Insurance Sector Reform in the Digital Age

Technological disruption has caused a shift in the way businesses communicate and engage with their consumers. It has heralded an era of customisation that allows businesses to get up close and personal with their customers. Today, in the wake of the pandemic, risk assessment and mitigation have come under the spotlight. Insurance, being one of the best risk protection tools available to people, is inevitably going to gain traction. However, the insurance industry can optimally leverage upon this opportunity only if it is focused on meeting the nuanced needs of its customers. 

The Catalyst for the Insurance Industry

People’s attitude towards risk management has changed from being reactive to proactive. They are more demanding in terms of being selective in the type of insurance coverage they purchase and a “one size fits all” approach is no longer an option for insurance companies. Personalised insurance can effectively cater to the changing demands of new-age customers. Here are three key reasons why personalised insurances are likely to prove popular in 2021.

1.    Awareness: Today’s consumer is highly evolved – with many following either the Research Online Buy Offline (ROBO) model or its reverse, i.e., Research Offline Buy Online. In either case, online is an integral part of the buyers’ journey. This is because the consumers’ digital interactions generate a significant amount of data that can be further harnessed to create personalised solutions. As consumers are receiving personalised solutions and services in most aspects of their lives, it is only inevitable that they expect the same level of personalisation from their insurance companies as well. 

2.    Option to Pick and Choose: Insurance also requires customised solutions basis individual/business risks. This is especially true for health insurance. Every individual has different levels of health and fitness. At the same time, there is a whole range of insurance products that are available to meet your specific needs. Thus, you can choose to purchase an insurance product that meets your requirements, whether it is a preventive cover or a cover for critical disease. Further, you can also choose add-ons to improve the extent of coverage of your chosen policy. As a result, you can customise the insurance policy to suit your unique needs. Similarly, personalised car insurance based on factors such as customer’s driving record, annual mileage, etc is also possible by the use of telematics devices that can be fitted in cars. 

3.    Personalised Marketing: Customer-centric marketing is still at an early stage in the Indian insurance industry. However, the experience abroad suggests that insurers who are willing to offer tailor-made solutions for their clients after understanding their requirements are likely to see better revenues as well as higher customer retention. While data privacy issues remain a concern, research suggests that customers are willing to share data provided it results in a solution that is cheaper and more suited to their needs.  

Many insurance companies are embracing this opportunity to improve the value proposition for their customers. For example, a health insurance policy where a menu card approach has been adopted, offering customers the option to choose the cover that best suits their requirements. 

Personalisation has already orchestrated change in several industries. Insurance is next.

The author is Head – Product Development, SBI General Insurance