How insurers can pave a path to digital trust with greater transparency
Closing the protection gap – a goal and an opportunity that insurers around the world have sought for years to resolve as it represents huge growth potential and more importantly a path to a more trusted insurance industry. For many consumers, insurance is either ill-suited to their needs, too costly, inaccessible, or in some cases simply impossible to navigate and understand.
In health for example, it was observed that over 40 million households forego medical treatment to avoid financial stress across Asia, noted during a breakfast briefing on Asia’s Health Protection Gap Research hosted by Swiss Re.
The research highlighted a growing health protection gap —valued at $1.8 trillion in 2017, 10 percent of average household income—and projected to widen more quickly and become more persistent.
But in a post-pandemic world as people seek better ways to protect their health and livelihoods, a genuine opportunity has arisen for insurance to meet the growing demands for protection.
Much of the opportunity and promise of a new era of insurance rests on the potential impact that new technologies and an accelerated shift to digital will bring. But it’s critical to realize that going digital is just the means to the goal. That goal is ultimately to drive a new level of digital trust in the insurance sector. The only way consumers will buy into the promise of trusted insurance is through greater transparency. Transparency means giving customers what they are looking for in terms of insurance products and services.
This requires a number of factors to be met – improved understanding of consumer needs; improved access and control for consumers throughout the whole insurance process; and finally, an experience they can trust to be unbiased, fair and tailored to them. The promise is for a customer that knows exactly what protection is being provided, but more importantly what is not protected, but also for the customer to fully understand and be in control of the whole insurance process.
I believe the emergence of digital technologies is a golden opportunity to deliver on this promise of greater transparency and digital trust. Following are three key areas where digital technologies can usher in a state of digital trust.
1. Technology enabling insurers to have a better understanding of customers
Underwriting has always and will remain a core engine for insurance. For the insurer, the advancement in technologies like AI, big data analytics and automation significantly improves the sophistication and capability of the underwriting process.
In the past the digital underwriting process may have been too standard and a painful experience for both insurers and customers. As a result, insurers have had to rely on alternate means to mitigate underwriting risks, such as providing fewer product features and benefits, relying on more product exclusions or in some cases declining coverage all together.
With advanced underwriting processes today, insurers can dynamically tailor the underwriting questionnaire to the customer and intelligently pose the most relevant questions as the process progresses. The result is a much-improved understanding and assessment of the customer when insurance is purchased. This allows insurers to offer improved insurance coverage to even more customers and with less unexpected surprises at claim time.
I predict insurers to continually drive for faster, more accurate underwriting, while also pushing to reach that fine balancing act between managing insurer risk and meeting the protection needs of all consumers.
2. Digital and data empower improved customer experiences and decisions
The immediate impact for most consumers as insurers go digital is the surge in new information available for consumers. How this new information is presented, delivered and ultimately protected will be integral in driving the customer experience and their decisions.
The biggest challenge for consumers in the past was the sheer difficulty in navigating the world of insurance products. That’s why we have brokers and agents to support consumers in that journey. With simpler and transparent digital insurance offerings combined with today’s availability of data and digital channels, we are empowering customers to take control and ultimately make more informed decisions at their own pace. Transactions, claims and policy updates can now all be accessed, tracked, and actively managed at any time. This heightened sense of access, control and transparency in itself creates a more trusted experience. The relationship between insurer and customer can evolve into a much more open and pragmatic exchange as data becomes a vital currency. A recent Accenture study revealed 7 out of 10 consumers (69%) would share significant data on their health, exercise and driving habits in exchange for lower prices from their insurers, an increase of 19% from two years ago. More consumers (66%) would also share significant data for personalized services to prevent injury and loss—up 54% from two years ago.
For insurers the challenge will be to serve information in the best ways possible to ensure a seamless customer experience but also ensuing that the information provided is critically secure so that any trust gained is not lost by abuse or loss of personal data.
3. Digital-human insurance offering to reassure consumers and drive up trust
The rise of AI, chatbots, powerful algorithms and intelligent automation brings a dramatic shift in the way customers engage and interact with insurers. The promise here is not to deliver a completely automated process. But the promise of technology backed by appropriate human intervention and input will give customers a critical level of reassurance that may be lacking with a fully automated process or a human-only process.
Automation should minimize the risk of human bias and mistakes at more basic levels of the insurance journey and provide instant feedback to customers. However, for more complex products and processes relating to such products, human input is invaluable when making those critical decisions. This combination of digital and human engagement depending on the needs of the customer will again drive up transparency and build a higher level of digital trust. As a new model for digital interaction emerges, we can expect more engaged customers and that usually equates to better products, service and satisfaction.
In a world where consumers no longer want to be “sold” a product, empowering them through data and digital means can drive greater control and self awareness of risk by customers, ultimately leading to better decisions. This is the path to trust that the emergence of digital has provided. At iptiQ, we are striving to unleash the potential of digital technologies and make insurance more accessible, engaging and relevant – in a secure and accountable manner.