Pandemic a boost for life insurance technology

Vol: 43 Issue: 4 | Dec 2021

Life and health insurers were already using technology to transform themselves before COVID-19 struck; the pandemic has just accelerated the process.

‘It’s probably turned trends that would have taken five or eight years and compressed them into six months. It was just a necessity,’ says Bernhard Kotanko, a senior partner at McKinsey & Company in Hong Kong. 

The Swiss Re COVID-19 APAC Consumer Survey, conducted in April 2020, confirmed the surge of interest in life insurance among consumers in Singapore, Hong Kong, mainland China and Australia since the outbreak. It also found that selecting an insurer able to process their policies online from start to finish had become a priority for many consumers, with Chinese respondents topping the survey at 77 per cent.

Participants in the S&P Global Ratings’ 2020 Virtual Insurance Conference in June heard a similar message from life insurance executives, who reported that digitisation efforts had been rapidly fast-tracked during COVID-19.

Kotanko points to research from McKinsey that found that people often feel overwhelmed by the number of commitments they have, and the pandemic only served to heighten these concerns. This fuelled demand for life insurance, which people see as a tool to organise their commitments and protect their loved ones, making them feel more in control of their situation. 

According to Kotanko, as more people began to research life insurance online during periods of lockdown, this accelerated a shift towards digital connectivity that was already well and truly underway. 

ASIA-PACIFIC’S FIRST RESPONDERS

As the first country to deal with COVID-19, China also went into recovery mode earlier. And its life and health insurers were quick off the mark to innovate.

‘China has become another major centre of innovation in the world besides the United States,’ explains Anthony Lee, partner, financial services – insurance sector, KPMG China.
‘In many ways, it sees more investor development interest in its use of technology, especially in insurance.’

Lee believes COVID-19 affected Western life insurers, which tend to operate out of Hong Kong, differently to insurers in China. ‘That’s because Chinese insurers were already very heavily into the digitisation journey and leading the way in how technology was being adopted,’ he says.

KEEPING IN TOUCH

Chinese consumers have widely embraced social media platforms like WeChat, Sina Weibo and QQ on their phones, and Lee says these became very handy for insurance agents during COVID-19.

‘They filled the void when face-to-face interaction wasn’t possible,’ he says. ‘On WeChat, for example, agents could set up a special topic account, make personal postings and disseminate helpful reminders or information to targeted groups. Customers could also easily reach these agents to ask questions.’

Lee notes that Chinese life insurers also responded quickly when face-to-face distribution came to a halt. Ping An, for example, used a combination of artificial intelligence (AI) and voice recognition to deal with customers. AI service robots handled 82 per cent of its service calls. The rest were handled by contact centre agents working remotely. 

Foreign insurers in Hong Kong also leapt into action with different approaches. For example, Manulife Hong Kong, a branch of the Canadian multinational insurer, launched a ‘virtual face-to-face’ agency sales platform in June to sell its products.

The platform, approved by Hong Kong’s Insurance Authority through its Insurtech Sandbox, enables customers to speak to insurance agents via highly secure video chat. It allows recordings in real time for record keeping and uses a hi-tech e-signature technology tool.    

LIFE DOWN UNDER

Australian life insurers put immense effort into using innovation to ensure business continuity as the COVID-19 virus began influencing work practices, observes Bernadette Howlett, PwC Australia’s insurance leader. 

However, she adds, other regions are generally ‘more progressed with regards to data and data sharing and innovating around the use of data than we are in Australia’. 

‘Australian insurers know what they would like to do but they don’t have the capital or management bandwidth to innovate as well as they want to,’ she says. ‘Too much of their time is consumed in regulatory efforts and managing the claims experiences within their existing capabilities.’

Howlett notes that the increase in digital ways of working and information flows has sharpened the focus on cyber risk. ‘Cybersecurity has become even more important and on the agendas of life executive teams,’ she says.

Among the life insurers accelerating their use of technology to overcome COVID-19’s challenges are AIA Australia (see breakout) and BT.

‘The technology that we had in place has seen us through the new COVID-19 work era,’ says BT’s head of claims, life insurance, Neil Borthwick. 

‘We already had video conferencing available, and we quickly became more familiar with using tech tools that enable collaboration.’

Borthwick believes one of the most impressive changes during COVID-19 has been the medical profession’s adoption of telehealth services. ‘BT is looking at telehealth very carefully to see how it can benefit our customers and the medical profession in their future interactions with us.’

Post-COVID-19, Howlett anticipates positive outcomes for life insurers from developments in the telehealth device market and the emphasis on mental health. ‘I think we should be watching the interplay of telehealth into the life insurance sector more broadly,’ she says.

Reinventing life insurance

There is a huge opportunity for life insurers to shift from being a provider of a product that people don’t want, to becoming a partner in customers’ life and health journeys, says McKinsey & Company’s Bernhard Kotanko.

‘Rather than only being there to protect you when devastating events happen, life insurance is becoming more of an infrastructure that helps you live a good life,’ he says. ‘Technology is helping to turn a push product into a pull product.’

Kotanko says today’s customers want to be better understood and appreciated in their individual situations. 

‘For example,’ he says, ‘our research shows that in China, which used to be a product push market, 80 per cent of customers now want their financial advisers to consider their needs, have empathy for their situation and create tailored services, [rather than] trying to push the next product onto them. 

‘Data analytics help you create personal contextual marketing that fits the customer’s family, financial situation and values. In the past, you could only do this through the intuition of the adviser.’ 

Kotanko adds: ‘Typically across Asia Pacific, we see health as the area where you can create the strongest bond with customers and really add value through services. It can be as simple as wearable devices or apps or much more sophisticated with ongoing advice, including using data from wearable devices.

‘It also improves customers’ understanding of their health and the underlying risk drivers. Based on data and analytics, you can assist customers earlier in the process of preventative medicine and activities. It helps customers to become more mindful about things, even if it doesn’t necessarily change their habits.’

Picking up speed

China’s Ping An put its pedal to the metal as COVID-19 hit. 

‘COVID-19 has really accelerated digitisation even for us, and we have always been at the forefront of digitisation,’ says Ping An’s co-CEO Jessica Tan.

First, the pandemic fuelled demand for Ping An Good Doctor — China’s largest mobile internet telemedicine platform — as people with minor illnesses avoided hospitals.
In the first half of 2020, the platform, which has its own medical team and proprietary AI-based medical system, saw an average of 831,000 consultations a day, up 26.7 per cent year-on-year. 

Ping An also launched its COVID-19 smart image-reading system to assist doctors with fast and accurate diagnoses to help control the pandemic. It can generate smart analysis results in about 15 seconds, with an accuracy rate above 90 per cent, says Tan. 

Another trend highlighted by COVID-19 is the digitisation of government services. Here, Ping An’s Smart City platform is helping 118 cities in China digitise their services. In Shenzhen, Ping An worked with the government to provide 7,000 services on one mobile app. As face-to-face interactions became impractical, citizens could access 70 per cent of the government’s services from the app.

Ping An isn’t about to slow down. By end-June 2020, it had 26,008 technology patent applications. Plus, it topped the 2020 global fintech patent ranking list for the second consecutive year with more than 1,500 applications in the area.

Thinking outside the square

There’s no doubt that 2020 has challenged paradigms and forced AIA, which operates in Australia and New Zealand, to think differently about how it solves problems, says Kelly Smith, AIA’s general manager of portfolio, delivery and intelligent automation.

‘We were already on a journey of using automation and AI [artificial intelligence] to make it easier for us to meet our customers’ and partners’ needs. So when COVID-19 hit, we have only had to re-prioritise some of our plans, not create new ones.’

Smith says AIA Australia expedited its delivery of electronic completion and execution of forms so that advisers and customers could operate virtually, without the need for face-to-face meetings.

This capability enabled clients to provide information and sign electronically, replacing 80 per cent of manual forms and providing advisers with more time for client contact. It also reduces data-entry errors and gives AIA’s operations teams more time for value-add customer tasks. 

‘Most importantly, we can issue policies and provide other important services to our customers sooner than we could before,’ says Smith.

‘Since COVID-19, we’ve also seen more engagement in our rapidly growing AIA Vitality program in Australia and New Zealand, as members have become more focused on their wellbeing. One of our priorities is to respond quickly to member email enquiries, with the help of AI and robotics.

‘Using AI, we automatically read and sort incoming emails. Those emails in the common cohorts have responses automatically crafted. Our customer service representatives add a personal touch and then release. We now answer more emails than we used to, in half the time, which frees up team members to focus on enquiries that require unique and complex responses. Most importantly, we’re responding quickly with the information members need to make the most of their AIA Vitality membership.’

In June, AIA Australia also ran a two-and-a-half-day virtual hackathon across 30 sites in Australia and New Zealand. ‘That was something no-one thought would be possible to achieve,’ says Smith, ‘but the team was able to develop new data models in a very short time.’