By Chirag Buch, Managing partner, SE2 India
Insurance is one of the fast-paced industries in terms of the adoption of digital technologies. With the advent of the internet and consumers becoming more perceptive with digital, today, buying insurance has become effortless. Purchasing of policies is instantaneous, touchless, and can be purchased online or using mobile devices. Customer experience is not just about the front-end presentation-Today, the customers want self-service capabilities. They want to begin their research online, seek views through their social networks, and get feedback from their peers. There is a shift happening from, "I spoke to my Dad, and he introduced me to his financial advisor," to, "I'm talking to my social network, and I intend to buy online." Therefore, people do buy simplified life products without a financial advisor.
While current distribution channels will not go away soon, direct-to-consumer is an emerging channel, especially for products that are simpler and have modest insurance value that cater to the millennials and mid-market consumers. Driven by customers' needs, digital transformation continues to remain a key priority for the insurance carriers. However, many insurers remain constrained by the complexity of their backend systems, resulting in genuine concerns around agility, value, and delivering the right consumer experience.
In India, too, the picture is not very different. Consumers are demanding more simplified products, as well as a growing preference for bundled products with the overlap of income and mortality risk. They are also willing to make a choice themselves rather than be led by an intermediary. Ultimately, much of the struggle comes back to the antiquated backend architectures. Without an agile, flexible architecture in place, many insurers struggle with launching products fast enough to capture new customers with these preferences and gain market share. However, many non-traditional disruptions are underway. Last year, Amazon, Flipkart, and Paytm were all in the news for seeking Insurance Regulatory and Developmental Authority of India's (IRDAI) approval to sell insurance. There is a broad consensus that simplified products sold via digital platforms that allow consumers to buy insurance seamlessly present an excellent opportunity to penetrate and grow the under-penetrated insurance sector in India. One significant catalyst is the advent of widespread and affordable internet connectivity in cities and towns that have allowed making insurance products available digitally.
And this is where InsureTech comes in. After the FinTechs, it is InsureTechs that are looking to disrupt this industry with cutting-edge technology to simplify insurance for the end customers. InsureTechs have made innovation readily available and adoption seamless. More and more insurers are aware of the disruption technology is causing to this industry and, at the same time, looking for avenues to engage with InsureTechs. Outsourcing service providers, on the other hand, are collaborating with InsureTechs to build an ecosystem to leverage the technology for their clients to help them with faster go-to-market solutions.
InsureTech is often viewed as being a collection of smaller, customer-centric startups that push larger traditional insurers to rethink the customer experience they provide and to transform their business models. There is more to it-InsureTechs are technology enablers that help enterprises address industry needs at a much quicker pace. They can simplify products and launch them in just two months instead of more extended gestation periods of 12-13 months traditionally. InsureTechs utilise technologies such as IoT and AI to make the claims processing happen seamlessly, and processing of policies now takes only a few weeks. InsureTechs are putting AI to achieve accuracy in underwriting. They are using machine learning to automate the claims processing and implementing robotic process automation (RPA) to automate several processes in the backend, making it much easier for the insurance carriers to deal with the growing customer needs.
The InsureTech story is more of partnerships and eco-systems in the form of innovation labs, long-term collaboration, idea accelerators, and sponsorships. From the use of AI and chatbots to digital marketing, InsureTech is driving the development of innovative customer-centric products. They are reimagining the selling and servicing of insurance and taking advantage of broader technology trends such as big data, machine learning, AI, and wearable devices, to name a few. By having a modernised back-end that can plugin APIs and exposes those capabilities into the presentation and experience layer, you can create an engagement model that makes consumers want to work with you and be loyal to your brand. By breaking down the customer journey, prioritising pain points, and redesigning those journeys to focus on what matters most for the policyholders, carriers can differentiate themselves as a customer-centric business.
InsureTech as a concept is relatively new in India as the insurance companies still follow the legacy mindset with processes more focused inwards than outwards. We believe it will be the disruption driven by InsureTechs that will finally drive growth and penetration of insurance in India. Leveraging digital technologies, developing innovative, simple, and on-demand products, and driving customer engagement levels will be the catalysts for growth.