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How Technology is Transforming Insurance Distribution Channels

4 minutes, 31 seconds read

‘Insuring’ has always been a mundane and complicated subject for businesses. Distribution channels allow customers to access and purchase products efficiently. According to JM Financial, online insurance sales for new business are fast catching up and are likely to grow at a CAGR of 13 percent to become a $37 billion break by 2025.

Each distribution channel requires different resources to be effective and impact the pricing structure. The type of insurance business model determines its structure, strategy and placement in the market.

Take, for instance, India. The market size of the online insurance business in India is currently $15 billion, but the overall insurance penetration rate is just 3.7% (Statista, 2018). 

The regions where insurance penetration is low poses an immense potential for the digital premium market. Insurers can leverage the following distribution channels to undermine the profound potential.

1. Self-directed or Direct Distribution Channel

Through Self-directed or direct distribution channels, insurers can reach out to the customers without shelling out commission for any middle man. With an increase in the population of tech-savvy customers, the ready availability or online channel of advice or transaction capabilities is the need of the hour. 

Online channels, websites, social media platforms, e-commerce and kiosks are some examples of the direct distribution channels in insurance. The 2017 Global Distribution and Marketing Consumer Study reveals that nearly 51% of digitally active groups of consumers (39% of all Insurance consumers) have purchased insurance through an online channel. The direct insurance distribution channel encourages self-service and independent decision making.

NLP-powered chatbots are a great way to provide a self-service portal for buying/renewing insurance policies. Leading Insurers like Religare are leveraging the direct distribution channel by integrating chatbots in different platforms like their website, mobile app, and even on third-party apps like WhatsApp.

2. Assisted Distribution

Agents and brokers are typically the key players in the insurance distribution channel, with market shares of 42% and 25% respectively. The old school face-to-face distribution channel is very much alive and is integrated with tech assisted models to ensure more leads and conversions. They mainly play a part in advising and managing complex insurance products.

agent's share in assisted insurance distribution channel

Agents, insurance brokers and reinsurance brokers remain the most recognized insurance purchase channel. The Gartner Group reports that 60% of the US GDP is sold through assisted or indirect channels. Cognitive technology is becoming a key enabler to strengthen the assisted distribution channel. PwC suggests leveraging analytics solutions (mainly predictive analytics and behavioral analytics) to increase sellers’ knowledge as well as skills.

[Related: How behavioral psychology is fixing modern insurance claims]

The technologies that are empowering learning for Insurers include augmented reality, machine learning, data analysis and NLP.

upcoming technologies in assisted distribution channel

For example, Zelros, a European AI startup, is augmenting the knowledge of sales and customer representatives through best product recommendations, advisory, and pricing based on the customer profile in real-time.

3. Affinity-based Insurance Distribution Channels

The affinity channel focuses on distributing products to a tightly-connected group of consumers with similar interests. Traditionally, the affinity-based distribution channel involved peer-to-peer networks, brokers and aggregators. While the network model remains the same, the model has become digital and tech-driven for affinity channels. And technology is playing a vital role in expanding the consumer base. The key benefits of the affinity distribution channel are-

  • Common platform for all stakeholders.
  • One-stop access to policies and claims.
  • Centralized database for insightful analysis.
API-based Insurance Model Affinity Distribution Channel

This distribution channel is also a part of B2B2C or API-based insurance business models. Here, Insurers can leverage 3rd party apps to distribute their policies. APIs or Application Programming Interfaces are lightweight programs to extend the functionality of existing apps. Travel, airbus, hotel, bank and retail are some examples of affinity-based distribution channels.

Finaccord estimates that airline companies hold a distribution share of up to 10% of the travel insurance market. The annual revenue from airline and travel insurance providers partnership may range from $1.2 billion to 1.5 billion in premiums.

[Related: 4 New Consumer-centric Business Models in Insurance, How InsurTech-Insurance Partnership Delivers New Product Innovations]

The majority of travel insurance policy sales across the globe are done through some kind of affinity partner instead of via a direct sales channel.

Jeff Rutledge, President & CEO, AIG Travel
Source: Insurance Business UK

The Bottom Line

In the countries where buying an Insurance is not mandatory, market penetration is extremely low for Insurers. Being meticulous in sales and marketing efforts and educating customers about the benefits of insurance is just not sufficient. Convenience is the key to new generation consumers. Therefore, insurers need to invest in technology and make insurance policies accessible to the new-age digital consumers through the channel of their choice. 

Michael D. Hutt and Thomas W. Speh, in their book – Business Marketing Management: B2B, suggest a six-step process to select among the most efficient insurance distribution channels-

  1. Determine the target customers.
  2. Identify and prioritize customer channel requirements by segment.
  3. Access the business’s capabilities to meet those customer requirements.
  4. Use the channel offering as a yardstick against those offered by competitors.
  5. Create a channel solution for customers’ needs.
  6. Evaluate and select the most effective among the distribution channels.

We’ve developed insurance chatbots for organizations like Religare to automate policy distribution and renewal. For your business-specific requirement, please feel free to reach us at hello@mantralabsglobal.com.

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Conversational UI in Healthcare: Enhancing Patient Interaction with Chatbots

As healthcare becomes more patient-centric, the demand for efficient and personalized care continues to grow. One of the key technologies that have gained traction in this domain is Conversational UI (CUI) — a user interface where interactions occur through natural language, often with the help of chatbots. For developers, building a robust CUI in healthcare requires a balance of technical proficiency, understanding of the healthcare landscape, and empathy toward patient needs. Let’s explore how CUI can improve patient interactions through chatbots and what developers should consider during implementation.

Why Conversational UI is Gaining Popularity in Healthcare

From scheduling appointments to answering medical queries, healthcare chatbots have become vital tools for enhancing patient engagement and streamlining healthcare workflows. Conversational UIs enable these chatbots to interact with patients naturally, making them accessible even to non-tech-savvy users. By incorporating AI and NLP (Natural Language Processing), chatbots can now simulate human-like conversations, ensuring patients receive timely, relevant responses. 

Image credit: https://www.analytixlabs.co.in/blog/ai-chatbots-in-healthcare/ 

Key Areas Where Chatbots Are Revolutionizing Healthcare

  1. Appointment Scheduling and Reminders – Chatbots can automatically schedule appointments based on patient availability and send reminders before the visit, reducing no-show rates. For developers, this feature requires integration with hospital management systems (HMS) and calendar APIs. The challenge lies in ensuring secure and real-time data transfer while adhering to healthcare compliance standards like HIPAA.
  1. Medical Query Resolution– Chatbots equipped with NLP can answer common patient questions related to symptoms, medications, and treatment plans. This reduces the burden on healthcare providers, allowing them to focus on more critical tasks. Developers working on this feature need to consider integrating medical databases, such as SNOMED CT or ICD-10, for accurate and up-to-date information.
  1. Patient Monitoring and Follow-ups – Post-discharge, chatbots can monitor a patient’s condition by regularly asking for health updates (e.g., vital signs or medication adherence). Developers can integrate IoT devices, such as wearable health monitors, with chatbot platforms to collect real-time data, providing healthcare professionals with actionable insights.
  1. Mental Health Support – Chatbots have shown promise in offering mental health support by providing patients with an outlet to discuss their feelings and receive advice. Building these chatbots involves training them on therapeutic conversational frameworks like Cognitive Behavioral Therapy (CBT), ensuring they offer relevant advice while recognizing when a human intervention is required.

Key Considerations for Developers

1. Natural Language Processing (NLP) and AI Training

NLP plays a pivotal role in enabling chatbots to understand and process patient queries effectively. Developers must focus on the following:

Training Data: Start by gathering extensive datasets that include real-life medical queries and patient conversations. This ensures that the chatbot can recognize various intents and respond appropriately.

Multi-language Support: Healthcare is global, so building multi-lingual capabilities is critical. Using tools like Google’s BERT or Microsoft’s Turing-NLG models can help chatbots understand context in different languages.

Contextual Understanding: The chatbot must not just respond to individual queries but also maintain the context across the conversation. Developers can use contextual models that preserve the state of the conversation, ensuring personalized patient interactions.

2. Security and Compliance

Healthcare chatbots handle sensitive patient information, making security a top priority. Developers must ensure compliance with regulations such as HIPAA (Health Insurance Portability and Accountability Act) in the U.S. and GDPR (General Data Protection Regulation) in Europe. Key practices include:

  • Data Encryption: All communication between the chatbot and the server must be encrypted using protocols like TLS (Transport Layer Security).
  • Authentication Mechanisms: Implement two-factor authentication (2FA) to verify patient identity, especially for sensitive tasks like accessing medical records.
  • Anonymization: To avoid accidental data breaches, ensure that the chatbot anonymizes data where possible.

3. Seamless Integration with EHR Systems

For chatbots to be truly effective in healthcare, they must integrate seamlessly with Electronic Health Record (EHR) systems. This requires a deep understanding of healthcare APIs like FHIR (Fast Healthcare Interoperability Resources) or HL7. Developers should aim to:

  • Enable Real-time Updates: Ensure that chatbot interactions (e.g., new appointment schedules, and symptom checks) are instantly reflected in the patient’s EHR.
  • Avoid Data Silos: Ensure that all systems (EHR, chatbot, scheduling system) can communicate with each other, eliminating data silos that can lead to fragmented patient information.

4. Scalability and Performance Optimization

In healthcare, downtime can be critical. Developers need to ensure that chatbots are scalable and capable of handling thousands of patient interactions simultaneously. Using cloud-based platforms (AWS, Google Cloud) that offer auto-scaling capabilities can help. Additionally, performance optimization can be achieved by:

  • Caching Responses: Store frequently used responses (such as FAQs) in memory to speed up interaction times.
  • Load Balancing: Implement load balancers to distribute incoming queries across servers, ensuring no single server is overwhelmed.

Tools and Platforms for Building Healthcare Chatbots

Several tools and platforms can aid developers in building healthcare chatbots with conversational UIs:

  1. Dialogflow (Google): Offers pre-built healthcare intents and integrates with Google Cloud’s healthcare APIs.
  2. Microsoft Bot Framework: A scalable platform that integrates with Azure services and offers AI-driven insights.
  3. Rasa: An open-source NLP tool that provides flexibility in creating highly customized healthcare bots.

Conclusion

Conversational UI in healthcare is transforming patient care by offering real-time, scalable, and personalized interactions through chatbots. However, for developers, building these systems goes beyond programming chatbots — it involves understanding the unique challenges of healthcare, from regulatory compliance to seamless integration with hospital systems. By focusing on NLP capabilities, ensuring security and privacy, and integrating with existing healthcare infrastructure, developers can create chatbots that not only enhance patient interaction but also alleviate the burden on healthcare providers.

References

  1. NLP in Healthcare: Opportunities and Challenges
  2. HIPAA Compliance for Chatbots

About the Author:

Shristi is a creative professional with a passion for visual storytelling. She recently transitioned from the world of video and motion graphics to the exciting field of product design at Mantra Labs. When she’s not designing, she enjoys watching movies, traveling, and sharing her experiences through vlogs.

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