Insurers must rethink their distribution models to offer a seamless experience and maximum value as the industry continues to overcome Covid-19’s impact on customer acquisition and retention, new study found.
To stay relevant, insurers need to upgrade their distribution network with emerging technologies including augmented and virtual reality and AI and embed insurance in customers’ daily lives by embracing open insurance, the study from Capgemini and Efma found. It explored how the current distribution models are being challenged and revealed how technology can supercharge channel effectiveness and revenue.
Dubbed as World Insurance Report 2021, it noted that whilst 87% of insurers say they will invest in digital enhancements, only 32% think digital channels are effective in sales due to the lack of personalised advice capabilities.
APIs and AI-based analytics can help agents and brokers understand customer preferences, answer questions, and offer appropriate products around policyholders’ special life events, the report said. Indeed, AI-based analytical tools and a 360-degree view of customers is essential for a customised customer experience.
As a result, more insurance agents and brokers want to ramp up their digital engagement capabilities and about 44% said they need support from their insurers. More than half of the agents and brokers surveyed said that to assist customers effectively, they need digital collaboration and engagement tools such as screen-sharing platforms and digital document-signing tools.
Insurers admitted that customer convenience improves when digital illustrations and single-screen product comparison tools are offered. However, less than two-thirds said they provide agents and brokers with these sought-after digital tools to enhance customer experience.
Furthermore, Covid-19 has not been kind to the industry, the survey showed. Over 60% of the insurance executives said Covid-19 affected their firm’s customer acquisition efforts and about 40% cited an impact on customer retention. To add on, over 40% of personal line customers said it was challenging to contact agents and brokers outside typical office hours with lockdowns and social distancing making the situation more complicated.
Pandemic fallout and a changing business environment have significantly affected insurers’ KPIs related to sales and retention. The need of the hour is to focus on distribution channels as acquisition and retention enablers, the report said.
Going forward, the most successful insurers will win and retain customers through reinventing their operating ecosystem to support a ‘phygital’ model based on a mix of physical presence and digital engagement where human channels are digitally empowered and sophisticated on-demand digital features humanise virtual channels, it said.
Commenting on the future of the InsurTech sector, Capgemini’s Financial Services and Group Executive Board Member CEO Anirban Bose said, “Insurers have an opportunity to convert digital traffic to sales by focusing on a hyper-personalised virtual experience.
“Today’s customers expect interacting with their insurers to be easy, and providers need to ensure their channels enable a convenient and seamless customer experience. By investing in the right technologies, insurers can win and retain customers while empowering their agents and brokers to deepen relationships.”
Echoing a similar sentiment, Efma CEO John Berry added, “Insurers of the future will need to embrace digi-intermediation to eliminate distribution gaps, enhance CX, and maximise delivered value.
“The global impact of all-at-once digital adoption has changed the way insurers need to operate to satisfy their customers. Digital investment in connected channels is a critical ingredient for insurers of the future to be successful.”
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