With the use of technology, traditional insurance processes can be enhanced and the insurance business model can be reconfigured.
The Indian insurance market is gradually shifting from being an agent and broker driven seller’s market to a digitally driven buyers’ market with the customer at the center of digital transformations across the value chain, as per CII-EY report titled Insurer of the Future.
Technology is being rigorously pursued for connecting with customers digitally in each stage of the value chain including product design, marketing or sales, underwriting or pricing, customer servicing and claims management.
Despite rest of the financial services adopting the new technology value propositions available in the market as an enabler of business strategy, insurance is yet to pick up the technological pace.
The insurance industry is at the threshold of a long period of growth. With the rapid change in technology and digitization, the drivers of insurance business are changing.
Those insurers who disrupt themselves continuously would be the ones who will succeed in the long run.
All stakeholders the industry, intermediaries, Government and regulator need to work together in transforming customer experience, as per Sanjiv Bajaj, Summit Chairman & Chairman, National Committee on Insurance & Pensions, CII.
Insurance Industry has made strides over the last one and a half decade riding on entry of private sector, introduction of new products and expansion of reach on a large scale, and to repeat the same kind of performance in the next 10 years the industry has to gear up for introduction of flexible products, and adopt of new strategies to reach out to exploit the full potential of the vast unexploited market, said TS Vijayan, Chairman, Insurance Regulatory Authority of India (IRDAI) at his inaugural address at the 18th Insurance Summit of the Confederation of Indian Industry (CII).
There is a huge market available, but bringing suitable products to cater to its needs is a big challenge.
Besides leveraging the data available with the all the government agencies like various registration authorities, Aadhar and financial sector KYC (Know Your Customer) registries would expand the reach of the industry phenomenally, Vijayan said.
The industry should design products in such a way that they could make it easier for the customers to tide over situations like fluctuating income levels and other risks during the long tenure of the plans, stated Vijayan.
Linking the products to Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Insurance Schemes like Jeevan Jyoti Bima Yojana, Suraksha Bima Yojana and Fasal Bima Yojana would be key to achieve 5x (five times) growth in the next 10 years, IRDAI chief added.
The Insurance Industry has collected a premium of over Rs 4.5 lakh crore in 2015-16. Creating awareness about the benefits of insurance would be one of the efficient tools for increasing penetration, the IRDAI chief said.
Prime Minister’s insurance schemes has brought in 13 crore customers. There are about 20 crore vehicles registered in the country but only 8 crore are covered for third party insurance.
Even if the remaining vehicles are tapped for third party insurance alone it will be a phenomenal success. About 80 per cent of the properties are not insured.
The changes happening in the economy especially under Make in India is creating an immense opportunity for providing insurance cover to MSME sector. These are some of the strategies Vijayan has suggested to the industry leaders.
With the opening up of the industry to the private sector, which spawned numerous products catering to various needs, has resulted in the industry growing at a compounded annual growth rate of (CAGR) of 17 per cent.
High upfront cost of the insurance products is considered to be a negative aspect, but Vjayan thinks that sufficient remuneration for agents was a must for encouraging them to build business and increasing the reach of the industry.
The Insurance Companies need to leverage the data available through Bank Accounts, Vehicle Registrations, Agricultural Insurance to create basic products to create the awareness about Insurance and then to leverage this awareness to increase coverage and penetration.