Insurance sector can witness humungous savings on its operational costs if it deploys the latest technologies such as big data and telematics. Pranav Pasricha, CEO, Intellect SEEC shares the insights and problems that ail the insurance sector and tells how these problems can be addressed.
What are your observations about the insurance sector when compared to the banking sector? Where is it moving to? What kind of tech challenges is it facing?
Insurance sector is definitely not as advanced as banking. Banking is used everyday as it is important for your financial security. On the other hand, people buy insurance and just keep it away. It is only taken out at the time of need. Due to this, insurance companies do have a little interaction with their customers. Although they are trying to increase the frequency of interaction, but it is very difficult for them to engage with customers on a frequent basis because the customers don’t have motivation to do so, unless they don’t go to companies where insurance is used as a wealth management vehicle. Like you deal with a wealth manager or a private manager, you deal with an insurance company. That changes the dynamics slightly.
The legacy issues are same for the banks and the insurance companies. The banks have a riding factor as the competition pressure keeps them always on the heels. If a bank has a mobile app and ATM network with notifications, etc, other banks will also try to match or surpass the customer experience by offering more innovative services. This kind of competition lacks in the insurance sector.
Given this, why is it that insurance need to upgrade to the next layer of technology? How does it open a window of opportunity for Intellect SEEC?
While the client pull for frequent interaction barely exists in the insurance sector, my belief is that insurance has more to gain from digital technology rather than banking. From the point of view of customer, banking may have a high plus point, but insurance companies can gain more by using the latest technologies.
On an average in the industry, an insurance player is spending 30-35 percent of the annual premium paid by a customer on operations and distribution. It is a huge cost considering the overall business. Suppose as an insurance company you are telling your customer that out of Rs 100 they are paying, 30% goes to the agent, operations and other expenses, it would come as a shock to them.
How can insurance companies reduce these expenses? Technology can address this issue significantly. The use of big data, social intelligence can help companies address this easily. An insurance company selling car insurance can find out about the driving habits of the driver, past history and social behaviour before giving him/her a cover. It will save insurance companies huge amount of money.
How easy and difficult is it to apply big data, analytics or IoT in insurance companies?
When we talk about IoT and telematics, places like India are much easier to deal with than places like the United States. The reason is that here regulation is more in fancy stage which is good as well as bad. In India, mobility is everywhere. So using a telematics solution is not a problem. You can install a solution into the vehicle and get seamless information about the vehicle easily. In fact in many cases, the biggest challenge in the adoption of telematics is nothing but privacy of data. In countries like US or UK, clients are more concerned about their privacy and so reluctant for an insurance company to put a telematics device in their car.
Challenges with big data are very different. They revolve around quantity data, especially for individuals or businesses whose digital footprint is weak. It revolves around quality and quality of information. In our solution, we have employed a lot of sophisticated tools or methods that help insurance companies to gather, process and analyse data to make effective decisions. Our company has achieved global best practice in data matching. In the US, for commercial entities, we can do 90% plus positive data matching which is a greater number.
What is Intellect SEEC? What are the sectors that you target?
Intellect SEEC is focused on changing the way the insurance industry works. We have tried to solve the problems of the insurance industry by building advanced technologies that help insurance companies to engage with the new-age digital customer. Our aim is to bring excitement into the insurance business which usually leaves a little scope for companies to interact with their customers. Intellect SEEC has tried to reduce the cost of insurance for end customers by about 25 percent as it enables insurance companies to use latest technologies such as artificial intelligence, big data and block chain along with the application of design thinking. We have questioned the traditional paradigms to create a tangible difference in a low-risk manner and have built a comprehensive mix of products ranging from distribution, underwriting to claims management, covering the whole insurance lifecycle.