Digital vs Traditional Insurer – Are The Differences Truly That Great?

ITC Asia 2021 recap - A panel of experts from AXA, Manulife, AIA Singapore, and Huawei, together with QBE Asia’s Chairman Michael Gourlay moderating at InsureTech Connect Asia, assessed the question from four perspectives – the customer’s view, distribution partners, the insurtech community, and the broader tech community.

The gap between how traditional insurers do things and the approach of digital insurers is usually assumed to be a large one, but are their approaches really so different?

A successful customer engagement strategy is threefold, relies on a wide-reach of distribution channels, backed up by credible service, and speed and efficiency throughout the customer journey, according to Melita Teo, Chief Customer and Digital Officer, AIA Singapore.

New technologies such as artificial intelligence (AI) are helping to better understand customers’ needs, helping insurers to innovate and create a more personalized customer experience, she suggested.

The pandemic circuit-breaker period provided the spur for regulators and traditional insurers to provide digital services, Teo suggested, when physical infrastructure, such as clinics for buying health or life insurance were inaccessible for all but pandemic-related services.

“We quickly put together a self-purchase platform our customers could use, enabled by our distribution forces, during that critical time of need. We were able to incept these policies almost instantly.” Teo said.

Claims digitization has also improved, she suggested, through digital submissions and AI. “This enabled customers to continue to register claims, and we now pay claims faster than in pre-Covid days,” she added.

Distribution partners are on the front line of the shift towards digital channels, Gourlay noted.

“The lines have become blurred,” said Sonali Verma, Head, Digital, CX and Innovation Regional Bancassurance, Manulife. “I’ve stopped trying to define what’s digital and what’s traditional. They may be digital solutions; they may be face-to-face; or they may be a combination of both – increasingly we’re seeing the latter being exercised by customers.”

Distribution partners need to collaborate across channels to provide a holistic customer experience, she suggested. “If they view it as siloed distribution play it will never be successful. Whether you’re a traditional insurer or a digital insurer, the customer has a need and you have to make it seamless for me as a customer,” she said.

Tomasz Kurczyk, Chief Transformation and Digital Officer, AXA, gave his impressions of the insurtech perspective. The overwhelming majority – about 95% – are engaged with the traditional market to provide it with digital solutions, he underlined.

“Digital insurers differentiate themselves by being nimble, agile, as well as providing better service quality by automation and product differentiation by a narrow focus,” said Kurczyk.

Writing low-margin business in a prolonged soft market cycle has honed such skills, he suggested.
“In Asia the successful digital insurers are those that understand the customer best,” he said.

Traditional insurers still enjoy enormous advantages of scale, he suggested, offset by problems of legacy systems, cultural barriers, and inefficient processes. And the lines between digital and traditional are blurred in part because so many insurtechs are working with traditional players.

For many insurtechs, this is where they can have the greatest impact, he suggested. “In insurtech, seven or eight years ago, it was all about eating your lunch, and now it is all about collaborating and creating value,” he added.

Providing a broader view from the tech giants, Shiwei Wu, Chief Technology Officer Huawei Cloud APAC, pointed out that the key differentiator between digital and traditional insurers is becoming less about technology.

“Technology is becoming generally available, and traditional insurers are making great efforts to adopt technologies and innovate,” he said.

Insurers are increasingly reliant on the Cloud, he noted, and AI technologies used for anti-fraud modeling, such as biometric identification, optical character recognition, and natural language processing, are widely used.

“What I see as being the key difference between a digital and traditional insurer is the way they operate,” said Wu. “To change the way insurance companies operate, how they design policies, and how they control risks with a data-driven approach, is difficult. It’s not just a technological transformation, it’s an organizational change – and it involves a lot of risks.”

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