Technology will lead to a transformational change in the way insurance business is done in India, and will bring the sector on par with the developed economies across the world, a report said.
The Confederation of Indian Industry (CII) and Ernst and Young (EY) released a report titled Insurer of the Future, which recommended insurers to pursue technology to improve the traditional process and to re-configure the insurance business model.
The future for insurance in India looks not only exciting but also transformative, it said.
The CII-EY report said that insurers will need to evolve the way they do business across operations to become more customer-centric, data savvy and automated, across all processes.
By using the latest risk management tools and techniques, insurance companies can become flexible and cost efficient.
The customer is at the center of digital transformations across the value chain and insurance in India has moved from being a sellers’ market to that of a digitally driven buyers’ market, CII and EY cited in the report.
While other sectors have taken to new technology, the Indian insurance market has been slow.
The report said, that the insurance sector can use new technology like the Internet of Things (IoT), which can play a crucial role in assessing and pricing the risk of loss.
Similarly, Robotic Process Automation (RPA) that replicates human behaviour and executes non-judgemental sequence of activities can help insurers to automate client servicing activities, it added.
Insurance companies can also make better, informed strategy and policy-related decisions for insurance risk-management and fraud monitoring through collaboration with third party data service providers.
The drivers of insurance business in India are rapidly changing. Over the last decade and a half several innovations have smoothly blended into the ecosystem of insurance, be it in terms of products, distribution, technology or the basic way in which business is done.
Business as Usual of today is very different from what it was in the last decade and the insurer of the future will conduct business very differently in the decades to come, CII director general Chandrajit Banerjee said in a press release.
Technology and digitisation disruptions have brought the sector to a point of transformation and as it manoeuvres itself to the changing paradigms, there is a clear multiple level growth envisaged throughout the ecosystem of insurance in India, Banerjee added.
The use of technology in insurance can go way beyond customer targeting . The report says that it can be used to design specific products according to customers’ needs too.
Digital technology is used in product design chain which helps the insurers to customise products as per buyers requirement wherein the information is available at the click of a button, the report said.
The report said that insurers who use advanced technology in operating their businesses in the country are likely to be successful in the long run.
The insurance industry is at the threshold of a long period of growth. With the rapid change in technology and digitisation, the drivers of insurance business are changing.
Those insurers who disrupt themselves continuously would be the ones who will succeed in the long run, cited CII’s chairman of National Committee on Insurance and Pensions Sanjiv Bajaj in a statement.
Moreover, cyber and data security risks are the two areas which will present new opportunities for the reinsurance sector in future, CII and EY noted in the report.
India is a key player in the outsourcing business and accesses a lot of data globally and cyber risk is a key concern for clients, it said.
The risk is expected to increase in the future, with growth in big data and data analytics requiring even more data to be accessed.
While cyber liability insurance products are available in India, providing comfort to global clients on cyber risks is one of the key challenges for technology businesses.
However, this challenge can also be viewed as an opportunity, the report said.