Author: Atul Pandey, COO & Principal Officer, Bimadirect
Like it has been doing for other business areas, technology is helping the Indian insurance retail industry to transform itself and become more customer-centric. Last mile processes pertaining to retail customer engagement and education, product information, sales fulfillment and claim servicing are slowly and steadily moving to the Internet based online channel with voice support delivered via call centers. What has fuelled this? The answers are quite simple to comprehend.
Increasing internet and mobile penetration
Internet and mobile phone penetration along with conversion to smart phones is growing rapidly in India. With 900+ million mobile subscribers, 240+ million internet subscribers and 160 million+ smart phone users with ability to browse the web on their mobiles, the digital economy has truly arrived (Source: IAMAI). The given numbers are increasing rapidly. There is a general positive buzz about e-commerce which seems here to stay and transform the way we live.
Increased competition benefiting the customer
Post-liberalization of the insurance sector with many new private insurance company entrants competing with established legacy public sector companies, the competition to cover the risk of an individual has increased manifolds. Innovation in products and services are essential for survival and the insurance companies have stepped up their game. This game will increasingly get played on and enabled by the digital medium and the internet. The earlier model of reaching an individual customer via an agent or a branch office rep entails higher cost of customer acquisition when compared with web and call centre based customer engagement and servicing. The customer benefits in many ways, one being the ease with which a dialogue is now possible with the insurer to seek product and policy clarifications and get resolutions to issues.
Technology enables innovation
Technology has given rise to a new kind of thinking amongst the underwriters of risk and insurance product managers. Soon enough, like it is already being experimented with in a few developed countries, car insurance premium would differ depending upon your address in a city. You could be charged more for busy and thus accident prone areas when compared with say city outskirts or other sparsely populated areas with good wide roads and ample parking space. It is not unthinkable that we would soon have devices in the car monitoring location, speed & so on which could be linked to the car insurance policy in certain obvious ways. IoT or Internet of Things could deliver real time underwriting and risk premium determination and compliance.
Take the case of online Term Life Insurance plans. It was the first of the Life insurance products to have moved on the internet and quickly becoming a product category by itself. Launched by a certain private insurance company a few years back to gain a foothold in a market dominated by LIC and other entrenched players and now emulated by most of them including LIC, the product has helped create brand names for certain insurers, educated the customer that insurance is not really an investment but pure risk cover, and has thus started to rightfully address and eliminate any legacy of perceived life insurance mis-selling.
The premium is much lower for this product which can only be retailed and bought online when compared with what was sold manually by the agents earlier. The lower premium has been made possible due many reasons- modern & revised actuarial tables of private insurers due their international data set and experience, increased life expectancy in India, lower intermediation or commission costs, a certain typical profile of the online customer from an awareness and education perspective with insurance companies perceiving them to be low risk, and so on.
The way travel insurance products are bought and managed is changing too. A flyer can now buy and self manage and change a travel insurance policy on the internet in sync with last minute changes to travel plans whether due curtailed dates or more days or changed dates. Likewise, innovations to other areas of insurance would also become possible due a high degree of connectivity and automation that is being spawned rapidly.
Buyer seller transparency and quick fulfillment
The internet has enabled not only the insurance companies to offer their products online with full information but has also given rise to demand aggregation websites providing transparent product comparisons both for price and features. The price or the premium for a policy is no longer a hidden item being read out by an agent. It is now transparently available to all. Likewise for all the benefits offered, the conditions included and those that are excluded.
Rather than seek a connect with many insurers, a customer may now visit “Compare & Buy” insurance portals operated by licensed insurance intermediaries who provide detail of all products available in the market for a given category. Such sites connect online with many insurers and offer the customer immediate product fulfillment in one seamless session starting from the comparison site and ending on the insurer’s site with policy arriving as a PDF attachment in the mailbox. This is particularly true in the case of mass market guaranteed issue products which do not require any specific underwriting or physical verifications and checks.
These could be, for example, a health checkup in case of health insurance for a young person seeking a reasonable sum insured which is below a certain amount, car insurance of not-so-old cars from known manufacturer’s registered in known cities, term life insurance plans below certain age and sum assured thresholds, and so on. Where an insurance product is not guaranteed issue and does require underwriting check and validation, the buying process gets initiated online with premium payment done via credit/debit card or net banking. Call centre reps coordinate off line activities like health check up etc which when successful leads to electronic policy issuance via mail.
One of the key reasons for any insurance claim denial historically has been incorrect or improper and incomplete declarations on the part of the customer. With the advent of filling up of web forms on the net whose copy may be retained, this issue has been largely overcome. The buyer of insurance is no longer dependent on a not so careful insurance agent causing wrong or insufficient disclosures in the manually filled proposal forms. With self data entry, proper and accurate disclosures are the norm of the day eliminating any disagreements at the time of claim processing. The storage of electronic data also lends itself to lower administration cost for the insurance companies and faster claim settlements to the benefit of the customer.
Improved customer service
Most insurance companies and licensed intermediaries are already serving the customer online for offering information and clarifications, policy renewals and claim initiation and settlement. This so far has predominantly been on the desktops & laptops. With the kind of growth that tablets & smart phones are showing, it is only a question of time before we will see abundant availability of mobile apps providing instant on demand services like nearby network hospitals for cashless hospitalization and treatment, nearby network garages for cashless maintenance of motor vehicle claims, list of documents required for claim filing, the procedure to do so, and so on. That when coupled with call centre voice support and assistance will truly deliver the highest level of customer service.
Till about a decade back in India, insurance for individuals and their families was a largely misunderstood and difficult subject.
One can argue that life insurance was mis-sold and/or bought for the wrong reasons, like saving of income tax under section 80c, or as an investment for future requirements. The fact that life insurance is meant to cover financial risk only by providing a sum assured to the family of an insured upon his/her untimely death, and is never an investment with assured or otherwise returns, was neither explained well to the buyer in many cases nor was ever asked of the seller. The general insurance side (health, car, home insurance) also had its own challenges of opacity of information and questionable communication. Sellers, if they wanted, could thrive in the lack of clarity and opacity and customers did not have much information or recourse. A few years back, things started to change. Today, they are becoming quite different and refreshingly so.
Technology and Internet are gradually changing the way insurance is understood and bought. There is a long way ahead though, but it is quite evident that right selling of insurance in a transparent manner serving only the just needs of a buyer is becoming a reality.
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