'COVID-19 has transformed the insurance industry in India'
The insurance industry has rapidly moved its front-end online since the outbreak of the pandemic, said Tarun Chugh, Managing Director and CEO of Bajaj Allianz Life Insurance, at the BFSI Leadership Summit 2021, organised by YourStory and EnterpriseStory on July 16.
Watch the BFSI Leadership Summit 2021 here.
Traditionally, life insurance was mostly believed to be a face-to-face channel, Chugh told told Priya Sheth, Senior Anchor, YourStory Media. But in the past 15 months, almost 99 percent of the business is done online. “We have moved and learned what would have taken 5 to 7 years in normal circumstances.”
COVID-19 has saddled insurers globally with losses to the tune of $55 billion, second only to Hurricane Katrina, according to an estimate by management consulting firm BCG (Boston Consulting Group). But 2020 was also a year of transformation, Chugh said.
"From not knowing how to use technology, our advisors went to being comfortable in transacting business online, downloading brochures, and taking sessions with customers online," he said. It has been a 180-degrees change straight off, he added.
At the same time, consumer interest in buying insurance has increased in the backdrop of the pandemic. “People have started looking at life insurance as a serious component of their portfolio,” he said. “They have been able to plan their life goals a little better”
Investors mirrored this interest in ‘insurtechs’, startups that use technology to simplify the insurance industry. According to a BCG report, “the pandemic pushed insurtech funding to an all-time high. Globally, insurtechs raised $7.5 billion last year in 2020.”
Insurance companies are opening up to this changing landscape. The industry has learnt about technology, customer orientation, being more agile, altering operations, making the front-end easy for customers to access virtually. This wasn't the case in the pre-COVID-19 world.
It is hard to tell how many changes go back to the old normal, and how many innovations from the digital era remain after the pandemic subsides. But there is a realisation that remodelling the insurance value chain with the help of technology has a lot of gains on two fronts.
First is cost. When you digitise the processes, customers can figure out everything they have to know through online chatbots or video sessions. "They need not come to branches," Chugh said. As a result, customer interactions went up by 84 percent in June last year, which would have typically registered a 10 percent increase, he added.
This means insurance companies can reduce their number of offices and save on rental costs. Insurance companies are moving to a hybrid—work-from-home or office—culture.
“Employees now work virtually, which is a change from the military culture that required everybody to be in office by 9 AM. Imagine how much time was wasted in travelling,” noted Tarun Chugh, CEO of Bajaj Allianz Life Insurance.
Second, employees have been more productive as a part of digitisation, cutting down time wastage on unnecessary activities. In the pre-pandemic era, for training agents, insurance companies would have to invest in training rooms and teams, and find time on weekends. “Today, I can get a subject-matter expert addressing the entire country,” said Chugh, adding that interested employees attend it.
While highlighting the key innovations that the insurance industry is undertaking to remodel the value chain, Chugh pointed out three key challenges. The internal culture changes on how to use technology, simplifying the entire processes including the products, and how to use data.
You need to ensure that your internal ecosystem—infrastructure and employees—is more accepting of the digital wave, said Chugh. All product companies need to simplify the process for their customers, but more so for insurance companies.
"We usually have a form of 120-160 unique fields, where the customer is required to give information on these fields for us to do an assessment," he said, referring to the huge potential to profile and service customers.
"But insurance needs a simple front-end user interface for customers to interact. Earlier, insurance companies spent 70 percent of their technology on backend processes," Chugh added.
The formats of growth will be defined by technologies available and innovations happening outside, Chugh said. Now, with the growth of fintech startups, insurance companies are talking about technology with them. “Three years back, I hardly used to talk to a startup,” Chugh said. “Now, every week there is a startup that we talk to.”
Bajaj Allianz Life Insurance has chosen video, voice, and vernacular as important themes, Chugh said, which is going to burst open in a big way. His team is testing facial recognition and automating manual processes that could be made efficient. With a lot of options, life insurance companies need to decide what technologies they want to change, Chugh said.
With more acceptance of technology, data security and cyber security are concerns too. An increasing number of fraudsters are trying to trick customers to divulge their personal information. “That is a cat-and-mouse game and we will always be chasing the mice all the time because they will always be at it.” said Chugh. That’s why, for insurance, security perception is important too.
Watch videos of all the session from the BFSI Leadership Summit 2021 here.