Trends That Will Shape Insurance Industry – BW Businessworld
Insurance, which is an important industry for the economic development of a country, unfortunately, has low market penetration in India. However, there has been a shift due to the awareness of the importance of insurance amid the current pandemic situation.
Over the years, factors like complicated jargon and tedious processes have eroded the trust of customers in insurance companies. Quite an irony as the concept of insurance itself is based on trust that someone will take care of you when you are in need.
Some new-age insure-tech companies have been trying to simplify insurance processes to regain the trust of the customer. While the companies are working towards transforming the way the industry works, dependable support from the government and the Insurance Regulatory and Development Authority of India (IRDAI) has also helped in strengthening innovation and enabling the adoption of technology in the sector.
Some have also adopted cloud technologies for data storage paperless documentation and faster implementation of new solutions to improve the customer experience and availability of insurance.
The following trends are expected to become mainstream and help the sector:
Industries across sectors have seen a digital disruption. Technological advancements have made going digital easy. With the regulator encouraging new product innovations under Sandbox, technology can be leveraged with IoT-driven modules like wearable devices to track health parameters and telematics to track driving behaviour. With a shift towards digital insurance options customers would continuously look for “contactless’ or “zero touch’ solutions.
Insurers are adopting technologies like AI and ML to ensure that there is continuous automation and simplification of the processes for getting insurance or a claim. Another example is of using video calling or images to complete the inspection process of the asset without the intervention of a physical inspector. At the backend, Data Lakes will become mainstream as the technology starts maturing. External data will become one of the main data sources, and Data Lakes will be the de facto choice in forming a base for a single customer view. It will help improve the customer journey, thereby increasing efficiency.
Automation is going to increase manifold. Over 30 per cent of data-based tasks will become automated. It will result in higher rates of productivity, and analysts will have broader access to data. Automation will additionally assist decision-makers in making better decisions for their customers with the help of accurate analytics.
The industry has seen insurance for new-age products and concepts only in the last few years catering to millennials and Gen Z customers. Despite the current situation, these products could still see demand. For example, a fresher at a job will be able to purchase a mobile phone or rent a home. That is why products like mobile screen damage insurance, house content insurance, pet insurance or dengue insurance make sense to these customers. Also, these products are generally easy on the pocket.
The demand for such bite-sized insurance will only continue to rise, and such first-time customers will understand its benefits.
The IRDAI on 18 May 2019 came out with a draft for the creation of a regulatory sandbox to allow a favourable environment for insurtech and fintech companies to bring innovations in the insurance space. A sandbox is a workspace where tech-driven companies can ideate, experiment, test and innovate financial products. The move was to help increase the penetration and adoption of insurance in the market. The idea was to help insurance companies make bite-sized policies available on a larger scale so that access to affordable insurance increases. Documentation could also be reduced by bringing in faster KYC (know your customer) methods and tech-enabled automated processes for faster policy onboarding. The regulatory Sandbox will enable quicker adoption of developments technologically and improve the customer experience.
The Motor Vehicles Act that was introduced in September last year might have inconvenienced motorists initially, but it has had benefits for all road travellers. Insurance companies, of course, saw a sharp rise in the sale of motor insurance as a result. Companies that sold motor policies digitally were able to handle the traffic as they were backed by technology that helped them scale their operations as needed. The customers looking for a renewal of insurance were also introduced to a whole new way to buy insurance online at the click of a button.
The trend is expected to continue due to an increase in customers’ awareness of the simplicity of buying insurance online. While there might be a decline in new insurance policies right now, the renewal of existing policies can be made online. Onboarding that is done within minutes and the process of pre-inspection that can be in DIY video inspection format will also draw customers who want a fast policy and benefits they would get with a traditional insurance company.
The new-age customer experience requires an entirely holistic approach that puts the policyholders’ needs centre stage in nearly all aspects of the business. An effective CX strategy balances personalisation, empowerment and efficiency using a combination of human and digital solutions at every touchpoint throughout the customer journey. The strategy must be flexible enough to accommodate a wide range of preferences. While digital engagement is critical, consumers continue to rate providers who show empathy as a key differentiator among insurance companies. Hyper- personalisation is a baseline expectation and can only be achieved through detailed data analysis and modern digital capabilities.
The sector must embrace these upcoming trends holistically to contribute to the growth of the industry. While the Indian insurance industry is at the cusp of an evolution, it will be interesting to see the way the industry performs in the second half of the year in the current economic environment.
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. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
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