Insurance in India is known for its penchant to rely on personal selling methodology. Traditionally, around 80% to 90% of insurance business is done via physical sales channels. This implies that there is tremendous opportunity to explore the digital way of selling. With the COVID-19 outbreak, insurance providers have taken on the challenge of digital selling wholeheartedly. Insurance has immense potential for major development in sales, service and product development. The adoption of InsureTech will enable these providers to have increased customer engagement, increased use of analytics and convenient adoption of mobile and social media for customer communication and transactions. Thus creating an eco-system where customer experience, product development and technology work together.

Since InsureTech has had a tough time finding a foothold during early adoption, it directly hived off from FinTech with a crystal-clear focus on the insurance business to develop a niche. FinTech also helped InsureTech by making it more inclusive for Banks, NBFCs and MFs. Today, InsureTech is considered as one of the key contributors in the deepening the insurance reach across the country and increasing market penetration multiple times over.

InsureTech has also largely been in the distribution and aggregation space and customers are now aware of the digital products and services across life, general and health insurance. It has carved a space by creating a funnel from lead-to-closure that is managed with very little or no manual intervention and has particularly found a great response among the millennials. Through various initiatives, insurers have enabled purchase of Life Insurance with remote fulfilment from the comfort of one’s home.

Opportunities for InsureTech

While physical selling channels are always going to be the dominant channels, InsureTech provides multiple opportunities to balance the physical and digital. InsureTech can be implemented as a whole or partially, with backward or forward integration to create value. InsureTech can facilitate the creation of new markets, new distribution channels, new products but more importantly, in increasing the degree of insurance market penetration.

• Products: Data and analytics can be used to create strategically positioned products. This has led to a paradigm shift from product-based pricing to person-based pricing.
• Risk assessment: With the ability to utilise distributed databases using blockchain, the time to assess the risk can be brought down to a few milliseconds. This can shorten the decision-making time, remove any manual error and the knowledge gained is available digitally for further analysis
• Servicing: Digital servicing of the policies is crucial as it reduces the cost of servicing while maintaining the Customer First philosophy. By minimizing human intervention, the customers receive a consistent product and brand experience right from the very first stage
• Claims assessment and settlement: Data, analytics, and blockchain can play an important role in weeding out any fraud involved thereby reducing the time and cost involved in settling a claim. Other than the automation of claims or ease of claims settlement, the learning from this will act as an input in tweaking the product feature or design. One can use RPA, M/L in both the settlement as well in the design.
• Return on investment management: When it comes to market prediction, technology has been unable to predict sentiments relating to market ups and downs. However, technology can be used to identify the right vehicle of investment. Technology can give greater power to the customer to identify or move the investment based on the prediction which otherwise was limited to an investment manager
• Distribution beyond aggregation: Digital is all about creating new market opportunities and scaling the existing business models. Though InsureTech has restricted itself to aggregation, with focussed technological innovation, it can bring new, varied means of distribution as well and thus expand exponentially.

With the COVID-19 pandemic directing us towards a new normal, insurance has occupied top of the mind recall for buyers and has changed the value cycle completely. It is noticeably clear, that both forms of selling are going to co-exist for many decades to come and balancing the physical with the digital is the way ahead. However, the interesting point here is that InsureTech has proven to be a channel contender to traditional sales. Digital selling is contactless and has established a trust factor with the customers by ensuring complete transparency.

InsureTech has thus created an enviable niche for itself in the current insurance industry and contributes directly to building customer trust for the insurance provider.

By Sankaranarayanan R, Chief Technology and Data Officer, IndiaFirst Life Insurance Company Limited