In chaos theory, the butterfly effect is the idea that small things can have a non-linear impact on a complex system. The flapping of a butterfly's wings in the Amazonian jungle, for instance, could create tiny changes in the atmosphere that lead to a tornado in Texas. Just like the minuscule yet deadly novel coronavirus in 2019 triggered a storm of changes that swept across all sectors in the world, including the insurance industry.
Analysing risks and planning for a crisis is what the insurance business is about. While the pandemic has wreaked havoc on the industry, it has done better than most other. The industry has changed structurally, mostly for the better. The changes, forced into the industry in a tearing hurry, have proved to be sticky and durable. And whether intended on not, have put the customer firmly at the centre. Let’s dive in.
Consider this: India has 1.18 billion mobile connections, 700 million Internet users, 600 million smartphones, and a population that has the highest data consumption in the world—about 12 GB per person a month (National Health Authority of India, 2021). Today, being digitally versatile is central to every decision and every interaction made by both individuals and companies. The insurance industry was among the first to recognise this and made the best possible use of technology, investing early in collaborative tools like social media, WhatsApp, Zoom, Microsoft Teams, and so on—as well as digital technology assets such as mobile apps for insurance, chatbots, and tools that allow processes like faster KYC verification and onboarding, automated underwriting, virtual claims adjusting, and so on. Digital technology that is cheap, scalable, functional, and replicable is here to stay. Here’s a pro tip: Watch out for the seismic impact of Artificial Intelligence (AI) on all parts of the insurance value chain.
Choice is nice
A marked increase in awareness about health during the pandemic has resulted in an uptick 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 customers today demand customised, personalised, and intuitive policies that were not covered by companies earlier. For example, policies specially designed for Covid-19, mental health issues, certain types of cancer, seasonal illnesses such as dengue, malaria, or even a cover for those with ‘adverse’ medical history who were denied cover earlier. As customer demands and expectations continue to change, insurers will have to find a way to adapt their business model to meet new demands and win trust.
Innovate or perish
During the pandemic, the changing consumer behaviour spurred companies to reimagine and build new product strategies to offer relevant products that sustain customer interest. This is a trend that will continue for the foreseeable future and companies that adopt a mix of hyper-segmentation and innovation are the ones that will emerge stronger than others.
For instance, an innovative cyber insurance product, especially now, due to the increased risk of vulnerability, cyberattacks, 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 restricted to just health either. Hourly car insurance, women-only driver’s insurance that rewards good drivers with lower premiums, pet insurance, trip delay or cancellation insurance just for honeymoons (anyone who tied the knot during the pandemic will vouch for the need for this)—innovation is the mantra for success.
During the pandemic, like the rest of the world, the insurance industry too adopted the work-from-home model. However, remote working comes with challenges, such as a fragmented workforce, the blurred lines between working and personal hours, mental fatigue, and the challenge of building a cohesive organisational culture with a distributed workforce. Hybrid work culture is the future. Make no mistake, there is no going back to a 9 AM to 6 PM, five-days-a-week workplace.
While the physical demands of travel to the office and other locations and cities have diminished, the demands on the employee's time have increased and will continue to stay elevated. Or worse, in most cases, employees have to fend for themselves and take responsibility for their sanity and well-being. Distance between the organisation and employees, and between employees themselves, could lead to the serious consequence of the company distancing itself from the customers. Of all the changes, this is the most significant and impactful one. How this is dealt with will have the biggest bearing on the future and success of an organisation.
“The secret of change is to focus all of your energy, not on fighting the old, but on building the new,” said Socrates. How we build the new will separate the wheat from the chaff and the winners from the also-rans.The next five years promise plenty of drama and upheaval. Let's grab the best seats in the house and enjoy the show.
The author is the Managing Director & CEO of Future Generali India Insurance.
The thoughts and opinions shared here are of the author.
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