Edition II Customer Experience The Future Present YOU CAN NOW GET A GLIMPSE BEYOND THE HORIZON WITH DATA-BACKED AI. IT’S NO LONGER ABOUT MEETING CUSTOMERS WHERE THEY ARE, IT IS ABOUT MEASURING THE IMMEASURABLE AND NAVIGATING NEW COURSES IN CUSTOMER JOURNEYS. - Ashish Tanna GOING PLACES BY EVOLVING NEW AGE CUSTOMER EXPERIENCES Authored by: Ashish Tanna, COO & Co-Founder, Aureus Analytics. The future is digital; that’s a phrase we had all gotten accustomed to decades ago. Enterprises the world over were already automating repetitive processes and digitizing them. However, these past two years have forced the entire business ecosystem to leapfrog years ahead into the technology of tomorrow. Last year we took a look at how what was considered inevitable in the future has become necessary now! This year, we’ll examine why most organizations that embarked on digital transformation projects didn’t get the results they wanted. We will also gauge the significance of making the entire process customer-centric rather than product-centric. Join us as we explore this new landscape of rapidly changing dynamics in human-technology interaction with insights from industry experts. We shall take a look at some interesting case studies and implementation stories to understand how CX design & its manifestations, backed by data and analytics, is reshaping the entire enterprise from the inside out. Customer journeys across an omnichannel presence have become more important than ever. An insurance company can still build trust with its customers despite being a low-touch industry and enhance distribution using a digital approach. We will also take a global overview of insurtech, with marquee CX and C-suite industry experts providing key business insights. What we see lying before us is a plethora of opportunities for insurance companies to proactively connect and respond to customers when they need them the most. The insurance industry is poised to enter into a brave new world of data-driven hyper-personalization leveraged by artificial intelligence. Let’s take a sneak peek at what lies ahead of us. NEW AGE CX With much anticipation, we awaited the release of the 2nd edition of the Annual Aureus Insights Yearbook. It would not have been possible without the help of some fantastic authors who came forward and contributed their first-hand experiences as well as their expert opinions on the subject. The Aureus team has been working hard for the last few months to bring you this edition. Thank you to the writers, designers, and in-house team for pulling all the stops to get here. What would you say to the people who helped us create such a remarkable showcase of insights and the people who supported the yearbook? Quite simply, thank you. Authored by: Prerana Suvarna, Marketing & Communications, Aureus Analytics. Thank You! Ashish Tanna, COO & Co-Founder, Aureus Analytics. Gives us a brief introduction to the book and tells us about how what was inevitable in the future is necessary now. Kayzad Hiramanek, Joint President - President and Chief – Operations & Customer Experience, Bajaj Allianz Life Talks about the new model for enhancing the components of your "marketing mix," the 4 Ps of data-driven organizations. Matt Masiello, Chief Executive O cer, SIAA. Talks about the robust Independent Agency Insurance distribution channel prevalent in the US and the opportunities and challenges that they face in leveraging data. Ashish Jhajharia, Independent Management Consultant. Highlights the importance of CX to be included in the product design right from the strategic level. Dr. Nilesh Karnik, Chief Data Scientist, Aureus Analytics. Delves into the perplexing field of measuring customer experience by calibrating customer sentiments. Saket Rathi, Customer Success. Shares some valuable insights pertaining to data & AI that he has gleaned through his interactions with customers in the insurance industry. Anurag Shah, CEO & Co-Founder, Aureus Analytics. Discusses how although it’s impossible to predict the future, the CX game can be improved by leveraging data with technology. Frank Sentner, InsurTech Advisor, Aureus Analytics. Discusses the potential and challenges of utilizing the wealth of data accumulated by insurance agents for data and analytics. Neharika Agarwal, Head of Analytics and Business Intelligence, Bharti AXA Life Insurance. Throws light on the changing role of data in the Insurance Industry and the importance of modernizing data to gain true leverage. Kirti Patil, Joint President - IT & CTO, Kotak Life Insurance Explains how businesses should be more comprehensive in technology adoption to revolutionize customer relationships. Subhajit Mandal, Co-Founder Cyber Sierra. Critically evaluates the need for digitization in the insurance distribution process. I N D E X CX in the new reality The Great Data Grab: The new 4 Ps of data-driven organizations Exceptional CX - The Razor’s Edge CX & Design Manifestations: Insurance industry’s cart-fool challenge Acceleration of Technological trends- Revolutionizing Customer Relationships with Technology & Digital Digitization: A boon or a bane for insurance distribution? 1 8 12 20 32 38 1 2 3 4 5 6 Data & Analytics Modernization Data & Analytics: It’s Not Just for Carriers Data & Customer Experience: What do they tell us? Customer Insights: The needs of insurers today & tomorrow The Strong and Evolving U.S. Independent Agency Insurance Distribution Channel 44 50 56 68 78 84 7 8 9 10 11 Conclusion - Navigating the Era of Uncertainty Right from the onset of Digitalization, we have often wondered how much of our daily tasks could we perform online. The past year or so has served as an eye-opener in addressing that very question. Doctor’s appointments, schooling, and even workouts have all made the virtual transition. We’ve all passed the crash course in working, learning, banking, exercising, and even seeking medical care via the internet. We have witnessed organizations making the transition from creating welcoming ambiances in their o ces to optimizing virtual customer journeys. The immediate and widespread impact of COVID-19 brought about a sudden shift in prioritizing health and safety, which ruled out in-person visits to enterprises and institutions. Luckily we already had online alternatives and solutions to fall back on. CX IN THE NEW REALITY As more and more people work, bank, shop, and learn virtually, expectations are beginning to heighten. Hence, what was thought of as ‘good customer experience’ earlier may no longer fit the bill. Businesses are being forced to reorganize their approach to customers by realigning core human beliefs and values. Despite the high number of people getting vaccinated, a complete return to the status quo seems highly unlikely. Considering how well we have adapted to digital options, it’s di cult to imagine people returning to the brick-and-mortar alternatives. Especially since most of the changes brought about by COVID 19 were just an acceleration of existing trends. Current Scenario 1 OF INSURERS ARE DEPLOYING CX INITIATIVES THROUGHOUT THE CUSTOMER JOURNEY. 85 % - IBM Institute for Business Value Customer empathy Customer Journey Marriage of form and function An iterative approach Agile, cross-functional teams Industrial automation & contactless payments have revolutionized the way companies manufacture and serve their customers. Virtual reality, 3D printing, and telehealth are demonstrating a value that people were unable or unwilling to see until now. Store closures and physical distancing measures made face-to-face interactions impossible and customer service challenging. Customer support teams had to field more calls about return and cancellation policies, store closures, and more. The use of conversational artificial intelligence (AI) and cloud-based call centers have helped firms effectively address customer issues without face-to-face interactions. The 24-hour support has been especially beneficial for first-time insurance buyers who are unfamiliar with the insurance industry’s complexities and jargon. This trend is most likely to stay as it has proven its value in easing customer interactions with companies. Enhancing Processes It would be prudent to keep the fundamental elements of the current customer journeys while evaluating them for redesigning, which are: CUSTOMER JOURNEYS • Customer empathy • Marriage of form and function • An iterative approach • Agile, cross-functional teams The ability of brands to empathize with customers goes a long way in building a strong rapport with them. A good design is essential in striking the right chord with your target audience in the digital medium. This will play a pivotal role in creating unique and innovative products. It’s about meeting the unimagined needs of customers by listening to what they say. As Henry Ford said, “If I had asked people what they wanted, they would have said faster horses.” He definitely exceeded their wants and set new personal and public transportation standards by giving them more horsepower than they had ever imagined. Customer Empathy Good design must also marry form (the customer experience) with function (the value to the business). It’s a WIN-WIN situation that needs to be continually maintained by the design process. Customer experiences need to be optimized at all touchpoints before, during, and after conversion. Customer-centered strategies should drive design to delight customers at each step of the conversion journey. This will allow you to nurture strong relationships with customers right from the get-go. Marriage of Form & Function Instead of going all in, it always makes sense for companies to tread new waters in CX through an iterative approach. Once companies have successfully addressed the main CX needs, they can continue building forward from that point. Approaching and dealing with the challenges in CX piecemeal will give organizations more opportunities to test various options. It will also allow them to make quick corrections and modifications wherever necessary. An iterative approach 2 3 4 5 • Customer-centricity • Collaboration • Risk-taking Lack of transparency, vision, openness to experimentation, and siloed thinking are indicators of issues that prevent enterprises from capitalizing on digital opportunities. From the C-suite to the boardroom, business leaders are the primary drivers of a company’s culture shift toward true digital transformation. Customers serve as the purpose in this digital transformation era, while digital serves as the means to that purpose. With each revolution and disruptive change, a leader emerges who possesses the capability, tactical expertise, and vision to row the transformation boat successfully to the other side. Digital transformation must be comprehensive. It is not digital transformation if one unit of an organization uses modern digital technologies while another uses legacy systems. As a result of technological disruption, new roles such as Chief Technology O cers, Chief Information O cers, Chief Information Security O cers, and Chief Security O cers have emerged. All processes, systems, and people must work in tandem with one another to achieve a common goal. There are a variety of ways in which companies can go about developing their digital culture. The following are a few traits that are common across high performing companies: DIGITAL CULTURE The traditional approach to decision-making involved gauging the business case against what the competitors were doing. However, it has become paramount to put the customers’ needs first to make the right decision. Therefore, a key question to keep in mind throughout the decision-making process should be, “How does this create value for the customer?” For example, internal presentations at Amazon are called “working backward documents." It begins by determining how a proposed solution will help to improve the customer experience. The presenter then works backward to present the business case. This is an invaluable mindset that can help companies across myriad industries to succeed. Sandeep Bakshi, CEO and Managing Director of Indian life insurer ICICI Prudential, insists that all decisions made by employees, regardless of rank, must result in one of three outcomes: better customer experience, more business, or less risk. Companies have also begun proactively engaging customers in the product development process. A lot of time and money is saved, as customer needs are understood at the outset, and feedback is sought continually during product development. Thus enabling companies to design products that match customer expectations. Customer centricity Customers have come to expect quick responses in a rapidly changing environment. This may appear to be in stark contrast to insurance functions like risk, underwriting, claims, and sales & marketing. As each of these functions requires deep expertise, and the data is often siloed. This rigid siloing of data greatly reduces an insurance company’s ability to respond quickly. Besides, no one can own the full customer experience in such a functional setup. It even reduces the impetus for anyone to commit to the improvements needed to better the customer experience. The only way around this hurdle is in building cross-functional teams with a common goal of easing customer pain points. Agile, cross-functional teams 95 % OF CUSTOMER INTERACTIONS IN THE INSURANCE INDUSTRY ARE EXPECTED TO BE AI-ENABLED BY 2025. - Capgemini Efma – WORLD INSURANCE REPORT 2021 Aviva has an internal app that connects employees to the company’s digital insight about its customers, such as live feeds from social media or curated calls from its contact centers. It keeps its employees updated with the customers’ view of their brand. 6 7 One of the best ways to implement a customer-centric culture, of course, is to link employee compensation to metrics that promote it. Metrics that directly measure customer satisfaction or are related to other characteristics of high-performing digital businesses. The manner in which a company organizes itself can significantly impact the rate of cultural change. While some companies tackle the cultural challenge from within, others prefer to set up a separate division. “Insurers have increasingly focused on migrating to the cloud, digitally enabling their sales forces and supply chain interactions, and using data as a navigator to build technology systems and resilience into their operations,” said Kenneth Saldanha, Accenture’s global insurance lead. COVID-19 has reshaped consumer behavior and accelerated an existing trend toward customer experience digitization. This has resulted in a compression of two to three years of innovation and implementation into 12 to 18 months. ROLE OF CXOs Insurance companies and new-age insurtechs now utilize digital technologies to fuel innovation and offer increasingly customized solutions tailored to their customer’s unique requirements. In addition to analyzing basic information such as health status, employment history, earnings, age, geographic location, insurers also leverage valuable insights from publicly available data sources. Even the customer’s digital footprint across channels is used to build custom-made products/services, thereby providing a more personalized experience. The increased focus on consumer behavior data has also provided insurance providers with an opportunity to drive effective product innovation. Modern tech-based insurance service providers are using automation, data analytics, and other digital services to meet the ever-evolving market expectations. Implementation of video-based KYC and e-KYC systems has facilitated a faster and easier onboarding journey for customers. Customers have grown accustomed to an omnichannel experience while dealing with other industries, especially retail. This high-quality experience saves them the trouble of reentering data when they switch devices. The keyword here is convenience, and companies who do not provide this omnichannel experience quickly lose out to competitors who do. Where do we go from here? Collaboration is important because it improves customer understanding and decision-making quickly. A majority of insurers take six months to more than a year to move a digital initiative from concept to implementation. That is too slow. Pure-play digital companies like Spotify were among the first to embrace this agile approach, and insurance companies are increasingly following in their footsteps. John Straw, an entrepreneur with insurance investments and former chairman of the digital advisory board at Thomas Cook, recalls his experience developing a new insurance website for the company. “It was the prototyping part that made the big difference. Rather than put the plans through a committee, I took some of my budgets and went to a WordPress developer and said, ‘Build me a working prototype of the new insurance website.’ It took four weeks. I then took it to the innovation committee, and it was relatively simple from there. It’s really hard to stop a prototype because it’s touchable, feasible.” Collaboration Each year, the United Services Automobile Association, a US-based insurer, tests around 8,000 ideas, resulting in approximately 250 patents. A culture that recognizes the value of calculated risk-taking accepts and learns from setbacks. Some organizations openly celebrate the lessons learned to encourage their employees to take risks. Risk-taking OVER 70 % OF CUSTOMERS EXPECT A MULTI-CHANNEL EXPERIENCE FOR POLICY RESEARCH & PURCHASE. - Capgemini Efma – WORLD INSURANCE REPORT 2021 Social media, e-commerce portals, and payment applications have become basic utilities for consumers because they have made it easier to access a variety of products and services and the ability to pay for them with just a few clicks. The shift from the physical to the digital was a long time coming. But it was the pandemic that cemented the transition and accelerated digital adoption in everyday life. The entire customer journey - through stages encompassing product or brand research, purchases and feedback has been digitized. The end result is that online solutions for customer needs are now no longer a mere luxury but have become a basic necessity of any service-driven organization. Consumers leave behind a trail of valuable information about their needs and preferences. This digital footprint and data associated with it is a gold mine for businesses that aspire to enrich their consumers’ experience. With the right descriptive, predictive, and prescriptive analytical models, it’s also possible to enrich businesses’ relationships with existing and prospective customers. This promising phenomenon that has piqued the interest of businesses and data analysts worldwide has an interesting name – "The Great Data Grab." Among the many things that this new trend has transformed are the old 4 Ps of marketing - product, price, place, and promotion. Today, data-driven organizations have 4 new Ps on their radar. Here’s what the new marketing mix looks like. THE RIGHT DESCRIPTIVE, PREDICTIVE, AND PRESCRIPTIVE ANALYTICAL MODELS CAN ENRICH BUSINESSES' RELATIONSHIPS WITH EXISTING AND PROSPECTIVE CUSTOMERS. THE GREAT DATA GRAB: THE NEW 4 PS OF DATA-DRIVEN ORGANIZATIONS Authored by: Kayzad Hiramanek, Joint President - President and Chief– Operations & Customer Experience, Bajaj Allianz Life Insurance Customers today are not only omnichannel, but smartphones have completely altered their behaviour and expectations. Today, it’s not uncommon for people to quickly whip out their phones and perform a quick online search for any answers. It’s almost second nature to research or seek information online about any topic under the sun. Consumers now expect to interact with your brand at any time and from anywhere. They expect to be able to engage with your brand before, during, and after transactions. Customers expect your brand to remain consistent in terms of information, offers, and service as they switch between online, in-store, and mobile touch points. 8 9 Tracking Digital Footprints - Kayzad Hiramanek 10 11 Embracing data-based solutions opens up a world of possibilities for data-driven organizations. The ability to make sense of large tranches of data is revolutionizing the opportunities available to organizations across industries. In the insurance sector, data helps develop and promote the right kind of products, processes, and services based on what customers are seeking. Banking, healthcare, agriculture, and the telecommunication sector are also working on the possibilities that customer data offers. When businesses tap into these opportunities, it could open up new revenue streams, improve customer experience and retention, allow consumers to co-create experiences, and offer a competitive advantage that their peers may not enjoy. For businesses participating in the data-sharing ecosystem, it is important for them to ensure customers’ privacy is respected and adhered to at all times. Data is a powerful tool, and the responsibility to ensure its correct usage lies in the hands of all service providers. This will be further streamlined with the implementation of the proposed "The Personal Data Protection Bill 2019". Mastering the new-age 4 Ps in the new business environment can help organizations use the "Great Data Grab" to their advantage while simultaneously enhancing overall customer lifetime value. Possibilities The partner ecosystem is crucial to every business, whether it’s new or established. In an environment centred on shared data, every organization’s data practices and insights add value to the partners with whom it collaborates. An organization that doesn’t have much to offer on this front may not be attractive to potential partners and external stakeholders who are looking for more than just a distribution tie-up. On the other hand, an organization that boasts of e cient data practices presents a more attractive opportunity for potential partners. Traditional business processes suffer from several bottlenecks. A seamless data ecosystem can eliminate the existing congestion by reducing unnecessary processes in the customer’s journey. Only the vital milestones of information required remain then, making it easier for customers and businesses to traverse the distance from leads to sales. Paperwork becomes less cumbersome for the user, and processes that rely on data collection get more e cient. Data-driven organizations can also take advantage of the open API ecosystem in India, which includes information from credit bureaus and account aggregators etc. Process decongestion Partner ecosystem The digital footprint that customers leave online can help uncover their needs, preferences, requirements, and choices. This enables businesses to respond to every existing or potential user in the manner in which they are most comfortable. These can range between product, pricing, recommendations to building individual journeys for target customers. A data-driven marketing strategy also helps organizations reach out and communicate contextual content at the right points in their customer journey. BUSINESSES WITH DATA ANALYTICS TEAMS THAT LEAD DATA SHARING PRACTICES WERE 1.7 TIMES MORE EFFECTIVE AT DEMONSTRATING VALUE ADDITION TO STAKEHOLDERS. - Sixth Annual Gartner Survey Preferred Offerings THE ABILITY TO MAKE SENSE OF LARGE AMOUNTS OF DATA IS REVOLUTIONIZING OPPORTUNITIES TO DEVELOP AND PROMOTE PRODUCTS, PROCESSES, AND SERVICES SOUGHT BY CUSTOMERS. - Kayzad Hiramanek When it comes to purchasing decisions, most consumers place a high value on customer service, making CX the No. 1 driver of brand loyalty. While brand loyalty is critical to a company’s success, it is also shockingly fragile. In fact, one-third of consumers say they will abandon a favorite brand after just one bad experience. EXCEPTIONAL CX -THE RAZOR’S EDGE The Gen Z and millennial generations place a high value on how a brand treats and values them. They account for the majority of the customers willing to abandon a brand after a negative experience. Thus, a great customer experience strategy is critical to ensure customer satisfaction and loyalty. Today, many company executives expect COVID-19 to fundamentally change the way they do business over the next five years. A majority of them expect it to have a long-term impact on their customers’ needs and wants. Challenges Most CX leaders struggle to create projects that increase customer loyalty and produce results. To optimize customer interactions and drive business outcomes, marketing leaders must develop effective customer experience strategies. Silver Lining 12 13 Organizations anticipate that the majority of CX will be automated within a year’s time. In fact, over half of today’s workloads are handled by AI and robotics, and the use of AI or robotics is exceeding expectations. However, when organizations calibrate their rapid adoption of CX technology, a significant gap in perceptions between organizations and consumers is revealed The good news is that businesses are eager to make those investments. Enterprise decision-makers across industries the world over have increased budgets for digital transformation post-COVID-19. BRAND PERCEIVED CX VS. CUSTOMER’S REAL EXPECTATIONS OF CUSTOMERS STOP DOING BUSINESS WITH A BRAND THEY LOVE AFTER ONLY ONE NEGATIVE EXPERIENCE 32 % - PWC 14 15 The rise in confidence in CX has resulted in the responsibility for CX being elevated to a significantly more senior level. The majority of organizations now hold ultimate responsibility for CX at the board level. Organizations with ’well advanced’ or ’complete’ CX strategies have more than doubled in 2020. A large proportion of organizations are very satisfied with their CX strategies. Whereas half of the consumers report digital channels failing them due to limited capabilities or services and experiencing failures due to digital channels misinterpreting their queries. A smaller but significant number of customers are ’delighted’ with automated CX solutions. Organizational Perception Consumer Perception Over the last two years, there has been a significant increase in CXOs (Chief Experience O cer) and CCOs (Chief Customer O cer) in many organizations. A CXO can reimagine customer engagement by ensuring best-in-class marketing, sales, and service journeys. In contrast, the CCO is responsible for the overall relationship with an organization’s customers by providing a unified vision across all modes of customer contact. Marketing departments in organizations have begun to take on more responsibility for CX budgets and initiatives. Thus, it has become necessary for them to prioritize collaboration among the different business functions. This will ensure that roles across the organization are well understood and conflicts and redundancy are minimized. In order to do this effectively, CMOs & organizational leaders must practice the following measures: Rise of CXOs & CCOs To avoid competing CX strategies and programs, ensure that all CX leaders meet regularly to share information and discuss common issues. Duplicate vendors and efforts must be evaluated, and there should be clear lines of responsibility and accountability for everyone involved in CX. Goals should be defined not only by internal expectations but also by how customers define success. Committing time and resources to CX efforts should extend beyond short-term objectives like awareness, inbound tra c, and conversion. Long-term outcomes such as increased customer satisfaction, lower churn, higher lifetime value, and high referral volume should also be considered. Metrics and KPIs should be developed around efforts that meet customer expectations. Cross-functional governance Short & long-term metrics Understanding your customer’s needs, both spoken and unspoken is essential to getting the right picture of what they want. Incumbents already possess a wealth of data from which they can derive meaningful insights. Provided they know what to look for. Combining this structured data along with unstructured data gathered from the internet creates a powerful concoction in designing the customer journey. Intelligent analysis of this data can assist you in developing innovative approaches to simplifying and augmenting CX. Staying ahead of the Competition Successful CMOs improve customer experience from strategy to execution by putting the customer at the center of every business decision. Every successful customer experience program is built on the following three pillars: GOOD CX 16 17 Insurers are already fostering collaboration and leveraging APIs to integrate their products into the offerings of their partners. Frontrunners in the insurance industry will use a combination of technologies for personalization, with a laser focus on superior reach and engagement. With end-to-end information sharing and personalized CX, the old monolithic value chain with a siloed approach to data and customer experience will become modular and specialized. The following are a few irreversible trends that will transform the insurance industry: • The global insurance market is transforming ’digital-first’ business models, which can unlock new value worth billions of dollars • With a growing emphasis on personalized premiums and usage-based coverage, insurers are leveraging the Internet of Things, advanced analytics, and machine learning to create more detailed individual risk profiles • Collaboration between traditional insurance and InsurTech firms will result in newer models and revenue streams, increased profitability, and lower operational costs Companies that pull out actionable intelligence from the vast consumer data they possess can curate personalized offerings to their customers. It saves the customer a lot of time and effort that is usually spent browsing through different products and service offerings. It also makes them feel that the brand understands their needs and is fit to meet their requirements. A customer is bound to spend more than they had intended if the experience is highly personalized to them. The same customer would abandon a website without making a purchase because they felt it was poorly curated for them. Brands that provide a good customer experience are more likely to see their revenue grow faster than those that do not prioritize CX. Powerful & Distinct CX Customer Experience has become more important than ever. Companies that focused on improving CX excelled during the pandemic. Companies that put the customer at the center of their strategy and operations increased revenue and customer retention. Customers of these firms are more likely to stay with them, spend more, and highly likely to recommend them. Customer-centric culture Insurers of the future will invest in both digital and face-to-face channels to reinvent the operating ecosystem and improve the customer experience. As more policyholders interact with digital intermediaries, there will be a greater emphasis on generating value and speed to compete with emerging platforms and players. Insurance for the future To provide superior CX, insurers must embed intelligence at every customer touchpoint. Insurers who succeed in offering convenience, personalized risk prevention propositions, and deploying robust analytical capabilities will unlock superior customer experiences across the insurance value chain. Very few companies believe they have the expertise, resources, and commitment to pursue new growth successfully. While two-thirds believe the pandemic will be the most challenging time in their executive careers. The rise of widespread remote workforces in the previous year and more data and applications moving outside the traditional security perimeter have increased the emphasis on cybersecurity. An area in which nearly two-thirds of companies plan to increase their spending, according to Deloitte. ARE COMPANIES READY? OF CUSTOMERS WHO TRIED BIGTECH/INSURTECH/FINTECH DURING THE PANDEMIC DID NOT RECEIVE THE EXPECTED CX FROM THEIR CARRIERS. 30 % - Capgemini Efma – WORLD INSURANCE REPORT 2021 Customers want options that are digital, at-home, and low-touch. Once the coronavirus has been dealt with, digital-led experiences will continue to grow in popularity. Companies that act quickly and innovate in their delivery model to help consumers navigate the pandemic safely and effectively will gain a significant advantage. Adoption has increased dramatically, even among the most “digitally resistant” customers. For some businesses, the rapid development of digital functionalities is critical to ensuring service continuity. Other companies are making certain digital services available for free in order to assist existing customers and expand their reach to new audiences. Meet your customers where they are I Consumers around the world believe they will be living their lives very differently in the near future. They are more vulnerable, less secure, and less in control than they have ever been. They expect brands with which they interact to provide better, safer, and more seamless interactions at a lower cost. As value and price become equals in terms of customer loyalty, businesses will need to rethink their business and operating models. The consumer’s quest for value extends far beyond short-term margin dilution. It is a fundamental shift in purchasing priorities that will last at least a year. Consumer Concerns II As the effects of COVID-19 reshape our economies, businesses will need to invest in new digital communication and payment methods in order to strategically re-engage with their customers. While consumer behaviors and spending patterns have already shifted dramatically, the evolution of customer needs, attitudes, and values will have the greatest impact on how businesses compete. The use of chat technologies and social media has more than tripled. Consumers claim that they will use social channels, webchat, messenger apps, and SMS chat as their primary means of communicating with organizations in the new reality. According to Kenneth Saldanha, Senior Managing Director at Accenture, insurers have done a good job of raising the level of customer data exchange required to support their digital journeys. In addition, COVID has disrupted how technology is viewed as a business enabler, amplifying insurers’ need to say, ‘I can’t build this all internally on my legacy systems, so let’s talk to providers about how we can tap into scaling in the cloud,’ Collaborating with tech providers will also help achieve greater e ciencies and economies of scale. This will throw open a whole gamut of opportunities to incorporate CX right into the product design. Chat technologies & Social media III 50 % OF CUSTOMERS SAID THEY ARE NOT SATISFIED WITH THE CONVENIENCE, ADVICE, AND REACH (CARE) OFFERED BY THEIR EXISTING PROVIDERS AND ARE WILLING TO BUY INSURANCE FROM BIGTECHS/INSURTECHS AND NON-TRADITIONAL PLAYERS. 18 19 - Capgemini Efma – WORLD INSURANCE REPORT 2021 20 21 Insurance product design has focused its attention within the product to solve the customer problem. A more plausible approach would have been to channel their attention throughout the design process to maximize the chances of providing a strong solution. CX & DESIGN MANIFESTATIONS: INSURANCE INDUSTRY’S CART- FOOL CHALLENGE Authored by: Ashish Jhajharia, Independent Management Consultant Anticipating what customers will want and incorporating the right solutions into product design must be done at the strategy level. While product strategy is focused on business outcomes, design strategy is focused on customer experience outcomes. Can poorly designed products be the manifestations of product strategy aiming to solely achieve business outcomes? Probably yes, if you just keep designing them in such a way that it delays or denies the benefits to the customers, and design them inherently complex to understand and use. SHOULD THE INSURANCE BUSINESS BE DESIGNED AROUND THE PRODUCT? OR SHOULD THE INSURANCE BUSINESS DEVELOP A PRODUCT TO FIT WITHIN IT? - Ashish Jhajaria Many InsurTech startups and new entrants in other markets are taking the latter approach; incumbents also need to consider “design strategies” that differentiate them from competitors. Why are we talking about design manifestations? Product Design Consider an insurance market like India POPULATION OF 1.4 bn GDP OF ALMOST US$ 2.5 TRILLION, GOING TO BE US$ 3 TRILLION SOON GWP IS AROUND US$ 120+ BN WITH LESS THAN 4% PENETRATION And then came covid 2nd wave, which toppled all the benchmarks, actuarial models, and claim ratios for the local insurance industry (mostly in the term life and health insurance category). It was good in some ways because it provided a huge opportunity for incumbents to boost customer trust in insurance and prove their worth by fulfilling the promises these insurance customers had bought into. Instead, we’re seeing a huge number of both pending and rejected claims. Then there are families where all of the adults have left, leaving no one to claim or understand the insurance that was purchased as a safety net for their own family. (It’s sad and frustrating, but there are many such instances) With the uncertainty factor regarding life, income, and health suddenly increasing exponentially. Insurance products should have emerged as a solution to allay some of the financial woes resulting from the increase in perpetual uncertainty situations. Unfortunately, the faith factor in insurance providers and products, which were already on the decline, has now been severely shaken. There are distinctions between a product and a commodity; a commodity is something that one group of people sells while another group buys and uses. The product is the feeling they have when they buy and use it; it is a design experience; it is a brand promise with consistent quality to meet the objective and customer needs. 22 23 • Can digital technology really create stupendous demand for insurance? • Where the “lack of trust” is actually emanating from and, how can it be resolved? • Why do these issues directly relate to how they are designed, manufactured, canvassed, or sold? • How does it impact and restrict the “Customers’ job from being done”? • Can it truly transition from “being sold to being bought” in the near future? We have come a long way in the last 20 yrs, given the population increase of 30% (1.07 bn to 1.4 bn). It is remarkable that the markets have continued to maintain the insurance penetration rate at 3-4 percent over the last 20 years, especially given other macro factors. • The increase in per capita income • Average jump in mid-class income (and expansion of middle-class bracket in the base population) • GDP size growth • How other peer markets have performed in their GDP to GWP growth (e.g., China US$ 15.6 trn to US$ 700+ bn) and insurance penetration (6%+). It’s necessary to point out that we are lagging behind many smaller economies and that we need to catch up much faster. While digital technology is gradually increasing e ciency across the insurance value chain, the issue is more with insurance product demand creation and low customer trust. While this is mostly true for incumbent carriers, new generation carriers, such as pure digital players or D2C InsurTech, have managed to avoid it for the time being, though there are a few outliers and exceptions on both sides. Product vs. Commodity INSURANCE HAS ALWAYS BEEN COMMODITIZED, AND SCORES OF POOR CLAIMS EXPERIENCES FROM COVID 2ND WAVE HAVE FURTHER EMBOLDENED THIS FACT. - Ashish Jhajaria The COVID backlash Insurance customer journeys are very unique in comparison to all other industries. It can be as short as a few hours and can stretch beyond 40-50 years, too ( depending on the line of business (LoB) and kin