Digitising Recurring Journey in Insurance
Collection is the most important parameter in the insurance industry. However, problems like customer segmentations and channel behaviour make the entire concept of collection and how to productively run it becomes an enormous challenge within the industry. To tackle this, the recurring and the digital flows of recurring is what gets us the stickiness.
Let’s know more about these challenges and how we can tackle it in the insurance sector.
But first, let’s meet the industry magnates who have got their minds dug deep into the insurance industry; the ones who’ve been weaving a seamless & successful insurance business.
HELLO INDUSTRY EXPERTS
- Aditya Chatterjee, Vice President | Enterprise Sales, Ingenico ePayments India
- Gaurav Sadana, Vice President & Head | Central Retention and Customer Experience, Bajaj Allianz Life Insurance Company
- Ramakrishnan Ramamurthy, Executive Vice President | Service Delivery, Ingenico ePayments India
- Manish Kumar Sachdeva, Senior Vice President & Head | Digital Products, Max Life Insurance Company Ltd.
- Ramu Gudimetla, Vice President | Claims, SBI Life Insurance
INSURANCE AND RECURRING PAYMENTS GO HAND IN HAND
We all know, digitizing every organization has become a necessity today.
The insurance sector is a long-term contract or a product by nature. It requires targeted marketing and a ring-fencing strategy starting from the organizations to the customers for a better retention and a longer stickiness.
In the Recurring payments ecosystem, insurance looks at it in two ways-
- Business prompted / Business-led Recurring payment methods
- Customer Led Recurring Payment methods
Business Led Recurring Payment is when the company prompts insurance to a customer. It has two funding options at the backend i.e pay via credit card or link it with the bank account via NACH.
Customer Led Recurring Payments is when the customers themselves hop on to a recurring payment method. It is still evolving to be picked up. Example: Bank applications.
To summarize, insurers are primarily looking at the business prompted mechanisms because that gives us a better control in terms of driving customer to the payments.
SEAMLESS AND RELIABLE USER EXPERIENCE
(Manish Kumar Sachdeva)
Recurring payment for the insurance industry is extremely important. To put it in simple terms, it is a push business more than a pull business. Because agents solicit, advocate, and sell this business. Seldom do the customers come hunting for insurance.
To create a constant touchpoint with the customer and retain them for a longer period of time, Customer Experience plays a major role. Seamless interaction and customer service enhance one’s experience and reminiscence.
COVID is pushing people to a digital space rapidly, which has led to increased used in Credit Cards than net banking. Credit Cards have become the best optimal solution because of its standing instructions, reliability and one-click journey. This has given a higher bitrate and success rate in this sector.
Why you ask? CUSTOMER EXPERIENCE and RELIABILITY we say.
The seamless payment journey of the customer is what attracts them to opt for this payment method.
Also, reliability plays an important role that enhances the longevity of customers. There are high chances of error rates, backend nuances, tedious action of adding the details in Net Banking. Therefore, people lean towards a better and a reliable user experience.
ENHANCING CUSTOMER EXPERIENCE
“If there is a lack of conviction, there is a lack of commitment. That in itself influences persistency.”
Indian demographic is vast and varied. And each tier has a different behavioural experience. For instance, tier 1 & tier 2 are more financially enabled. Therefore, for these customers, the company needs to create a bouquet of experience they could choose from and take the process ahead. For tier 3, the company needs to know what segments it is touching. In essence, for the rural audience the company could create an experience using Aadhar and physical biometrics; and ensure consistency on authorization rather than registration perspective.
Therefore, a blend of experience is paramount to cater to different sets of audiences.
“Persistency has been the most critical parameter that insurers have gauged on.”
The total composition of any insurers comprises of 2/3rd of renewal premium rather than the new policies which are sold. Therefore, the ability to collect premiums with the right experience at all touchpoints helps maintain the persistency. It is also important to give a wide array of products to choose from. Especially for the new customers who sees a wide range of payment methods to choose from, it instils confidence in the company. Which drives persistency in the long run.
(Manish Kumar Sachdeva)
The digital payment channel is widely being used by audiences today. Majorly being a non-assisted channel, it can also be classified as semi-assisted channel because many companies like policy bazaar have call-centres that solve queries and guide them through the payment process.
In semi-assisted, people end up paying premium & register for NACH or we the organization nudges them towards a more stable option like CCSI.
70% - 75% of people who are assisted, go through the process and successfully register through ENACH.
Today, most of the insurance companies stick to multiple distribution network environment. They don’t stick one distribution channel to sell insurance. Agents act as independent advisors to the customers that assisted them to buy an insurance. Pre-dominantly, the agency has been a large assisted sourcing channel for the insurers. Traditionally, in India, that is how insurance has been sold since inception.
In Post COVID era, if selling insurance using a recurring payment option (which is the need of the hour), it has to be seamless. Whether it is assisted or non-assisted, one can’t have agents to merely focus on recurring payments along with selling insurance. It has to be a part of the journey and in a seamless fashion, for both - the distributor and the customer.
The agencies are an independent body and they are not bound by the business terms. Therefore, it is important for the company to make the process simple for them as well. There has to be an equal retention strategy for the agents.
Insurance companies are backed by banking partners. One advantage of Banca channel is that they already know their client in-dept. Right from their salary, credits and debits, savings, etc.
It has always been a challenge to handle physical premium collection. Therefore, more custom channels like Banca have been introduced to get the people on board, collect premiums and retain them in a seamless manner. It remains a major channel where it gets 80% to 85% recurring payments where the insurance policies have been sold through a bank.
In this COVID scenario, there is a need to tweak the process because there is less or no physical presence where a customer walks in a bank. Therefore, it has to be suited as a remotely assisted channel to some extent.
SCENARIOS THAT AFFECT CHANNELS
Customer Present Scenario
- Physically present
- Higher solicitation
Customer Not Present Scenario
- Mainly based on mobile-led and smartphone led
- More progressive
What are the innovations the Insurance Industry requires?
Insurance Industry 5 Years from now
- More things will be moving towards ‘one-click journey’
- More payment options will be available
- More transparency
- World-class journey
- Intelligence and dynamic operations