Digital technologies are becoming critical to the insurance business, with particular ramifications on how insurers learn about and engage with customers. Sumit Popli weighs in on how insurers can harness this trend to grow their business.
The bancassurance channel has been successful in Asia. Why should banks and insurance change?
Bancassurance has been growing very rapidly in Asia, if you look at the last ten years. The core driver of that has been the trust which the customer has in banks, and the relationship they have with their banker. Now this is changing, and there are three shifts at play.
First one, I would say customers are trusting not their bank but their devices. Their engagement has moved completely to their devices. When we ask customers and do our research, anywhere between 50 to 90 percent of banking transactions are already happening digitally, depending on which country. So this is the first shift.
Second, I would say, [there] is a lot more data available, a lot more computing power available. This allows banks and insurers to really understand customers deeply by using analytics. And we know, [in] insurance, the best time to have the initial conversation is at life moments—childbirth, marriage, things like that. Banks and insurance companies can now find out, using data and analytics, which is the right time. And third, there are a lot of attackers who also realize this shift and have started to go after this opportunity. They are going after the customers and they are getting a lot of traction, so banks and insurers need to change.
What does digitization mean for agents?
I think, [in] mature Asian markets, agents have moved from the mind-set where they used to think digital insurance or digitization means a competition, another channel. Now they have started to realize that digitization is a core enabler for their business. So it means three things for them: One, a very good service and experience for their customers. For agents themselves, it’s much higher productivity, and for insurers, much better economics. Further, we’re starting to see that digitization of [an] agency is also a very good recruitment proposition. More and more agents are joining insurance carriers who have very good digitization support, so it is helping drive the capacity of the channel as well.
How can digital distribution drive growth?
So let me clarify again. Digital in insurance distribution does not mean that human aspect will go away, or the face-to-face interactions would go away. At least, not in the near term and for life products. Now having said that, I will make an assertion: digital and distribution can be a massive growth driver. What will it take? It’ll take three things, which are very important in my mind.
First, I would say a very seamless customer journey end-to-end—not just focused on sales, but end-to-end. Second, it’ll take digital customer engagement, because that has to become the first interaction with customers. It has to attract customers, make them understand that this is their need. And third, it will take a commercial model which drives collaboration between channels—digital and face-to-face—and also experts within distribution teams.