Indonesia

Gilbert Naibaho

The insurance sector has been known as one of the most traditional and conservative industries for many years and among the last industries to do digital transformation, especially prior to covid era. However, we have seen Covid has finally made no exclusion to insurance sector in terms of accelerating the adoption of technology. Some policies imposed by countries during covid make insurer had no choice but to do digital transformation.

As we are entering a post-covid era where market has changed significantly, insurers are facing a situation where the way customers perceived and value insurance products and services no longer the same. Customer nowadays not only looking for a good insurance product provided by reputable insurer with sound and strong financial support, instead customer starting to treat insurance products and services as comodity with expectation of seamless and convenient customer journey from onboarding until claim. No doubt that insurer should continue to evolve with digital transformation, no longer to overcome restrictions due to covid, this time it is needed to deal with current and future changing customer.

There are a number of benefits that digital transformation can bring to the insurance industry:

1. Customer Retention

Digital technology can help insurer in understanding their customer through data analytics where insurer will be able to develop a more tailored service for their existing customer that will contribute to customer satisfaction and customer loyalty. Data capability will also make insurer able to deliver more personalize touch with its customers and able to maximizing multi-channel approach to provide better customer experience.

2. Customer Acquisition

Data technology will contribute to streamlining onboarding process, make a seamless experience from customer when it comes to product offering, application process, policy issuances and premium payment. With digital technology, insurer even can offer a self-service for its customer in getting quotation and purchasing anywhere and anytime.

3. Risk Management

Since insurance business is paying loss, acquiring new customer also meaning accepting new risk for insurer. Therefore, risk management capability is paramount to insurance business. Digital transformation can be a key in improving risk management capability. With the help of data analytic and Artificial Intelligence (AI), insurer will be able to exercise risk and propose a risk improvement in order to fulfil prudent principles in insurance. We have seen how Optical Character Recognition (OCR) being used in insurance business nowadays, however we believe more technology will come in helping insurer do its role as risk management and risk selection.

“Customers nowadays are not only looking for a good insurance product provided by a reputable insurer with sound and strong financial support, but instead they are also starting to treat insurance products and services as commodities with the expectation of a seamless and convenient customer journey from onboarding until claim ”

4. Processing Automation

The insurance business involved a heavy administration work and operation, some of them are repetitive work from policy issuance and claims payment. Robotic Processing Automation (RPA) can be a solution in handling repetitive work to make the process become faster and more accurate. With the help of Machine Learning, insurer also can develop a system to do underwriting process, especially for simple but frequent risk as well as claim processing.

5. Fraud Detection

One of the issues facing by insurer for decades is how to deal with fraud cases and fraud prevention. Development in economy and technology at the same time also increase complexity of fraud act, including in insurance. With the help of digital technology and data analytic, insurer can develop Artificial Intelligence (AI) to detect fraud as well as selecting good customer.

6. Product Innovation

In the era of changing customer behavior, offering a product with the concept of one-size-fit-all is no longer relevant. Product need to be tailored to create more value for every customer. We have seen some implementation of Internet of Things to create new opportunity where insurer can develop product tailored to each customer, such as pay as you drive and behavior-based insurance in motor insurance product. Parametric insurance also an example of how technology boost the product innovation in insurance.

With benefits of digital transformation in insurance sector above, very clear that despite being more traditional and slow-moving than some other industries, the insurance sector should continue to innovate by implementing digital transformation, especially in overcoming the post-covid situation. I believe that there is no option of not doing digital transformation for insurer to survive in this era of changing market. However, Insurer also need to be aware of both the challenges and opportunities that exist in the implementation. Insurer need to find the best technology fit to its business.