A tough sell: the case for improved customer experience in Asia's life insurance industry

| 26 Oct 2020

The sand is shifting beneath the feet of insurers in Asia at the moment. Alby van Wyk, the Executive Vice President in Asia at Munich Re Automation Solutions, makes the case for improved customer experience in the region's life insurance industry.

First, their customer demographic is changing, with the growth of the middle-class and the generational transfer of wealth.

Second, expectations of customer experience (CX) are rapidly evolving, with the rise of technology and fast-paced social media like Twitter and TikTok seeing attention spans shorten and an ‘on-demand’ mentality take hold.

With so much competition in the market already, and more set to come, finding a way of differentiating customer experience offerings will make all the difference.

While the prospect of change or ‘digital innovation’ can be daunting, the roadmap to success for insurers is fairly simple.

It’s founded on two key objectives: to convince customers of the need for life insurance in the first place, and to convince these potential customers that what is being offered to them is better than what competitors can offer.

The solution? A reduction of friction at all costs.

Getting them through the door

Let’s start with convincing customers of the need for life insurance. Despite new interest generated by the growing middle class and millennial populations, life insurance is still far from topping consumers’ wish lists.

In fact, life insurance remains by its very nature something that must be sold, not bought, largely due to the fact that it is easy to put off, inherently for the benefit of others, and has some uncomfortable associations with one’s own mortality.

To put it bluntly, no one wakes up in the morning and thinks ‘I have to buy life insurance’. It’s a difficult purchase, often linked to specific life events, and one usually only done once or twice in a lifetime.

Therefore, the selling process is essential. For a long time, this was predominantly handled by high-energy, go-getter insurance agents, meaning the insurer’s focus was on supporting the agent to sell.

The digital evolution of the last decade has rendered this face-to-face methodology less appealing, and Covid-19 has further reinforced this transition.

With agents unable to sell, face-to-face, to the end customer, you can no longer rely on your ace salesman to cajole customers through the door. Instead, you’re targeting a very much un-captivated audience, with a million different distractions to contend with. To combat this, you have to create the most frictionless pathway possible for them online.

Put yourself in the shoes of the modern customer. Say they are scrolling through Facebook and they see an advertisement for a watch. They don’t need a new watch. Their existing watch is perfectly fine. But they click on it out of curiosity. Within two more clicks, they’re at the point of checkout and their details, which are saved to their phone, fill out automatically. They hit enter. Within 2 minutes of seeing the watch, it’s on its way to their house. If it had taken longer – if they had had to select a style, fill out lengthy forms, search for their credit card – they would have dropped off and gone back to scrolling Facebook.

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This is because the amount of friction that a consumer tolerates is directly linked to how valuable they perceive a product or service to be.

While arguably much more important than a new watch, a lot of people do not immediately see the value in life insurance, or at least they don’t see the urgency in buying it. Getting customers through the door quickly at any sign of interest is paramount. How does one achieve this? By making friction nearly unperceivable.

The first and most fundamental step to achieving this is actually designing the door – or rather the two doors – you want to get your customers through.

At the moment, most insurers give every applicant the same one door to knock on; that is, they receive an identical, one-size-fits-all application, no matter their age or health status. This means a 30-something, non-smoker with some, but not material health conditions is going through a similar arduous process as a 50-something smoker with high cholesterol.

By creating a predictive model to do an initial assessment of applicants, insurers can offer applicants a ‘two-door’ tailored approach, segmenting insurance applicants at point-of-contact into those who can be streamlined and easily accepted upfront, and those from whom more information is required.

By dramatically cutting down speed-to-decision, ‘two-door’ automated underwriting software has already seen a massive reduction in not-proceeded-with (NPW) applications.

Getting customers through the door first

The second part of staying afloat in the Asian insurance market revolves around a topic of perhaps more interest to insurers and their agents: convincing customers that their offering is better than their competitors, and maintaining that edge.

At the moment, most insurers in Asia have undertaken some level of necessary digitalisation, moving from paper to digital applications and automating various back office processes.

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However, it’s largely been a like-for-like approach; what we call the ‘online-ification’ of centuries-old processes. This approach fails to acknowledge the tech-savvy new customers, most of whom have more or less leapfrogged computer hardware to become digital mobile native.

To gain a competitive advantage, insurers must learn to ‘speak the language’ of the digital native and fully embrace the digital revolution. That is, catering to how they live their everyday lives by making the purchase of life insurance literally as easy as buying that watch on Facebook.

With the right technology, insurers can, for example, now facilitate a process whereby a short, dynamic questionnaire is linked directly to their prospective customer’s messaging platform of choice.

The applicant can then answer questions in their own time with a flick of their thumb, using an application they are familiar with. These answers can then be sent to a digital automated underwriting service in the Cloud for a real-time underwriting decision. Because the input and output remain the same, insurers would be able to very rapidly deploy this Cloud-based service with no big IT project.

Do or die

Covid-19 has finally put the pressure on insurers to match customers’ digital desires, with digital transformation roadmaps being condensed into “what can be achieved next quarter?”. 

It's all about the ironing out, what behavioural scientists refer to as "the messy middle" - the complex space between the buy trigger and ultimate purchase where customers are won and lost.

As Generation TikTok rises through the ranks and we simultaneously face a ‘Covid normal’ future, the need for reduced friction in life insurance will only increase.

Only those insurers that deploy a streamlined, digital-native approach to underwriting will match the needs and expectations of the 2020 consumer and come out on top.


Alby van Wyk is Executive Vice President in Asia at Munich Re Automation Solutions. He has over 20 years of experience in financial services.



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