If we look at how the insurance business has been carried out over the years, it is evident that functions such as underwriting, issuing policies, distribution network and claim settlement etc used to be heavy on paperwork and manual effort. If a person needed to buy a policy then he will contact an agent who would get the form filled and deposited personally. The person would then need to wait for weeks to get the policy issued. Claim settlement was another such laborious issue.
However, with the emergence of insurtech, things are changing rapidly. Insurtech is a broad term given to various advanced technologies such as automation, computerized processing, AI, data analytics, machine learning and digital marketing etc. Various insurtech startups and platforms are creating customized tools based on these technologies to make insurance a less labour intensive and more efficient business.
In the post-pandemic scenario, technology is going to be the key to consumer satisfaction and it is transforming the insurance sector as well with automation of conventional processes. To see how things are changing through insurtech, let’s start from the way insurance companies market their products these days.
Since the distribution has gone digital, it has also simplified and empowered the sales operations. The customers can directly evaluate the products available online and interact with the sales personnel through live chat and make the purchases online from either the insurance company website or the insurance aggregator platforms.
Although, in a country like India, majority of the insurance sales still take place offline, the trends are definitely changing. Most of the leading insurers have already developed advanced digital platforms for consumers to buy policies online. The day is not far when most of the insurance sales across India will take place digitally.
The direct digital access to insurance products and online purchases are not the only areas of insurance operations that are being transformed by technology. For instance, underwriting is a specialized activity which is now witnessing digital transformation that is highly data driven. Wearable medical devices provide precise data related to a person’s health condition and also facilitate continuous monitoring to aid the underwriters.
One of the biggest transformations which is going to lead to mass adoption of insurance in India in the years ahead is the digitization of application and policy issuing processes. Barely a decade ago, the process required filling up of complex forms and things like e-signatures and e-policies which are common now, were considered unthinkable. This has led to great efficiency in seamless customer service and things will only get better with further innovation.
An important and impactful change brought by technology is the process of claim settlement. Automation of the processes has literally created capabilities which would have been considered as science fiction a generation ago. The technology driven claim verification, evaluation and payouts have become almost a breeze. For instance, if a car gets damaged in an accident, there are tech tools which enable accurate assessment of the losses and insurers are empowered to make payments almost on-the-spot.
Usage of technology driven platforms especially social media has transformed marketing operations in the insurance sector already. Insurers are constantly using automation to mine social media data and revamp their customer experience based on the insights generated from data analytics. The impact of digital marketing in insurance is even greater in the post-pandemic scenario as most of the audience is likely to look online for the right products.
This digital marketing integration has directly led to the revamp of distribution channels for insurtech companies. With e-commerce features, there is a rising trend of direct distribution wherein customers looking for insurance products directly access the company website online and through mobile devices to search, analyse, and buy insurance policies online. This digitization is doing away with the need of an elaborate intermediary distribution network. Regular insurance products such as car, personal, health and property insurance are now being sold online seamlessly.
Insurtech is also going to drive inclusion. We are soon going to see the implementation of micro insurance regulations in the technology driven landscape. We are already seeing changes in the global insurance ecosystem and technology has now enabled insurers to reach new mass markets with ease. Data gathering and analytics will boost penetration of insurance products in previously under-covered areas such as non urban India.
Through the power of automation, digital smart phone apps and advanced analytics, AI and IoT tools, we will see digital insurance companies enjoy greater efficiency and customer satisfaction with even a lower human workforce. These type of leaner organizations with wider coverage are going to gain prominence in the future insurance ecosystem.
- The article has been written by Mr Subhajit Mandal, Co-founder of India InsurTech Association (IIA)