In chaos theory, the butterfly effect is the idea that small things can have a nonlinear impact on a complex system. The flapping of a butterfly’s wings in the Amazon jungle, for example, could create tiny changes in the atmosphere that would lead to a tornado in Texas. Just as the tiny but deadly novel coronavirus in 2019 unleashed a storm of change that swept through every industry in the world, including the insurance industry.
Risk analysis and crisis planning are the essence of the insurance business. While the pandemic has wreaked havoc on the industry, it has done better than most. The industry has changed structurally, mostly for the better. The changes, hastily imposed on the industry, have proven sticky and long-lasting. And whether it’s planned or not, place the customer firmly in the center. Let’s dive into it.
Consider this: India has 1.18 billion mobile connections, 700 million internet users, 600 million smartphones and a population that consumes the most data in the world, around 12 GB per person per month (National Health Authority of India, 2021). Today, digital versatility is at the heart of every decision and every interaction for individuals and businesses. The insurance industry was among the first to recognize this and to make the most of technology, investing early in collaborative tools such as social media, WhatsApp, Zoom, Microsoft Teams, etc., as well as than in digital technology assets like mobile insurance apps, chatbots, and tools that enable processes like faster KYC verification and onboarding, automated underwriting, virtual claims adjustment, and more. Cheap, scalable, functional and repeatable digital technology is here to stay. Here’s a pro tip: watch out for the seismic impact of artificial intelligence (AI) on every link in the insurance value chain.
The choice is nice
A marked increase in health awareness during the pandemic has led to an increase in demand for health insurance. But the “one size fits all” approach is a thing of the past. With a plethora of choices and a greater appreciation for the gift of health, people are taking a more holistic approach to their health. This means that customers today demand personalized, personalized and intuitive policies that were not covered by companies before. For example, policies specifically designed for Covid-19, mental health issues, certain types of cancer, seasonal illnesses such as dengue fever, malaria, or even coverage for people with “adverse” medical histories that were denied coverage earlier. As customer demands and expectations continue to evolve, insurers will need to find a way to adapt their business model to meet new demands and gain trust.
Innovate or perish
During the pandemic, changing consumer behavior has prompted companies to reinvent and develop new product strategies to deliver relevant products that keep customers engaged. This is a trend that will continue for the foreseeable future and companies that embrace a mix of hyper-segmentation and innovation are the ones that will emerge stronger than the rest.
For example, an innovative cyber insurance product, especially now, due to the increased risk of vulnerability, cyber attacks, data and identity theft. Companies will target newer age groups, such as Millennials and Gen Z, who traditionally tend to underestimate the importance of health insurance. Innovative products in insurance are not limited to health alone either. Hourly car insurance, female-only driver insurance that rewards good drivers with lower premiums, pet insurance, trip delay or cancellation insurance only for honeymoons (anyone who got married during the pandemic in will attest to the necessity) – innovation is the mantra for success.
During the pandemic, like the rest of the world, the insurance industry has also embraced the work-from-home model. However, working remotely comes with challenges, such as a fragmented workforce, the blurred boundaries between work hours and personal hours, mental fatigue, and the challenge of building a cohesive organizational culture with a distributed workforce. The hybrid work culture is the future. Don’t get me wrong, there is no return to a workplace from 9 a.m. to 6 p.m., five days a week.
While the physical demands of travel to the office and other locations and cities have decreased, employee time demands have increased and will continue to remain high. Or worse, in most cases, employees are left to fend for themselves and take responsibility for their mental health and well-being. The distance between the organization and the employees, and between the employees themselves, could have the serious consequence of the company distancing itself from the customers. Of all the changes, this one is the biggest and most impactful. How this is handled will have the greatest bearing on the future and success of an organization.
“The secret of change is to focus all your energy, not on fighting the old, but on building the new,” Socrates said. How we build the new will separate the wheat from the chaff and the winners from the rest. The next five years promise much drama and upheaval. Let’s take the best seats in the house and enjoy the show.
The author is the Managing Director and CEO of Future Generali India Insurance.
The thoughts and opinions shared here are those of the author.
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