Ensuring Data Driven Hyper-personalisation In The Insurance Industry With AI

As the insurance industry evolves, organisations are strategically blending data with Artificial Intelligence (AI) and investing in people, processes and technologies for greater customer connections and business outcomes.

The year 2023 marked an evolutionary phase for the Indian insurance industry. Policy reforms aimed at enhancing transparency and accountability and embracing technology contributed to a more synchronised alignment with core business challenges, propelling the industry to a higher level of maturity. A pivotal takeaway from 2023, as observed by industry experts, is the imperative to offer more personalised insurance solutions, elevating the overall customer experience.

In this evolving landscape, the significance of technology, artificial intelligence (AI), and data as enablers are acting as pivots. These elements play a central role in steering the industry towards a customer-centric paradigm, emphasizing hyper-personalised experiences that cater to individual customers' unique needs and preferences. The synergy of policy reforms and technological advancements has set the stage for a transformative journey in the insurance space. 

Demanding Customer Expectations

If one looks at hyper-personalisation closely, just a decade ago, interactions between insurance companies and customers were typically on traditional modes of communication. But in today's landscape, the attention span of customers has diminished. This calls for radical interventions. Reflecting on the changing customer expectations, Soumya Ghosh, Executive Vice President, and Chief Technology Officer of Tata AIA Life Insurance, says, "We live in the age of instant gratification, and the attention span of the customer is so short, and whoever maps the customer journeys holistically will gain greater market share and success in the industry. This shift emphasises the need for tailored services and offerings that resonate with each customer individually. It must be personalised in terms of its message and the medium of communication the customer prefers."
 
Given this backdrop, insurance organisations increasingly leverage data, automation and digitisation to meet demanding customer expectations. Technology and data play a crucial role in achieving hyper-personalization. "A study by the IBM Institute for Business Value (IBV) revealed that 39 per cent of executives from the insurance industry believe that data and AI are ushering greater business and customer value as the industry shifts from a product-centric to a customer-centric approach," says Rishi Aurora, Managing Partner, India and South Asia, IBM Consulting.

Ghosh adds, "Product offerings need to be not only personalised but also unbundled, requiring insurers to articulate the value proposition explicitly for each customer. This entails explaining why a product is relevant to a specific customer, its benefits for the individual and their family, and aligning it with the average persona resembling that customer." 

Navigating Hyper-personalisation

Let's examine how the insurance industry is doubling down hyper-personalisation and why it matters. Says Ghosh, "In the context of customer experience and hyper-personalisation, the challenge is to capture the customer's attention within minutes or even seconds. This necessitates delivering content that resonates with each customer rather than adopting a one-size-fits-all approach. The micro-segmentation of customers, down to a single individual, is crucial."

"The aim is to provide personalised recommendations that stimulate meaningful conversations, fostering a more responsible approach within the industry," says Ghosh.

This customisation level can only be achieved through insights derived from customer data, understanding diverse customer personas, and identifying specific segments. Says Ghosh, "At Tata AIA, customer obsession is at the core as we transition towards a hyper-personalised approach, where the customer is at the center. Our personalization extends to recommendations, shaping conversations around products. This evolution benefits both customers, who receive products tailored to their needs, and the industry, which becomes more responsible in selling meaningful products. Technology, including AI and data, serves as enablers in this customer-centric landscape."

The current trends in the insurance industry revolve around holistically understanding the customers’ needs, wants and aspirations. Says Aurora, "If I see the trends shaping up the insurance industry, hyper-personalisation is extremely vital, and for that, technology and data play an integral role. On the operational front, there's a noticeable shift towards increased automation, resulting in significantly reduced turnaround times for customer service delivery."

This intersection of personalised services and streamlined operations augurs well for the insurance industry and the consumers of insurance products. The dynamics are laying a progressive path driven by the convergence of data and the transformative influence of GenAI on bringing in actionable insights. As the adoption of AI and automation scales up, organizations face immense pressure to secure and protect data.

Taming the Threat Landscape

"Security stands as one of the paramount pillars in my role," says Ghosh. "Ensuring the safety and security of customer data is my responsibility and a crucial obligation for our entire organization. We've been progressively enhancing our security measures over the years. The shift towards proactive security sets our current approach apart, emphasising that it is not a post facto consideration." 

Ghosh adds, "Similar to our approach to compliance, the focus is on "shifting left." This means instilling awareness among every developer in the organisation that the code they contribute must prioritise security and address vulnerabilities. We've implemented a system of continuous scanning across the entire IT landscape, covering infrastructure, network, and all associated artifacts. This proactive stance ensures that security is integral to the development process, minimizing risks and fortifying our commitment to safeguarding customer data.”

"If one looks at IBM's Data Breach Report 2023, it said that each data breach has cost the FSS industry USD 5.9 million. According to me, security will be one of the most important aspects," says Aurora. 

Intersecting AI with Insurance

Whether it be hyper-personalisation or data, AI is becoming the transformation pivot. The transformative shift in AI's role is evident, moving beyond theoretical discussions to actively and positively influencing businesses and lives. The historical impediment to AI growth - the availability of labeled data, has been overcome with the advent of foundation models.   

"We find ourselves in truly exciting times, particularly within the realm of AI. IBM is poised to script the next chapter in AI's evolution with watsonx. We are currently in the fourth generation of AI, with the adoption rate having nearly doubled since 2017. The impact of AI on the industry is profound, with a forecast suggesting a staggering addition of approximately USD 16 trillion to the global economy by 2030. Closer to home, India's GDP is expected to see a notable boost, with an estimated addition of USD 500 billion by 2025 and a projected increase to USD 967 billion by 2030, "says Aurora.

But for AI to succeed, organisations need a complete technology stack on which they can build, tune, and run their models on their trusted data. The most important part is to govern all of this, and that's what watsonx brings to the table. A crucial development is the widespread proliferation of these models across various use cases and industries, transcending organizational boundaries.

Giving a deep dive into wastonx, Aurora unpacks its key components. "watsonx.ai is a comprehensive toolset readily available for organizations to deploy and operate AI models effectively. The associated watsonx.data is a centralized data store, providing the necessary inputs for these AI models. As adoption continues to grow, governance becomes paramount, and that's taken care of by watsonx.governance, designed to oversee and regulate both the models and the associated data."

Grooming Talent

With AI reimagining business outcomes and productivity, organisations are also looking at ways to elevate their talent quotient. Underscoring the importance of people in the equation, Ghosh says, "Organisations must have a people-first mindset. Exceptional customer experience depends on investing in the right talent to navigate the complexities of evolving technology and continue delivering the proper outcomes; skilled professionals are an organization's strategic investments.

As we look ahead, the insurance industry is on a growth trajectory, well positioned to leverage AI for reimaging the industry and take it to the next logical evolution. In the bargain, they are elevating productivity and enhancing customer satisfaction by adopting automation and digitizing their operations. The strategic integration of technology, AI, and data-driven insights positions the industry to not only meet current demands but also to anticipate and address future challenges in a rapidly evolving market.