Digital insurance is the future but human touch still needed

November 12, 2020 10:05
Photo: Adobe

In 2020, COVID-19 proliferated throughout the world and became a global pandemic. No one could have anticipated the disruption it would cause to billions around the globe. With this unprecedented crisis, people have become accustomed to the reality of the uncertainty that a pandemic of this magnitude brings. However, people's understanding of the importance of having sufficient protection during this time, and even longer-term, has increased significantly.

Sudden lockdown creates new opportunities

Due to the strict social distancing measures that were implemented to prevent COVID-19 transmissions, industries across the board, including insurance, felt the economic pressure and the possibility of a looming recession. The noticeable economic impacts, including the increase in unemployment, have forced people to make some difficult decisions, such as potentially giving up their insurance plans.

Seeing the value of self-protection during these difficult times, the Insurance Authority of Hong Kong (IA) put forth a set of temporary facilitative measures to minimise the risk of transmission in February this year, allowing non-face-to-face approaches for insurers to distribute long-term insurance policies. Viable non-face-to-face application measures include video conferencing consultations between agents and customers, phone-application of eligible products and online premium calculators. These alternatives can be applied to various types of protection products, including life, medical, critical illness, personal accident and disability income plans, on top of the Qualifying Deferred Annuity Policy and Voluntary Health Insurance Scheme.

To a certain extent, the pandemic is unlocking new opportunities for the industry to innovate and migrate to digital. People can also access and purchase plans to obtain the specific protection they are looking for, helping them prepare for any future uncertainties, despite COVID-19. Whilst there is going to be an uptrend of buying insurance plans virtually, there are a few key points to keep in mind.

Plan ahead

Individuals should always prepare for the worst or put contingency plans in place that support them through worst-case scenarios. It is essential to plan ahead and think about the types of protection needed such as life, medical, and critical illness plans, with the digital tools available. This includes using chatbots for support on quotations on standard premiums and coverage. Evaluating your needs and personal budget is also crucial when selecting suitable solutions.

Be careful with special features

The devil is in the details. For example, typical life insurance plans provide coverage until a specific age bracket, however, there are some which also offer protection until the death of the policyholder with a single premium. Also, types of death benefit settlement can vary in the form of a lump sum payment, regular installments, or a mixture of both. To some people, this could impact the process of asset inheritance which is key to them. It is essential to check the special features involved and compare various plans available.

Be mindful of available options online

Whilst the industry is making a concerted effort to go digital under the current constraints, not all products can be purchased online. For instance, products such as wealth management plans usually require some more customisation around the individual’s situation and goals to address specific needs. These products cannot be purchased by simply clicking on a browser.

Have in-depth chats with agents

Through meetings with agents, protection packages can be tailored to meet the specific needs of each individual and allow one to have a better understanding of what is on offer.

Whilst it is possible to engage in these meetings virtually, the essence of insurance is individual human nature and care. Although digital tools can help simplify the procedures of some standard plans, making it more efficient and user-friendly, they cannot fully replace offline consultations with agents that require in-person, individual customisation, especially for high-net-worth individuals. These individuals require personalised services, including face-to-face consultations and advice from agents, in order to have an in-depth and entirely confidential conversations on their personal needs. This will enable them to carefully select insurance plans for their wealth and other protections which are tailor-made and suit their own preference and needs. Such types of insurance plans are not currently available online and will continue to rely on in-person consultations.

COVID-19 has forced everyone to re-evaluate their life circumstances. It has transformed the way people live and think, pushing individuals to find more innovative solutions to life's problems. Further challenges lie ahead. For the insurance industry, and industries across the board, digitalisation is inevitable. This can be seen as a positive move and a facilitator in helping people live a long and healthy life. However, while technological adaption is rising, in the long term, both online and offline elements will be equally as important and play their respective role in the industry, ensuring everyone’s unique and personal needs are fully satisfied and enhancing the quality of bespoke services.

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Chief Product Officer of FWD Hong Kong & Macau