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Aug 2018

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Staying relevant in digital China

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Source: AIR | Feb 2018

China InsurTech Property & Casualty

While insurers in Asia and the rest of the world remain in various phases of disruption and tech adoption, China is without doubt the trailblazer in this space, leading the industry by a substantial margin. Asia Insurance Review caught up with China Pacific Insurance Company (CPIC) Group’s Chief Digital Officer, Mr Yang Xiao Ling, who elaborated on taking CPIC digital, on the sidelines of the InsurTech Innovation Congress, organised by SZ&W Group.
By Chia Hoe Seng
 
 
Despite CPIC being “only 27 years young”, the insurer recognised early on, an immediate need for it to digitise the organisation. Thus, at the group level, management identified five key components on which to focus its digitalisation efforts: 1) digitising critical touchpoints of the customer journey; 2) the digital supply chain; 3) computing infrastructure; 4) to be equipped with agile development capabilities and methodologies; and 5) digital security.
 
Customer experience is key differentiator
Delving deeper into digitising the customer journey, Mr Yang further highlighted several critical customer contact points that needed to be taken into serious consideration, including policy purchases and renewals, notification and enquiries, as well as complaints.
 
“Ultimately, as all insurers will be competing on the product front, there is not much differentiation in terms of what you can sell. Hence, the key differentiator lies in how we effectively streamline the processes and embed various improved experiences into the customer journey. There are simply too many inefficiencies and redundancies throughout the legacy operations.”
 
Main inefficiencies, he added, lay in traditional practices, such as a fixed customer-agent model system, which restricted a customer from being contacted by another agent. As a result, customers’ needs are not addressed accurately and immediately, and are instead limited by the agent’s capacity.
 
There was also a lack of opportunity to cross-sell during policy renewal calls, due to regulation forbidding cross-selling during policy renewals. Agents would have to follow up with a subsequent call to remain compliant; this was time consuming and did not value add to the customer experience.
 
The long turnaround times for claims processing, as well as manual processes adopted in policy document issuance, which required disproportional efforts, are further additions to inefficiencies.
 
Push for AI
“Currently, there are just too many different channels and layers. Different circumstances also call for different actions,” Mr Yang said. As such, with the level of complexity and permutations required to fully facilitate great customer journeys, he advocated strongly for the use of artificial intelligence (AI). 
 
The biggest rewards to reap from AI adoption he shared include reductions in operating cost and transactional fees, shorter turnaround times for claims processing, as well as a change from the legacy customer-agent model to a more customer-centric Customer-Insurer platform.
 
With the industry still predominantly labour-intensive, Mr Yang is aware that the path to digitisation is likely to be “long and painful”. However, he added that the adoption of AI will fast-track the digitisation process, relieving insurers from laborious chores and at the same time, will allow them to analyse new data sets to remain competitive and relevant.
 
“Our target is to achieve an enterprise level adoption of AI so that we are able to integrate traditional and digital business models, incorporate Big Data and complex business processes all on a single platform.”
 
Only way forward is to digitise – and fast
Highlighting online insurer ZhongAn’s success, he said: “The impact of online insurance is tremendous. And it’s not the insurance industry alone that is quickly adapting and gearing towards digitisation, it’s a nationwide phenomenon that can be seen across all industries too.”
 
Noting key factors to the newcomer’s breakthrough including leveraging investor Ping An Group’s insurance expertise, the digital expert said that the former’s “absence of legacy issues and the presence of long-term innovation plans” are factors that many large traditional players do not share.
 
“CPIC used to be one of the leaders in motor insurance but we lost market ground when telesales became crucial for renewals, and we were slower to adopt telesales then,” he said.
 
“So the same principle applies when it comes to transformation and innovation: be firm and fast or our competitors will find ways to overtake us. It’s one thing to reach the top, it’s another to maintain the status quo.” A 
 
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