Abstract:
In the recent times, we are compelledto nod our head to the fact that the concept of insurance has remain unchanged overyears from its origin, but the other aspects which are associated withinsurance businesses are continuously changing day-by-day for the betterment ofindustry. Even there are certain testimonials to confirm the ongoing paradigmshift in industry includes gradual increase in number of insurance companies,growing customer demands, improvisation in regulations by the authority,government’s strategic move towards the tax exemption for investment ininsurance, promotions in daily newspapers and branding advertisem*nts intelevisions to create awareness, launch of innovative products to target explicitcustomer segments and surge in the foreign direct investment (FDI) limit to 49%,etc. Whereas on the other hand in strategic viewpoint, the intricacy involvedin running the successful operation is not by capitalizing consolidatedapproach towards the independent and vital business towers. Every such divisionshas its own unique strategic move to conquest over the existing industrychallenges like adhering to regulations, practicing the cost advantageousmodel, competing with contemporaries, defining quality measures, directing thebusiness towards profitability, ensuring the customer protection andintensifying the business hubs. While looking at the current market, there arenumerous operational frameworks, strategic and tactical practices are adoptedby the industry to speed up the growth and progress towards accomplishing thebreak-even. During this pace of evolution, to alarm the insurance companies, butthis time fortunately not the new regulation has been passed by the regulatory,then again unfortunately its customers demand which is considered as moreauthoritative than the regulatory. Obviously, which made all the insurancecompanies to re-arrange their priority list and urge towards to understand thedigital world much better and to implement as soon as possible becauseconsumers are the so called supreme power and axis of the business wheel. Digitalizationis the latest mantra which has been uttered by lot of people in the industryand believe that this tactic will permit the segment to fast track the growthby means of customer acquisition, servicing, and retention. Nevertheless, thisinitiative may threaten the existing distribution frameworks, but complying andadopting to this latest methodology with their hands-on business familiaritywill enable them to lead the market and empower to infiltrate in larger targetsegments.
Introduction:
The gist in running thesuccessful business is not that the entityhas never encountered any challenges and obstacles during its operations, butthey have equipped themselves with a futuristic vison, strategy, proactive approach,and solution in place to overcome it. So, it’s recommended for any organizationthat eyeing into an initiative or transformation program that has to set-up thestage for its implementation to accomplish the anticipated outcome. It’s alsovital that for any transition, the principal attention must be the objectivebehind the inevitability of need, approval from the board members, adequate budgetprovision and resources capability to carry out the successful implementation. Similarly,in any organization, it’s well-known that the management is holding theresponsibility to make numerous key decisions on multiple challenges which are eruptingon regular intervals. However, they also have a choice to delegate theactionable items towards the group of key stakeholders to collaborate,understand and acquire the comprehensive awareness on a subject which the entityis keen to enforce in routine process. Its prudent decision that the keystakeholders must involve in productive brainstorming discussions that shouldcomply with the principle of five Ws (What, Why, Where, Who and When) and 1H(How). In line with digitalization perspective, the preliminary analysisaddressed must be comprising of
- Whatis digital strategy?
- Whyit is required?
- Whereit will get effected?
- Whowill outline the digital strategy?
- Whenit has to get implemented?
- Howit will be beneficial to the organization?
At present, the phase of digitalizationin India is as similar to the era of mobile phones trend that we had during theearly 21st century. But thejaw-dropping latest statistic is that “India holds 3rd position inthe smart phone market and by terrific technological drive, as it will surpassUSA to become world’s 2nd largest smartphone market with 200 million+users by 2016”[1]. Apparently, this is the vibrant evidence thatmakes all other industries including the insurance companies to gear up fordigitalization in terms of marketing, communication, service, sales, marketresearch and product development. As a reasonably innovative model, there is alsoa necessity to collaborate amongst the technological and operationalstakeholders to define the effective strategy and to take it forward. Sinceit’s the niche and new trend, the phase-wised approach will help theorganization to get in to digital world smoothly. The timely decision from themanagement and clarity in cascading the wide-ranging stakeholder will permitthe employees to co-operate and contribute towards the digital journey. Thephase wise digital strategy has to be proposed on the basis of industry needand areas of concern which may deprive the speculated new businessopportunities includes email, websites and social networks or e-payment, onlineregistrations and mobility. To certain extent, the concept of digitizationdwells in the hands of insurance companies by looking at it as an opportunityto progress or threatening trend or contemporary’s coercion.
Digital strategy
Digital strategy is the major componentof an implementation roadmap for defining the overall digital approach,including what, when and how we will achieve the desired results. It is athought process which helps in identifying the requirements and helps incharting a clear plan for digital journey. It is also referred as the crucialphase in an organizations’ s digital way to ascertain its vision, objectives,opportunities and associated activities like readiness for implementation, accessibilityof skillset, evaluating the necessity for improvisation, budgeting,identification of key stakeholders, defining the scope of work, finalizing theapproach and framework, proposing high level schedule, effort estimation, governancemodel, risk mitigation, recommendation, deliverables and value adds, etc. Thiswill be the critical portion for the entity because of its intention to maximizethe organization’s benefits and accomplish the desired outcomes by implementingdigitalization. Correspondingly, digitalization approach also requiresreciprocal support from customer-side which includes customer intelligence andcollaboration. But the substantial element and pure advantage of adopting to thedigital distribution is principally because of most of target customers arealready well aware about the technology and no additional training or awarenessis necessary from the insurer or regulator end which will considerably boost upthe new business and instantaneous go to market to get achieved. The digitalstrategy document is the key document required by the digital implementationteam and which defines the success of the overall program. Organization’s creatingthe strategy with following focus points based on its expertise and experiencefor implementation will ensure the smooth transition.
- Effective implementation plan adhering to the planned schedules
- Pragmatic approach by considering the multiple dependencies
- Identification of all known risks, issues, dependencies and mitigation plans
- Contingency planning and create back up plans for all key dependencies
- Identification of right tools and resources
- Optimization of resources, tools and technologies with clear commercial advantage
- Collaboration model considering the multiple stakeholders and applications including upstream and downstream dependencies.
- Reusability – Model for creation of reusable assets by having a long term plan
- Enabling effective Return on investment (ROI)
- Governance Model with clearly defined RACI matrix and escalation model
- Entry and Exit criteria - Definition of Quality gates with committed SLAs
- Regulatory and compliance requirements if any
- Assumptions and other key factor specific to the implementation and application landscape
Why it draws industry's instant attention
At the outset, the insurance industryis vigorously marching towards this revolution is not just because they wantedto diversify their distribution channel or upgrade their existing systemarchitecture but to a great extent, insurers are imposed into this digital transformationdue to growing customer expectations and demands. Virtually, internet of things(IOT) has become an integral part of day-to-day life for majority of urban andnominal rural population, often it turn into trend that people surfs theinformation over internet to find the pros and cons about the product beforethey buy it for their usage. Undeniably, many customers even prefer to carryout the end-to-end business transactions through the online assets to avoidstepping out from their residence. Starting from sharing their personal informationand thoughts through Facebook, twitter, etc. and their professional experiencethrough naukri, LinkedIn and carrying out all the day-to-day activities likebanking, payment of mobile bills, DTH, internet bills, electricity bills,groceries, tickets booking, tour plans, insurance premiums, hospitalappointment, medicine purchase, etc. the whole lot got in to digital platformwhich clearly hints the insurance industry uttering its high time for them todeep dive in to this segment for customer acquisition and retention. Inaddition to that, the insurance companies can leverage customer’s existing digitalawareness by targeting the niche segment with innovative products accordinglyand intensify the servicing arena with the objective of retaining existinginsureds. As well, the industry experts has to envisage the challenges that mayarise due to regulatory compliance like personal data protection, data privacy,prevention of information etc. However, diversifying the channel to the digitaldistribution arena will be not “one and the same”, but best of all. So, the managementhas to take a wise decision to create the provision for IT infrastructure,because it’s very tough and competitive to keep up with the pace of progress indigital world except if the organization has viable capital, ready to deployskill-set, mitigation plans, back-up for business continuity and compatible systemarchitecture in place which supports the integration with external downstreamor upstream systems.
Decisive authority must be part ofkey stakeholders
The core of any successful transformation is dependingon the identification of key stakeholders for its implementation. Also, it’sessential that the team of members to understand and influence what, really, isthe significance from digital that has to be accomplished. The crew’s primary accountabilitymust be predicting the challenges, laying down the prospective benefits anddisadvantages of digital. Bringing the flair to the existing business frameworkwill impact many diverse functions operating across the organization. In linewith digital distribution initiative, it has to get supported by sales andmarketing, branch and hub operations, finance and information technologydivision etc. It’s advisable to have a key decision making authority to takepart in digital stakeholder’s forum which will help the group to control andmonitor the wide-ranging departments. Having the C-level executives in thepanel will benefit the organization includes
- It’s universally knownfact that the final approval has to get vetted by senior management before theexecution and sometimes it may also get delayed due to non-availability ofindividual or he/she might be choked up with some other priority bottlenecks.
- Under top management’spurview, other stakeholders will own their responsibility
- Avoids blame game
- Enables completion ofwork within turnaround time and
- Permit one-stopsolution
- Empower guidance and supervision
- Evaluate dependency and budget constrain.
- Evades the last minuterush
- Allows to compete withthe contemporaries on time.
- Finally, having the keyperson in the strategic panel will smoothen the decision making requirements.
Digital Strategy – The Ideal wayand its components
In earlier times, new tools and techniques got introduced into a market occasionally but the current trend is like, there are numerous tools and techniques are getting tossed regularly somewhere around the world. Moreover, the usage and awareness on technology is increased multifold amongst the people in community which drags the insurance companies to improvise the existing business model with new distribution channels like digitalization. Followed by the spark of going ahead with the most obligatory transformation process, the organization’s has to emphasis on the strategy in place to envisage the end to end project information. In market, there are abundant methods available to experiment digital way, however all the diverse approaches will chart the fundamental indicators to attain at the common goal which includes During the strategy design, on top of expert’s guidance, it also has to rationalize other elements such as stakeholder’s convenience, existing business framework’s capability and organization’s perception from customer standpoint. The best part in framing the effective digital will itself pave the way towards successful implementation and assists in discharging organization’s stress from its digital journey. Post outlining the digital strategy, it’s just all about coordinating and integrating the necessary systems to ensure the logical flow of business data. An example to understand the components covered while designing the digital strategy document encompasses.
The cautious effort must be taken during the strategy phase on datausage. Being the second most populous country in the world with over 1.27billion people – organizations will end up with so much of data available. So,the strategy must be framed deliberately in such a way to chase and evaluateonly an actionable, meaningful and useful data. Or else, the junk dataconsumption will results in unreasonable effort spend and stuffing of databasespace without any substantial usage. Having flexible and adaptable frameworkwith effective strategy will acts as a key driver for long term success in anyimplementation roadmap. Furthermore, the entity has to build the seamlessintegration between existing business framework and digitalization enterprise,so by that it can leverage real-time customer needs, their responsiveness anddata analytics. The decision to implement digital may vary between the playersbased on their urge towards it and depends on financial viability. The industryplayers who wants to feed the customer demands on time will possess a long termapproach towards the digitalization and tends to diversify their company’sbrand, irrespective of channel. Similarly, few players may opt to attack thetransformation through stand-alone initiatives and collating the end results withthe existing business model. This approach can allow them to sustain forshort-term but not support them to yield the expected results in long-run when thedivisions operatesin silos.
Anexample for digital framework has been illustrated below to understand theend-to-end flow of key activities which needs to be carried out during the transformation.
Being the intangible product, life insurance segment is constantly facing manychallenges during its marketing and promotion phase. To get relived from thispressure the whole industry is eyeing to find a potential distribution method whichwill ease the life of life insurance industry. Fortunately, the buzz created bydigital distribution made the entire industry to equip themselves to fly withthe additional distribution wing to infiltrate into the second most crowdedcountry in the world. Moreover, the best part in making investment in digitaldistribution is that the ongoing trend has been instigated by customer demand.So, the risk of getting failure followed by implementation is certainly limitedwhen compared to any new initiatives has been taken by insurance companiesthemselves to pitch into the market. The additional benefit of digitalization iswhich will serve many divisions across the organization includes the marketing& communications, customer services, operations, sales, research anddevelopments, etc. To begin with the new digital initiative, it’s recommendedto initiate the pilot approach to start with and slowly can get in tofull-fledged digital environment to service better for end customers. Listedbelow are the admirable components which can be made available in the existingbusiness framework to satisfy the customer demands.
- Website
- Search engine optimization (SEO)
- Search engine marketing (SEM)
- Competitor website analysis
- Newsletters / Blogs / Subscriptions
- Online 24/7 chat through chatbots
- E-mail campaigns
- Feedback / suggestion forms
- Remarketing
- Search Engine Marketing
- Google Ads through different types of Campaigns
- Search Ads
- Display Ads
- Video Ads
- Shopping Ads
- App Ads
- Smart Ads
- Discovery Ads
- Influencer Marketing
Conversion Rate Optimization
Content Strategy
- Ecommerce for customers -Self Servicing Portal
- Request for quotation
- Consulting on appropriate coverage based on individual needs
- Access to view illustration document comprising graphs, analytics, etc.,
- Buying policy online
- Payment of premium
- Endorsem*nt request
- Claim intimation
- Policy certificate & premium receipt download
- Accumulated bonus information - for with profit policies
- Renewal remainders
- Tracking endorsem*nt and claim request
- Updates on launched products, regulatory information
- Search nearest branch
- Escalation matrix
- Platform for Agents & Brokers - Self Servicing Portals
- Request for quotation for their customers
- Illustration document & quote comparison facility
- List of servicing customers
- Details of blocked customers and declined lives database (DLD)
- Scheduled appointments
- Customer's anniversary and birthday remainders - to build customer Rapport
- Conversion ratio - new business & Renewals
- Trend analysis - location, customer segment, product-wise, etc.,
- Claims-loss ratio
- Commission/brokerage summary and detailed statement
- Summary and details of commission settled and pending
- Aging analysis
- Statement of Accounts (SOA)
- Raising & tracking customer's endorsem*nt & claim intimation request on behalf of customers
- Payment of premium
- Download customer's policy certificate & premium receipts
- Timely update on renewals to follow up with customers
- Updates on launched products, regulatory information
- Training and marketing material on products
- Contest promotion & eligibility
- Platformfor Employees -Front End Portal to work on the go
- Reports on customer leads - mobile no & e-mail id
- Creating customer login and maintenance
- Trend analysis - branch wise, location wise, customer segment, product-wise, agent/broker wise
- Cancellation & blocking of access
- Uploading the details of training material, contest, launching product and regulatory information
- Cross verifying the policy details with core system
- Validating the status of raised endorsem*nt & claims
- Coordinating with the finance team on collected premium through e-commerce
- Platformfor Third party administrators-Self Servicing Portal
- To raise pre-authorization
- Upload and compare the price list amongst the providers
- Retrieving the policy details
- Upload of documents - specific to claims
- Reports on pending and settled payments
- Claim-loss ratio summary - specific to customers, providers, location, branch, etc.
- Updating& tracking of claim status and details
- Social networkpage
- WhatsApp/Viber/Platform/Line - Country Specific
- YouTube
- Online Reputation Management
- Polls, Surveys, rating and reviews
- Customer forums / community
- Mobility
- Mobile self-service Apps
- SMS campaigns
- Responsive Mobile websites
- Mobile promotions/ advertisem*nts
- Awareness through games
- Payment remainders
- Cold calling through interactive voice response (IVR)
How it will bolster the business
Undeniably,niche skill-set is mandatory to strategize and implement the digitaldistribution, but the benefit out of it can be enjoyed by all the internal andexternal stakeholders of the organization.This new practice in distribution will permit the insurance companies toconnect with its customer through online assets will absolutely enhance thecustomer experience, increase the sales, speed up the go to market and reducethe cost to serve. Post the successful implementation of digital, organization’swill certainly recognize few benefits which are listed below as samples interms of new business acquisition, policy servicing and customer retention.
Conclusion
The most recent buzz and demand on digitalizationis adding one more feather on customer centricity’s cap. It’s prudent enough toprove the fact that even in the existence of lawful regulatory, numerousinsurance companies, breathtaking infrastructure, skilled resources, multipledistribution channels, well developed service-oriented architected (SOA)systems are in the current business model, still the industries overall bridleis in the hands of people. All organizations including insurance industry hasto make themselves flexible and adaptable to satisfy the demands andexpectations of the consumers to sustain in long standing business. Besides, the ever growing technology hasbecome the part of consumer’s normal life. So, the long awaiting opportunityhas been provided to the insurance companies to become the part of theirroutine. The alarming truth is that theinsurance companies are not in the position to decide whether to go ahead withthe digital way or not, because the customers have already started preferringto do the business through online assets in various modes. Therefore, it’s a wisedecision for any organization to equip themselves with technology to servicethe customers appropriately. Last butnot the least, while implementing the initiative, the digital stakeholders mustalso keep on their back of mind about the impacts of regulations such as thepersonal data (Protection) bill (2013), data protection and the IT act, India andsecurity of the data stored in system (Ex. Encryptions, secure socket layers,etc.) and have a duty to improvise the operation business process by baggingcustomer’s affirmation for volunteering to disclose the personal information. [1] http://trak.in/tags/business/2014/12/23/smartphone-users-india-global-growth-chart/References:
