I recently had the honour of participating as a panellist at the annual convention of the Mexican Association of Insurance Institutions (AMIS), addressing the topic of digital insurers. I will not summarise what was said there, but I would like to highlight some aspects of the digital revolution that impact customers, insurers, and distribution channels.
The fear of the new paradigm
We all know that the changes have been dizzying, as the speed of change has been facilitated by the pandemic, and that the various key players have taken accelerated action to bridge this period. Many transformations, especially those that have changed our customers’ expectations, are here to stay, so we are facing a paradigm shift.
This generates fear and frustration among managers and employees who feel out of the game because their processes, systems and staff are not aligned with digitalisation. Thus, the necessary leap is vertigo-inducing and finds some with advanced age, many scars on their backs and great uncertainty.
Not long ago, a bancassurance company decided to undertake the change, so it hired a Digital Transformation Manager, an accompanying team and a strategic consultancy firm that drew up a plan with large investments in the short term. Months later, everyone had to stop and think, because there was tremendous uncertainty about where it was all leading. The problem was solved after a two-pronged approach:
1. Think big but start small. A clear digital transformation strategy was adopted, with every step having well-defined objectives, targeted investments, and measurable results.
2. Learn on the run. Pilot tests with real, tangible actions were implemented, clear responsibilities were determined with limited impact on a specific part of the organisation, and a process of testing and learning was developed.
Today, that organisation not only knows how to manage change and what return to expect, but it has also overcome the fear of the new paradigm, which is something very important.
The need to structure the information well
It is useless to have the best e-commerce channel to position our products in the market with low acquisition costs or to have an excellent marketing automation solution that interacts perfectly with digital channels to maintain a smooth dialogue with our customers, if we are not able to combine all the digital information generated with each other and with the rest of the information available in the company.
In this sense, the digitalisation of Mexican insurers face two big barriers:
- The fragmentation of information
- The lack of an orderly process of creation of knowledge from this information.
To avoid digital transformation, some companies are tempted to spend more resources on manual data processing, but this way of processing data is slower, error-prone and costly, requiring skilled workers to perform mechanical tasks.
Opportunities to automate the capture, processing, understanding and availability of key information to decision-makers, both to the customer and to senior management, should therefore be seized.
In reviewing the case of a Life insurer, we found that a certain schizophrenia was developing with the annual renewal customer, as the Retention area was acting independently of the Renewal and Loyalty areas. There were customers who experienced high premium increases due to various aspects, such as leaps in age brackets; they requested cancellation, even though they had been recipients of loyalty actions carried out through digital channels, and when the Retention area acted, they obtained discounts almost automatically.
The product itself was competitive in price, but the technical adjustments originated in Renewal died in Retention and the Loyalty actions were not successful. So, a holistic view of the customers was built, which allowed to understand both the characteristics of the customers and the interactions planned and carried out with them. This helped the different areas to coordinate their actions, concentrating loyalty efforts on potential churners, improving and staggering the retention argument and considering the impact of the set of actions on the customer so that the price adjustment was adapted to the objective pursued.
Our likelihood of successfully embracing the digital revolution will increase if we combat our fears, through realistic long-term planning that delivers short-term results and learning, and if we increase the integration of information, to avoid silos and business schizophrenia in the face of the customer.
I will leave for another occasion two background aspects that are also important in digitisation:
- The role of the agent
- The opportunity affinities mean