The year 2020 has brought many changes in everyone’s lives, and a major one is the way people purchase essentials goods and services, including life and health insurance. As we prepare for the future, we must do so with a digital mindset.
Digitization will continue to play a pivotal role in how insurance products are bought and distributed. A successful digital transformation will involve empowering people to work in new ways, including learning new skills, and improving these skills further will be essential to the sector’s growth.
Previously, interacting with consumers through digital mediums had limitations because of the trust deficit in insurance. Also, the need to gain a deeper understanding of an individual financial protection needs made face-to-face interaction critical. However, in a post-COVID-19 Global Customer Behavior Shift Study by MetLife showcased that 53% of people expect to interact with their insurance agent more online than before the pandemic, and even more expect to buy life and health insurance digitally in the future. This presents a unique opportunity to reimagine insurance distribution through innovation and enhanced technologies. The insurance industry has made great strides in recent year to integrate new and customer-friendly technologies by proactively collaborating with platforms like Paytm and phone pe, and moving closer towards an embedded insurance model. This has been driven by customer’s ever-increasing expectations of ease and convenience..Increasingly we expect insurance to be bundled as a juncture feature on other products, services, or platforms. That means the insurance product is not sold to the customer ad hoc but is instead provided as a native feature to protect it against risks. Embedded insurance is transforming the insurance distribution model, providing insurers and their customers with a seemingly limitless number of unique and niche value propositions offered in real-time or at the point of sale. These trends will take the ease of purchasing insurance to new heights as it will further push insurance into the category of a necessity and begin the new era of insurance commodification.
Multi-channel Distribution Strategies going forward:
Bancassurance channels will play a critical role in increasing the ease for insurance customers. Banks and the insurers’ partnership will allow them to utilize the banks’ extensive database and advanced digital platforms and engage with the customer at the bank’s end, proving to be an unconventional and beneficial touchpoint. In addition, while it will provide customers with a complete financial solution, it will also provide consultation based on an individual’s specific needs, their current standing and more, thereby making the process hassle-free. Along with consultations, the channel acts as a one-stop-shop platform that will allow customers to get the required service along with the amalgamation of other financial services under one roof.
Digitization of the agency channel will also help in increasing the number of touchpoints significantly. The future agency network will provide customers with end-to-end solutions, from lead generation and lead management to sales support and after-purchase services. Here, the noteworthy transition will be from the face-to-face approach to a hybrid approach through virtual branch models. Given the pandemic has accelerated digitalization, customers are increasingly looking for digital tools as the primary factor for their financial and protection needs. With customers increasingly wanting convenience, responsiveness and the ability to have critical information readily available, the demand for a better customer experience will drive the change in the digitization of the agency channel. Lastly, in the age of ROPO (read online, purchase offline) web aggregators such as PolicyBazaar might prove to be the first point of engagement with many consumers who are interested in comparing and profiling various products available in the market.
Impact of the diversifying consumer base
The pandemic has accelerated us towards rapid digitization, but the pace at which different consumer segments opt into digital mediums is not uniform. Many people between the ages of 55 to 75 years may have adapted to online shopping, but they still have a long way to go before they become as comfortable as someone in their 20s or 30s with purchasing financial products online. These are of course generalisations, but the point is we need to segment our customers based on their comfort and preferences towards digital or traditional mediums. Older customers tend to remain more comfortable with offline, face-to-face interaction with agents at the branch. In contrast, the younger generation is rapidly adopting online purchasing with minimal engagement with the insurer. Both these segments have a completely different set of challenges. Hence, the key here is to provide different distribution approaches that cater to all needs. Our approach will also be translated into how these two distribution channels will integrate technology to give customers the most effective and delightful experience.
At PNB MetLife, we have adopted the model of phygital in our distribution chain to ensure better customer deliveries. For example, in the bancassurance channel, while most of the sale happens via face-to-face mode, the after-sale process thrives on our e-branch next platform, which is a digital tool for the sales team to monitor the status of the policies they have sourced and also get information on any requirements raised by the back-office team. Today less than 10 % of applications of new policies are carried through our branches, the rest are all through online platforms. This along with our other digital tools helps us to address the needs of our customers faster and better.
As we progressively move from surviving to thriving in the new narrative, the unification of the technology and the human touch will enhance the customer experience and provide a fresh perspective to the customer journey.
Views expressed in this article are the personal opinion of Sameer Bansal, Chief Distribution Officer, PNB MetLife.