Expertspeak: Customer will be more powerful

INSURANCE AS A subject matter has long been considered complex and difficult to understand from a customer’s point of view. I believe, in the coming years, a set of trends will collectively change the way insurance is consumed. The balance of power will shift in favour of the customer, as insurers shift from designing complex products to offering simple solutions; open architecture improves customer choice and customer experience is improved through effective use of technology.

Insurers would continue to serve customers with a bouquet of products. The products of the future, however, would not only be innovative and low cost from a consumer view point, but will be available online and via advisory platforms, to ensure that they fit in with a consumer’s financial planning requirements.

The RBI recently issued licenses to new payment banks, small finance banks, apart from the two new full-fledged banks, which have started operations. ‘On tap’ banking licenses may be feasible going forward. With the increasing role of these institutions in distributing insurance, a lot of the last mile challenge for insurance distribution to consumers is likely to be overcome. Also, one can expect many of these distributors operating like a super market, offering competitive insurance plans to policyholders. So, like other industries, customer choice is likely to improve.

The customer experience today is driven not by individual sectors but by the technology platforms, be it an Amazon, Google, Uber or Payment Wallets. It is only natural that life insurers will evolve in the coming years to try and be as close to these standards.

It would mean ‘One-Click’ purchase for customers, even as processes that add friction to the customer journey are eliminated through intelligent use of technology. This would mean adoption of e-KYC, financial underwriting using credit bureaus and fraud repositories, medical underwriting using health repositories, social media profiling and other such tools to improve customer experience. We have not yet reached a stage where health sensors and cognitive learning will aid decision making, but that trend would play out over a slightly longer term period. At the end of the day, life for policyholders would become much simpler, as insurers try and make the process seamless for them.

Also, the fact that the Government of India and the Irdai recognise the need to spread insurance coverage, its contribution to economic growth and its offer of enhanced security to policyholders through measures such as the ones which disallow insurers from rejecting claims after three years, I believe consumer trust and faith in life insurance will only grow. This will lead to a reinforcing cycle where more policyholders come in, reducing overall risk and hence better pricing and returns for customers.