Let’s reflect to a scenario a few years back. In 1995, I make a claim for my Maruti 800 and get my claim amount of Rs 20,000 within one-and-a-half months and I am happy. In 2005, I file for a claim for my Honda City and I am glad to receive my payment within 20 days. Today, if my car meets with an accident I expect my claim instantaneously. Is it possible to receive a claim within minutes? Has the insurance industry evolved out of its traditional mode to cater to today’s customers or to the millennials who are looking at instant services and more contextual and personalized solutions? The moot question is whether the industry today is equipped to reach out to the hugely untapped potential that India offers.
The insurance industry is undergoing a transformation today. Digitalization has opened up major opportunities for us. It has given us a breakthrough to deal with the challenges that we have been battling over decades. The advent of the insurance business in India dates back to 1818. The industry has had its presence in the country for over 150 years, yet its penetration is less than 3 percent of the GDP. A conventional approach, coupled with lack of infrastructure, has been the root cause of the industry’s inability to realize its full potential and penetrate the Indian market. However, today, the industry is embracing digitalization and transforming the way business is done. It has affected all the areas of operation of an insurer, including employees, customers and business partners. Most importantly, it has helped us address some of our major challenges.
Distribution Transformation
A weak distribution network and inability to penetrate into tier two and three cities was one of our biggest challenges. The brick-and-mortar model did not prove to be feasible in terms of cost effectiveness after a certain level. Digital infrastructure and rise in mobile connectivity in the country offered an opportunity to reach out to these areas and offer solutions and spread awareness about this subject. At present, insurance transactions like policy issuance, renewal, claim intimation and processing or accessing any policy or insurance-related information can be done through mobile applications via tablets or smart phones. Employees and business partners armed with smart phones and cashless payment solutions are taking insurance to customers’ doorsteps. Bajaj Allianz, with the help of this technology, has created virtual offices and has been able to reach out to 800 tier two and three towns in the last two years. Going forward, it will revolutionize the way this industry works and insurance will leave its imprint in the remotest corners of the country.
Simple Products and Solutions Anytime Anywhere
A complex array of product offerings and long processes involved in making a claim have also been a deterrent when it comes to insurance purchase in India. The digital revolution changed the way customers make purchase decisions or buy a product and paved the way for insurers to simplify this process to offer simple, customized and digitally-integrated products. Today, insurers are in the process of de-jargonizing products and simplifying the underwriting processes using advanced automation, machine learning and strong analytical capabilities. Considerable progress has been made in offering motor or travel insurance solutions to customers on an online or mobile platform. These products can be easily bought and renewed by the customer either online or via a mobile device within a couple of minutes.
Going forward, we aim to create flexible products that fit customers’ needs and allow them to tailor the product according to their requirement, easily on the go.
For example, if a family is looking at a home insurance cover as protection against burglary and malicious damage for the duration when they are travelling or are away from their home, they could tailor the product to their requirement for a price that fits their budget, make a comparison of the benefits and make a purchase straightaway in few easy steps. The use of big data, proxies and risk engines has enabled insurers to deliver simple solutions. Motor claims are now being settled via tablets; claims within the range of Rs 20,000 can now be settled within 1 hour. In the near future, big data and technology will help us further empower our customers by allowing us to provide a platform through which they can settle their claims on their own and receive the payment instantaneously via mobile applications.
Most importantly, digitalization has enabled the industry to provide customers with touch points that allow them to make a purchase or look for a solution in real-time anywhere anytime. For instance, the Bajaj Allianz mobile application, Insurance Wallet, empowers the customer to conduct all insurance transactions in real-time. The aim is to transform the entire customer experience and make it digital with no manual intervention.
Digitalization has created disruption across the insurer’s value chain. It has enabled seamless integration across systems that has reduced complexity and has improved the efficiency and efficacy of operations. Today, not only is it imperative for insurers to adjust to this rapidly changing environment, but also to be agile towards identifying future opportunities and challenges to leverage on.
The Internet of Things and its Implication on the Industry
The Internet of Things (IoT) opens up major opportunities for us. Internet connection in nearly every type of consumer device will result in huge implications for the insurance industry over the next couple of years. It will help us improve business practices and better assess clients’ risk levels. Most importantly, it will help the industry move from reactive compensation to proactive prevention. For example, integration with IOT devices like telematics in the car, health fitness trackers and Internet-based home security devices will help the insurers provide usage-based insurance by tracking the customer’s activity and subsequently offering discounts and other rewards for healthy and safe behavior. Bajaj Allianz set the platform for usage-based insurance in India by launching the industry’s first telematics-based solution, Drive Smart, for its motor insurance customers.
Social and Digital Media
As India’s middle class emerges with greater force, digital media is empowering customers to make informed choices. Previously, insurers did not have direct access to their customers. Today, social media has enabled them to gauge customer sentiment directly and address their needs through products and solutions. It has also opened up a platform to share information pertaining to insurance seamlessly. This technology is giving insurers more and more mediums to influence retention by engaging with customers directly via platforms like Facebook, Twitter, YouTube or even Google Hangouts. In the future, digital media will help us further intensify our contact with customers and provide them with knowledge and services, when and where it is most relevant for them.
The future offers a bright prospect for the Indian insurance sector. Riding on the digital wave, insurers will harness the power of technology, social media tools, new e-payment models and distribution channels to reach out to more and more people across the country. This will ensure that the majority of our population has a financial safety net in the form of insurance, so that in the wake of any unforeseeable crisis, nobody has to sell their land, home or jewellery in order to make ends meet.
Tapan Singhel, Managing Director & CEO, Bajaj Allianz General InsuranceCompany Limited writes this piece for FICCI BCG publication The Changing Face of Indian Insurance | March 2017
In motor insurance, surveyor roll is crucial. Digitalaization not as much support the Fauld control.
Good read. An insightful and futuristic article.
In the past 8 years – the digital revolution has completely transformed the life and thoughts of Indian population. The data and information flow has geared up with a mega speed. Information at fingertips – has become a reality. Indian geography and terrain cannot be compared with that of developed countries; where the area and population is in control and mapped.
Indian conglomerates like BAGIC must invest resources to design innovative products which caters the domestic market need – customised for the local prospects. To counter the reach and service in tier 2 and tier 3 cities; insurers must try induction of drones and resource sharing (like telecoms share their towers). To make the effective use of drones (accuracy); IOT device like telematics must be incentivised with Motor Insurance Premium. For instance, Indian motor insurance industry is famous or rather infamous for tough bargains on the reduction of Own Damage premiums. The maximum in the toughest situation of the insurer even closes at 80% OD discount (though unlikely with private insurers). Incentivise those customers who enjoy only minimal discounts like NCB.
I feel any insurer who would like to introduce the culture of gathering big data through IOT’s must provision some amount as an investment for future. It would be better and seamless if all private insurers or some collaborate and form a pool to induct ‘telematics’ in all vehicles. Restricting this device in car segment alone won’t serve the desired outcome. For the future vehicles going to ply on Indian roads, OEM’s should integrate the device in the vehicle. This will also ensure that the device is unharmed or not tampered. At the same time insurers can seek support on cost sharing of IOT’s with vehicle financiers especially NBFC’s and Banks. The data generated by this device are equally helpful to Customer, Insurer, OEM and Financing entity. Future ‘telematics’ devices must have “breath analyser” characteristics; help gather the data on the driver’s lifestyle. As I rest my pen, I strongly feel that insurance penetration will surpass the stubborn figure – 3% of GDP penetration, if all insurers try launching innovative products adding value to Indian ecosystem.