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Technology & Skilled Manpower can help insurers improve insurance penetration in India

Technology-led disruptive ideas are essential in changing the face of businesses and can make a huge impact on insurance companies

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Insurers around the world are harnessing the power of digital to re-think their business, build highly efficient models as insurance product developers and aggregators. Taking a customer centric view of the organisation, using creative strategies to connect and engage, and innovating products, processes and experiences to enhance revenue is all part of the transformation.

If you look at the US and UK markets, you see new-age insurance providers with policies built around lifestyle-related risks. We now have Lemonade in the US, which is making a mark in home rental insurance. Lemonade has created a new business model for insurance based on behavioural economics and technology. The company uses artificial intelligence and chatbots to deliver insurance policies and handle claims for its users on desktop and mobile (through its iOS and Android applications) without employing the use of insurance brokers. Ditto with Trov, which is working to solve content coverages offering insurance for individual items that can be toggled on and off using "micro-duration policies". Who would have imagined this a decade back?

If we shift focus to India – which is now amongst the top 5 economies in the world with its steadily growing middle class, a clear issue of insurance penetration can be seen despite recent growth numbers. The domestic life insurance industry registered almost 11 percent year-on-year growth for new business premium in 2017-18, generating a revenue of Rs 1.94 trillion (US $30.1 billion). Meanwhile, gross direct premiums for non-life insurance industry increased by almost 18 percent year-on-year in FY18. The government's policy of covering the uninsured cannot be the only push to increase the country’s insurance penetration.

In India the consumers and the insurers need to shift their mindset around buying insurance – and it calls for insurers to help educate the masses around the value add of insurance. Insurance only makes sense when put in context. One must understand and be aware of your risk to desire coverage. Insurance is and will continue to be a push-product. No one wakes up excited that they're going to buy insurance today, but we can change that as we begin to see insurance as a more integrated part of our lives. You have a fitness goal, so you should get a policy with your gym membership. You'll be commuting between Gurgaon and Noida for your new job - get insurance to cover the commute. The future of insurance distribution lies in creating that context.

By 2020, India will be the youngest country in the world with an average age of 29. The modern Indian worker is a digital native and has variant lifestyle needs. It's vital that organisations begin to consider the unique needs of this demographic. Current corporate programs are not catering to the needs. Modern Indian youth are not interested in blanket coverage insurance policies, which do not speak to their lifestyle. They're unable to put context to products, making the current offerings futile. This is the opportunity and challenge for innovation in the insurance ecosystem. The traditional model may no longer yield optimum results. The traditional offline model is broken, difficult, and expensive. Digital partnerships, which allow the customer to see and protect their risks, will lead. It’s clear that the problem of low insurance penetration can only be solved at the intersection of technology, product development, reduced regulatory cholesterol, and skilled manpower across the country.

Technology-led disruptive ideas are essential in changing the face of businesses and can make a huge impact on insurance companies. In a highly competitive industry that is not traditionally known for innovation, changes in demographics, technology, channels and business models are creating significant new opportunities for insurance companies to defend market share and increase revenue and margins. The need to innovate, and to do so quickly, is now deemed critical by most of the insurance companies.

Innovation can come in different forms, from policy disbursement to claim and settlement, enhancing customer experience, while being an enabler to achieve scale. It is also enabling insurers to move ahead and create digital offices, where salespersons could sell insurance policies via mobile and complete the processes within minutes and hours, instead of the numerous days that it used to take earlier.

Insurance product development companies are designing innovative products like Cycle Insurance, Dengue Insurance, Daily Commuter Insurance, etc. Giving wider options and flexibility to customers to choose as per their needs and specifications is spicing up the insurance market. This is simplifying the products and making it reach to customers like never before. Insurance companies were dependent on bancassurance, agency or direct sales channel to sell products, but web aggregator insurance companies are creating collaborative approach to sell products in untapped market segment. However, they alone cannot create the desired changes. It would require support and participation from other players in the eco-system including new-age fintech companies.

Products such as motor, travel, and personal accident insurance require very little changes as they are based on prospect information. The intervention required for such products is minimal and the training and exams for such persons could be of a lesser degree than those for a full-fledged distributor. In fact, last year, IRDAI had allowed the life insurance industry to use point-of-sale persons to sell life insurance products. For this, it identified products that are simple to understand, and in which the benefits are stated upfront and they are fixed and predefined.

So at an aggregator level, people must understand that there is huge potential for insurance in India. India still has low, single digit insurance penetration – despite the number of insured increasing during the last few years. With a population of over 1.3 billion, it's an epidemic. We're incredibly underinsured.

The next five years an estimated 500 millions first-time internet users are expected to come online via mobile: The Next Half Billion. India has a young, growing middle class, with an increasing awareness for the need of protection and retirements planning, which will support the growth of Indian insurance. Technological advancements can make a change powered by the increase of mobile phone penetration, reduced data service costs, and introduction of Aadhaar.

Regulators are doing their bit to reduce the cholesterol by empowering insurance companies to train manpower and conduct the test internally, but the ability of insurance companies to hire, train and have a consistent future hiring pipeline will be a key differentiator to the growth story of this untapped industry. The next generation of employees needs to be able to think through products and create solutions that solve real problems for the mass in a contextualized format.


By Rohan Kumar – CEO & Co-Founder - Toffee Insurance and Amit Vadera – Head of BFSI and PSU Vertical, TeamLease Services Ltd.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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