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AI and BI to drive the Insurance Market

Manav Sachdev, Senior Principal Analyst at Gartner shares new insights about the pluses and minuses of digital approaches in insurance:

Manav Sachdev, Senior Principal Analyst at Gartner

Manoj Agrawal: Do you think digital marketing has reduced the cost of customer acquisition?

Manav Sachdev: Marketing through new-age platforms (digital) has definitely increased the traffic for insurance companies. But conversions are negligible. Digital marketing is more educational in nature than targeted at customer needs. This is because the sparse customer data of Indian insurance companies and lack of backend system integration make it difficult to retrieve data. The available data is not good enough for contextual targeting.

Digital marketing vs regular marketing – what is adding to the bottom line?

In the case of digital marketing, it will cost lesser than a TV advertisement. But there is a cost to be paid to Google or Facebook or any other platform doing demography-based marketing. To sum it up, it may not get you the desired revenues or conversions.

Which category is pushing down the cost effectively for customer acquisition – insurance companies themselves or insurtechs or insurance aggregators?

Among the 3 categories of insurance companies, insurtechs, and web aggregators, the cost of acquisition for the latter two would be lower than that of a traditional player. One also needs to take into account that an insurtech normally sells low ticket products like car insurance or health insurance, which would have a low cost of customer acquisition. Also, the majority of the insurtechs are of digital native presence. This saves them from the burden of usual overheads that a company incurs.

Aggregators can overwhelm the customer with a higher number of options and the amount of information that can be shared. The conversion still may be low. While a customer may go to an aggregator to test the waters, he will eventually buy from the insurance company website. Overheads for aggregators are higher than a typical Insurtech company.

The traditional players have created spinoffs, which will directly compete with insurtech. For example, MassMutual has Haven Life, and Tencent and Alibaba have ZhongAn for selling life insurance products, which is done digitally. This is a clear spinoff from the traditional companies to compete with the insurtechs for their efficiency and self-servicing options. So, the cost of acquisition can be low for an insurance company as long as there are serving options and remote sales.

What are the trends in customer retention for insurance companies? Do digital strategies help with retention?

Watch Video Click here, More thrust on AI and BI in 2021: Manav Sachdeva

Three key trends are observed:

  1. a) Customers are looking for financial coaching or advisory. The market in India is not ripe but is getting there. This is not through an agent but through a remote setting that includes an AI model or a recommendation engine.
  2. b) Nudging – When a customer does not follow the right lifestyle, you nudge him to go out for a walk or follow a healthy eating habit. This is made possible through partnerships making it a service-based proposition.
  3. c) Intervention – When someone using an iWatch has a free fall, the iPhone dialling the number from your emergency contact or calling an ambulance is a kind of intervention that can be possible from the insurance company’s side.

What kind of large-scale skill up-gradation do you see taking place in the near future?

Employee rationalization is a big theme right now. With the same employee set and the same number of employees, organizations want to arrange them in different departments as per demand. For example, if there is a disaster or a major disruption like a pandemic, the insurance company would require more people in the claims department. When the time of buying comes in, which is typically the first quarter of a FY, more people are required for sales than people handling claims. Employee rationalization means to train people on different tools. And these tools require less of training that can be configured to different employee personas.

Is virtual assistance to employees happening in India?

It is happening to some degree. For instance, employees can tell a bot to arrange a medical examination for a particular employee. Also, there is a virtual assistant to remind the employees about their daily tasks.

Which hard skills or soft skills do you think will be in demand in 2021?

There is a big thrust on Artificial Intelligence (AI) and Business Intelligence (BI). Another area of focus would be RPA skill or automation.

What IT-related activities do you see moving from outsourcing to insourcing, and vice versa, in 2021?

That would be around infrastructure. So, data centers or infrastructure like the CPU processing would be outsourced. A little bit of insourcing can also happen, if you have the might to create something in-house, and you monetize it by offering it to other insurance companies.

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