Prudential: Digital-first, not digital-only, to drive greater value in insurance

IN AN increasingly digital-driven world, keeping up with technological advancements is necessary for all businesses and individuals alike to stay competitive.

But in the process of scaling up on digital capabilities, insurers should still not forget to humanise their experiences, says Dennis Tan, chief executive of Prudential Singapore, and managing director of Prudential plc's strategic business group including Singapore, Thailand and Vietnam.

"Technology is an enabler that should be used to enhance decision-making and to make it easier for people to connect with each other in an authentic way," Tan says.

Tan notes that keeping up-to-date with new digital trends has its benefits and is important to stay ahead of the curve.

But insurance is ultimately a people-focussed business that should not lose the human touch, he says.

Especially for more complex insurance products, insurers still need to connect customers with financial consultants, who can help with more holistic financial planning.

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He says: "As insurers, we are protecting people and their loved ones from unexpected events. Human empathy is essential for making important life decisions."

Evolution of insurance industry

Today, a customer can simply search for various insurance plans online to find what suits them best. Purchasing the insurance policy and subsequently making claims can also be done through a few simple clicks on a mobile phone.

This comes as the insurance industry has steadily picked up on digital innovations and new technologies to improve processes and customer experiences in recent years.

In the past five years alone, Tan notes that the growth of artificial intelligence (AI) and machine learning (ML) has made it more accessible and affordable to be deployed in businesses.

For the insurance industry, this means improvements in areas such as underwriting, claims assessments, and servicing.

The availability of data has also allowed AI models to learn, analyse and predict patterns more effectively.

A 2023 report by McKinsey & Company estimates that AI technologies could add up to US$1.1 trillion in annual value for the global insurance industry, amid a tech-driven shift.

This includes US$400 billion from pricing, underwriting, and promotion technology upgrades, and US$300 billion from AI-powered customer service and personalised offerings.

Mobile applications have also become increasingly prevalent, where customers can use them to purchase insurance, submit and track claims, and even do a video consultation with a doctor as part of their application process.

"Insurers need to understand and leverage new technologies to stay ahead of the curve and to remain competitive," Tan says.

In a study in October, reinsurer Swiss Re notes that digital technology can allow more holistic and accurate risk assessments and better pricing of risks, as it allows insurers to gather and process large sets of data using connected devices, data analytics and machine learning.

Data and analytics company GlobalData also notes that generative AI-powered tools can drive personalisation and efficiency across players in the financial services spaces.

At Prudential Singapore (Prudential), Tan says AI and ML have been able to improve efficiency and enhance customer experiences.

In 2022, the insurer launched an AI talkbot that reminds customers on their premium payments to ensure they stay protected.

The talkbot is trained to listen, understand, and respond to customers with empathy, and has a 65 per cent customer response rate, Tan says.

Meanwhile, Prudential uses data analytics to drive customer insights and personalisation.

For example, the insurer's customer segmentation model uses data to create micro-segments based on characteristics and demographics to provide a better sense of their product needs and life stages.

Speaking on the insurer's digital agenda, Tan says: "The aim was to reinforce business strengths and to reimagine new revenue streams and ways of working so that we would continue to thrive in the future."

Changing needs of customers

The McKinsey report notes that AI adoption has more than doubled in the past five years, and investment in AI is also increasing across industries.

But the industry remains at an early stage of transformational AI adoption, even though most large insurers are on the path to AI-enabled personalisation at scale.

In this aspect, Tan notes that Prudential - which began its digital transformation journey in 2016 - had made several technological investments over recent years to create a flexible and digital work culture.

This was tested during the Covid-19 pandemic, which had been a major contributor to the digital drive within the insurance industry.

At the height of the pandemic, Prudential developed PRURemote Advice (PRA), a video conferencing and e-signature tool, that allows for advisory and policy sales to be done online, without needing financial consultants and customers to meet face to face.

Developed and rolled out within seven days, PRA has since become a key channel of customer engagement, with 45 per cent of sales in 2022 done remotely. The trend continues in 2023, Tan adds.

Tan attributes the speed of the rollout to Prudential's transformation journey: "Underlying these changes was a strong desire to become a more innovative and agile organisation that would be able to adapt quickly to the fast-changing needs of our customers."

Looking ahead, Prudential has also identified three group-wide enablers to support its growth in the next five years, with one enabler being technology.

Moves by the insurer include automating tasks and streamlining processes, and investing in training and development.

A people business

But despite Prudential's foray into digital transformation, Tan says it is not the only thing that matters.

"Putting people first is key to humanising technology and making it useful and meaningful for people. This will enable us to deliver better outcomes for all our stakeholders," he says.

Tan notes that financial consultants are not just there to service single purchases. Instead, they are crucial in helping customers with their financial needs analysis for holistic financial planning.

He also notes that humans may need to be involved in more complex cases that involve a lot of nuance and context, as AI may not be able to understand them yet.

Across the globe, consumers are demanding for humanised interactions with insurers, even if they may be through digital channels, says insurance solutions provider Duck Creek Technologies in a 2023 survey.

The survey finds that 44 per cent of consumers would prefer human interactions once a policy is in place, up from 35 per cent in 2022, in areas including insurance purchasing, switching and communication experiences.

The survey also finds that 16 per cent of life insurance customers switched providers due to unsatisfactory customer experience.

Tan notes that many of Prudential's customers still prefer to interact with their financial consultants or customer service representatives in person or over the phone.

This is despite a rising expectation from customers to have a seamless and digital-first experience from companies, such as getting quotes, purchasing policies, and filing claims online or through a mobile app, he adds.

He says: "It's crucial to bridge the gap between online and offline channels and deliver a seamless customer experience across all customer touchpoints."

This includes shifting to digital channels, but also keeping traditional channels open.

Building omni-channel experiences is key for Prudential, apart from only focusing on digital experiences.

"It allows insurers to connect with customers where they are and to provide them with a consistent experience, regardless of how customers choose to interact with us," Tan says.

Digital-first, not digital-only

Instead of being its own channel, Tan views technology as an enabler to allow people to do more and be more connected.

Thus, insurers need to understand and invest in digital technologies that can help them create value for customers.

Looking ahead, he expects AI and ML will play an even greater role in the development of new and personalised solutions and services.

The rise of insurance technology - or insurtech - should also accelerate innovation and digital transformation, as well as encourage greater adoption of new technology through partnerships, Tan says.

He also notes the potential for embedded insurance as an opportunity to bridge the protection gap.

Embedded insurance, which refers to insurance that is offered at the point of purchase of a product or service, allows insurers to reach out to those who have limited awareness or access to insurance solutions.

This allows insurers to target those that remain un-insured or under-insured.

Meanwhile, Tan notes the rising importance of technology risk management and resilience.

As operations become more digitally-driven, this also leads to heightened cyber risks and possible disruptions.

On one hand, insurers benefit as cyber insurance is still the fastest-growing sub-sector of the global insurance market, with insurance premiums reaching about US$12 billion in 2022, says S&P Global Ratings in a report in August.

The ratings agency also expects premiums will increase by an average of 25 to 30 per cent per year to about US$23 billion by 2025.

On the other hand, insurers are not immune to cyberattacks on their operations, and any service disruptions or data breaches will likely affect their bottom lines and potentially their capital positions, S&P says.

Given that digitalisation of services is evolving at a quick pace, Tan says it is crucial for businesses and policymakers to keep an ongoing and collaborative dialogue to come up with solutions for safer transactions.

"Technology has brought about lots of benefits for us, and we acknowledge its importance. But, it's not the only thing that matters. People remain at the heart of what we do."

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