Digital insurance, the Challenge of Phygital Engagement

Improving customer experience and offering highly customized services: these challenges could bring growth and real profits to the insurance industry. The turning point in digital insurance – driven by the effects of the pandemic, the change in expectations of hyper-connected customers and by the market – also revolves around the “phygital” approach, a hybrid  between the physical and the virtual world.
This contamination sees agents exploiting the advantages of Artificial Intelligence, Augmented and Virtual Reality to reduce costs and time, to offer bespoke insurance solutions almost in real time, guarantee customers assistance H24.

The “phygital engagement” also paves the way for “Digi-Intermediation“, a process whereby digital tools aid  agents in heir work, so as to give the virtual insurance market a more human face.

“Phygital” in Insurance: Objectives

The continuous interaction between the physical and digital world has led to “phygital”, a fusion of “physical” and “digital”. The neologism reflects one of the pivotal changes introduced by the digital transformation in the insurance sector. However, this market will need to consolidate its distribution network with AI, AR and VR to ensure an adequate customer experience.

Forward-thinking insurance companies have already started this process. Many others, though, need to rethink the way they operate with a view to “phygital engagement” in order to reach new customers and build loyalty, as well as conforming to the open insurance model.

This is what emerges from the World Insurance Report 2021 published by Capgemini and Efma.

According to the study, 87% of insurance companies want to invest in the digital. However, only 32% believe that digital channels are sales effective. This is due to the inability of digital systems to offer detailed advice to customers looking for complex products when underwriting a policy, which brokers are able to provide instead.

Digital Insurance: the “CARE” Approach

More than 60% of insurance executives said the pandemic had affected new customer acquisition, while 40% said Covid-19 had had an impact on customer retention.
How to make a difference and ensure customer care via new digital channels? According to the World Insurance Report, insurance companies should adopt the “CARE” approach, which stands for “Convenience, Advice, Reach“.

But to give the right value to skills and credibility they also need to invest in Artificial Intelligence and immersive technologies. These are fundamental solutions to reduce costs and create more customized offers thanks to “data intelligence”.

Research highlights most brokers’ need to improve their digital engagement skills. 44% of these requested support from insurance companies for AI, Augmented and Virtual Reality, and collaborative platforms.

Technologically advanced solutions offer agents the tools to digitally represent and compare products, improving “customer convenience”.

With Artificial Intelligence and other advanced solutions, such as the use of Augmented Reality in video appraisals, brokers can optimize their performance.

How AI Revolutionizes the Insurance industry

In the insurance field, Artificial Intelligence brings significant benefits, shifting the industry from a “detect and repair” to a “predict and prevent” approach. This is what emerges from McKinsey’s report, “Insurance 2030-The impact of AI on the future of insurance,” which highlights how this transformation, supported by AI and digital expertise, will change the phases of the insurance process.

“The pace of change,” the report says, “will also accelerate as brokers, consumers, financial intermediaries, insurers and suppliers become more adept at using advanced technologies to improve decision-making and productivity, reduce costs and optimize the customer experience.”

Insurance companies use Artificial Intelligence for data collection, analysis, classification; improving back-office processes with robot-automation approach; personalizing insurance products or premiums; fighting tax fraud.

There are numerous benefits to using AI in insurance: reduced costs; reduced operational risks, such as errors in assessments and fraud; more flexible and fitting risk management; greater ability to attract and retain new customers; and 24-hour support.

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