Insurance is the dark horse of e-commerce: Gunjan Ghai, SBI General Insurance

A recent report by the Boston Consulting Group predicts that the Indian insurance sector is set for digital disruption, with online insurance sales set to grow 20 times by 2020. To get a perspective on this trend, Dataquest spoke to Gunjan Ghai, SVP & National Head Branding, Marketing & Product Development, SBI General Insurance.

Some edited excerpts from the interview

In a digitized era, how do you think technology is influencing the insurance sector?
I call Insurance as the dark horse of e-commerce. While reports abound about how e-tailing is growing, few know that Insurance is already ahead in terms of penetration of digital in the business mix. However, a more fundamental change that is likely to pick-up in insurance is the digitization of business processes.

Can you share some examples?
General insurance companies are moving towards making claims, servicing, underwriting and operations digitized in a big way.  For example,  radio tagging cattle for tracking the cattle as an insured asset is something that has become part of the business.

Telematics to measure correlations between driving behavior and a likelihood of claims is something that some of the GI companies are experimenting with. Health data on mobile devices is also a future opportunity for health insurance companies to tap into. Hence, focusing on e-commerce would limit the view on how far digitization is fundamentally changing the General Insurance industry.

By itself, e-commerce has rapidly changed the business for simple, easy to buy products like travel insurance. For motor insurance and health insurance, the need for manual intervention to take the customer from interest to purchase still exists. This might be due to the relative complexity and ticket sizes of these products. This is likely to reach an inflection point only if the industry moves towards differential pricing on digital versus offline in a significant way.

3. Do you see a future where insurance companies use analytics aggressively to offer personalized auto-insurance plans based on driving behavior or food habits and genetic history to alter premiums?

For motor insurance, usage based pricing is something of interest to insurance companies. Worldwide though, telematics experience has been a mixed bag. While the 'Pay As You Go' (PAYG) model should have taken off, the reliability of the model, in terms of tamper-proof devices, the cost of the device, provider switching etc have been stumbling blocks to the model being successful. For India, if car manufacturers are able to deploy these devices across the range of cars and the device is provider neutral, there may be some merit in low car usage customers choosing to save premium.

Further, the regulators view on this would also determine the application and controls required for telematics. For health insurance, pricing based on genetic history is unlikely to kick in anytime soon as such a rating factor borders on discrimination against certain groups. Medical history based pricing or lifestyle based pricing would depend on the availability of credible and reliable data. While consumer electronics is moving in the direction of capturing health information on the fly, its reliability and correlations with health outcomes is yet to be established.