Digitalisation is becoming essential for all industries. The reason is, consumption of more facilities, less time. The companies that lack to opt digitisation, tend to be no longer competitive in the market.
Insurance is one of the oldest industries with traditional practices. Although the covid pandemic did not let it remain untouched by digitisation. The industry grew 17 per cent in April-May FY22 with the power of digitalisation as compared to 2020-21. The Finance Ministry and Insurance Regulatory and Development Authority of India (IRDAI) are certain of 40-50 per cent sector development in the following five years.
BW Businessworld spoke to Vikul Goyal, CEO of Bimaplan, how the digital facilities that have been embraced by the insurance sector of India, and the facilities that are important but are yet to be adopted. Edited excerpts:
What necessity do you see in the digitisation of the insurance sector?
Insurance is a growing but underpenetrated sector in India as penetration of life insurance in the country stood at 3.20 per cent in 2020-21, and just 1 per cent for the non-life segment. Hence it is important to reimagine distribution and keep innovating to address vital issues such as insurance penetration, customer health, financial inclusion etc.
Traditional distribution channels have their limitations due to a high fixed operational cost involved. Only 25 per cent insurance sector is being able to reach tier 3 and beyond which we know is going to contribute to around 70 per cent of consumption by 2030.
How far has the insurance sector embraced digitisation now?
Digital adoption is increasing rapdidly, there are more than 600 million smartphone users in India. Insurance industry is also moving towards digitalisation as pandemic brought the systematic change to the sector. Powered by digitisation, non-life insurance sector grew by 24 per cent, i.e 15 per cent as compared to same period in previous year.
Insurtechs are simplifying insurance and its distribution model to enable distribution, making products accessible at their doorstep to the people currently suffering the last mile connect and facilitating product comparison by providing multiple options at their fingertips. The use of technology such as API, ML, and data analytics is boosting a hassle-free experience with instant issuance of policy tailored to their needs.
The collaboration between pure-play financial institutions and insurtech platforms along with API integrations can make the accessibility of products seamless via their smartphones. The API integrations have the potential to offer a greater degree of personalisation to the customers with a quick turnaround time.
Insurance is being integrated with other products to increase penetration and provide insurance to the customer when it matters the most. By using technology and reducing operational involvement customers are offered a policy at a lower premium and with lesser turnaround time.
The three core challenges i.e, lack of awareness, accessibility, and affordability are being addressed constantly through various innovations and advancements. The imperative is to overcome barriers related to awareness and affordability that widens the inaccessibility gap.
What other/more digital facilities could be embraced?
• AI capabilities at scale – Engage with customers leveraging AI to detect new purchasing patterns, tailor offerings and optimise the sales process and increase the relevancy of the insurance plan offered.
• Data-driven decision making – By accessing the diverse source of data science will be able to offer better premium prices, innovative personalised products, and services.
• Digitising claims using machine learning – To speed up the claim process and make it more efficient for customers, the best next steps can be identified in the customer journey to reduce manual touchpoints. Even it can help insurers in making the right decisions about leakage, delinquency, accuracy, and fraud.
How do you elaborate on the security/safety side if the insurance sector gets completely digitalised?
• Customer data security – Implement best cybersecurity practices over the cloud with secure encrypted personal data. Things like GDPR help in understanding the framework better.
• Security of health records punched on policy – Maintain the privacy of the records using cloud security and fraud detection technologies.