The COVID-19 pandemic has altered many aspects of modern life, increasing reliance on digital technologies and forcing organisations to adopt remote and hybrid work. Consumer behaviour has also been altered for many industries, and insurance is no exception.
To know more about how the pandemic has shaped the behaviour of insurance consumers in Singapore, Insurance Business caught up with Peter Tay (pictured above), chief digital officer of NTUC Income.
According to Tay, the pandemic has generated greater interest in insurance as consumers have become more aware that insurance is not an option but a necessity.
“Consumers are becoming more comfortable engaging with and purchasing insurance digitally,” Tay said. “We leveraged largely our Remote Customer Engagement platform during the pandemic and today, it continues to be the preferred mode of engagement by some customers.”
The rise in popularity of e-commerce platforms during the pandemic, has led to higher expectations of insurers from their customers. Tay said that consumers are now expecting insurers to offer more flexibility and personalisation in terms of offerings and services. They also prefer having more control over the time and manner they engage with and purchase insurance, due to time constraints and economic difficulties.
“In this regard, our proposition, SNACK, is gaining traction as it offers embedded insurance in one’s lifestyle,” Tay said. “As one dines out, commutes, takes a walk or jog in the park, he/she stacks insurance protection by paying micro-premiums. SNACK can be turned on and off according to the user’s preference at no penalty, unlike conventional insurance. To date, SNACK has 62,000 users, 74% of them are new to Income, and we have issued over 1 million policies via SNACK.”
This shift in insurance customers’ behaviour has provided several challenges that insurers must face if they want to remain relevant in today’s market. According to Tay, there is now an expectation for seamless customer experience.
“Consumers, regardless of age, are becoming increasingly digital-first,” he said. “Insurers must rethink processes that are currently still manual today to offer a better customer experience with insurance. For example, we expect smart underwriting and claims automation to become an embedded hygiene factor in a customer’s journey with an insurer in the next five to 10 years. To be able to delight customers on this front will offer an insurer immense competitive advantage.”
Related to this, customers now want more control over their insurance.
“As more customers prefer control in when, where, what and how they engage with and purchase insurance, it is essential that insurers leverage customer insights and data to better understand how we can play to their preferences,” Tay said. “By leveraging ecosystem partners, wearables and the Internet-of-Things, insurers can be more innovative in their ways to embed insurance in customers’ lifestyles through insights to their preferences and behaviours. For example, we reward users of SNACK FIT with insurance via health and fitness data that we received from users’ wearables.”
Due to the increased use of digital technology and collection of large amounts of data, there are bound to be issues regarding ownership of data and data privacy regulations.
“As insurers collaborate with different partners across sectors to co-create relevant and innovative propositions, the issue of data ownership will inevitably surface,” Tay said. “Going forward, the concept of data co-ownership will be fundamental to successful ecosystem partnerships.”
According to Tay, there must also be a balance between regulations and innovation. While regulations are in place to protect consumers and their data, overly stringent regulations can prevent insurers from developing better services.
“It is essential that insurers look out for customers and put controls in place, where relevant, and ensure that regulation, if any, remains a light touch so that innovations can thrive and not be stifled,” he said, “We should all work towards maintaining this delicate balance to allow insurers to push boundaries and for innovations to scale.”
The pandemic has accelerated the adoption of what Tay calls a “digital-first world”. In this world, there is greater integration of technology into the lives of consumers, where their habits and behaviours are continuously being shaped by digitalisation across different industries.
In anticipation of this, Tay identified several opportunities and trends that insurers must be aware of. These include the rise of “ecosystem play”, which means more partnerships between non-financial service providers and insurers.
“For example, lifestyle partners are extending insurance as a loyalty reward to their customers,” Tay said. “To optimise such opportunities, insurers must shift from offering insurance products to delivering more insurance capabilities to unconventional partners to innovate insurance propositions that resonate with consumers.”
Insurers must also take inspiration from consumers’ lifestyles, taking note of various problems, inconveniences and new risks that their consumers encounter and offering solutions.
“Droplet protects against price surges on ride-hailing platforms, while Freightsurance protects against delay in shipment given the rise of e-commerce,” Tay said. “In this regard, our insurance innovations address their lifestyle needs and better resonate with them.”
And finally, insurers must find an agile route to market by conducting rapid experimentation and testing to find out what works and what doesn’t for their customers.
“Enabling iterations of products via agile product launches will allow insurers to bring to market offerings that resonate better with customers as we leverage customer data and insights constantly gained during the process,” Tay said. “The differentiator for any insurer is really how quickly we learn, adapt and apply in the market.”