2.5 billion in funding during the third quarter of 2020, an increase of 63% over the second quarter, according to Willis Towers Watson research
  2. Q1 2021 saw record breaking mega deals for insurtech startups, with Next Insurance, Coalition and Zego bagging top funding. Around 8 companies accounted for $1.1 billion (44% of total raised).
  3. UK-based Sprout.ai raised $11 million in a series A round to further expand its unique value proposition across Europe, South America & APAC — use AI to help companies settle claims within 24 hours.
  4. Kenyan Insurtech, Lami, raised $1.8M to scale their API insurance platform across the African continent. Lami uses a B2B2C approach to leverage the trust already built by platforms that converse with customers daily and innovate around it. Via an API, it allows businesses like banks, startups, organizations to offer digital insurance products to their users, and can also be used by partner businesses to manage their own insurance needs.

 

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Analytics in Insurance: Why demand will go up in 2021

As convention goes, most Insurers are data rich and information poor. In that regard, analytics derived through data modelling can bring in the personalization of the insurance industry. To overcome certain gaps, insurers collaborate with insurtechs to make predictive modelling possible. This leads to customized products that decreases costs for insurers themselves, and expedites the application and underwriting processes. The build up to using these predictive models is so that insurance can one day offer a ‘pay-as-you-live’ model of coverage.

 

The rising need for big data and predictive modeling capability during the COVID-19 pandemic drives the adoption of insurance analytics tools. The Insurance Analytics market is projected to reach $22 billion by 2027, growing at a CAGR of 14.2% from 2020 to 2027. During this period, the service segment will expand at 15.5% CAGR, due to the broad spectrum of insurance analytics resources including claims analytics, subrogation analytics, and fraud & consumer analytics.

 

The major factor driving the insurance analytics market are:

 

  1. The surge in requirement & implementation of advanced technologies to identify new business insights/trends to unlock new value-added services to customers and reduce operational cost.
  2. Insurance analytics optimizes customer relationship processes and uses predictive analytics in insurance models to create reliable reports across several product lines.
  3. Risk assessment features of analytics are helping the insurers in predicting the cost of insurance associated with the coverage and reduce uncertainty in the business

 

 


Source: Celent Research

 

Can Augmented Reality be a game-changer for Insurance?

Read our Latest Blog here.

 

Virtualizing Insurance Customer Service Operations

Since March 2020, Customer inquiries have spiked dramatically by nearly 48% across all business sectors. Help centers are taming the spike in tickets by empowering customers to find quick answers. During the same time frame, there has been a global increase in digital channels being used to contact customer service, with WhatsApp up 148%, texting up 26% and direct messaging over Facebook and Twitter up by 21%. These shifts reinforce the need for insurance companies to virtualize their customer service and meet customers on increasingly diverse channels.  

Among other fast growing concerns, consumers are now actively looking towards securing superior service levels and premium digital customer experiences but at reduced costs.

To combat disengagement, conversational experiences will be the key to providing proactive and friendly risk advice for consumers navigating the long recovery phase ahead. AI in Insurance will value at $36B by 2026. Chatbots will occupy 40% of overall deployment, predominantly within customer servicing roles. They are expected to be widely used in claims settlement within APAC, while in more developed markets it is evenly split between pre- and post-purchase transactions.

Why are private general insurers faring better with Digital?

  1. Multi-channel (bordering on omni-channel) distribution models 
  2. Customer experiences are improving because of better AI & digital strategy
  3. Geographical expansion (Tier 3 & 4 cities)
  4. Efficient sourcing of business via multiple channels is lowering the commission expense ratio

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Customers are overwhelmed by Health Journeys. Here’s Why

Insurance customers aren’t generally disgruntled about one particular phone call or individual service interaction. It is their cumulative experience across multiple touch points and channels over time that reveals if the process as a whole is broken or not. Insurers are developing an unintended blindspot — focusing solely on touchpoints. A siloed focus on individual touchpoints misses the bigger, and more important picture: the customer’s end-to-end experience.

 

Insurers tend to look at each customer touchpoint, from visiting the website to calling an agent, as a separate event. But customers see these events as steps in a single journey of fulfilling an important need, such as protecting themselves and their families or recovering from an accident. 

 

  1. There’s a compelling business case for improving customer journeys – since they are more strongly correlated with business outcomes than touchpoints. A recent McKinsey survey found that customer satisfaction with health insurance is 73% more likely when journeys work well than when only touchpoints do. 
  2. Product features, processes, and company departments and functions must follow the customer—not the other way around. This means following and anticipating the customer journey across devices, segments, products, and channels.
  3. A seamless, digitized customer journey uncovers many benefits for insurers. In particular, it boosts customer satisfaction levels significantly and can yield cost savings of 15% to 25%. It also increases organizational speed and agility, reducing the number of process loops required to complete a customer journey by up to 40%.

Digital Everything UseCases for the COVID World.
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