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4 key areas that can transform the insurance industry in India

By Edil Corneille

February 16, 2021

  • Fedo
  • India
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insurance, insurtech, FinTech, The insurance industry is no exception to the disruptions caused by emerging technologies and finds itself at the cusp of innovation and possibilities like never before. New opportunities are arising, and business models and delivery are enhanced with InsurTech, a portmanteau of the words insurance and technology.

Prasanth Madavana, Co-Founder & CEO, Fedo mentions that for insurers focused on serving the needs of consumers in health and life insurance, the opportunity and need to drive digital transformation fueled with data and intelligence is the need of the hour. Consumers are increasingly aware and wary of risks to their health and life especially in wake of the COVID-19 pandemic. This allows insurance leaders to better bridge the gap between trust and empathy, which is essential to increase the penetration of insurance in India and around the globe.

The opportunity for customer delight and business success is now deeply intertwined and visionary insurance organisations are swiftly moving the down the path of rapid discovery, learning and transformation; experimenting and adopting a wave of technologies, data, insights and tools which are now more easily available.

Thus, the opportunities and trends for the insurance industry can be summarised into the following significant four areas.

1. Responsible data

Most insurance companies deal with an abundance of user data from various sources – policy records, claims, equipment sensors, social media, transaction data, etc. The quantum of data insurers deal with is bound to increase exponentially as the world becomes more digital.

Artificial Intelligence (AI)-based data management tools and algorithms are the need of the hour. It is imperative for insurers to ensure the fair, transparent, and accountable use of AI to enable justifiable decision making, guarding against the use of biased algorithms, and maintaining user privacy.

Insurers will also need to have robust cybersecurity systems in place to prevent data breaches and cyberattacks. The responsible use of AI and data is crucial for insurers to maintain customer trust and loyalty and more importantly seek data with consent.

The underpinning of the use of Intelligence and data needs to be firmly embedded in principles of fair, responsible and empathetic uses.

It is important to have clear principles of anonymisation of data ensuring privacy and respect of the data and insights gathered from consumers and institutions alike.

2. The BOT and language explosion

Consumers prefer using websites and mobile apps to browse policies, compare quotes, and make an informed purchase decision. There is an increasing trend of users seeking straight through, digital-only user journeys in the purchase and renewal of policies. In the area of assistance, consumers are increasingly comfortable interacting with non-human interfaces including conversational bots and virtual assistants.

The acceptance of bots is much more established now and even accepted as they ensure instant resolution of queries and more importantly, in offering contextual and precise information, which was quite often not possible in manual interactions.

Online virtual assistants can considerably enhance customer experience by instantly addressing queries and providing support, eliminating the need to keep customers waiting for the next available agent. As AI technology advances in terms of interaction and conversational capabilities, we may not even be able to differentiate between human and bot interactions in the future.

One of the largest stumbling blocks for digital growth of insurance has been the language barrier in a country like India. As multi-language skills in automated interactions gain maturity and intelligence, the opportunity for insurers to serve the needs of their consumers and partners is significant. With intelligent and scalable automated multi-language capabilities, the opportunity for insurers to assist and digitise both pure online and offline channels is immense.

3. The ‘I’ in everything – Personalisation!

For the modern customer, personalisation is everything. Be it fashion, gadgets, or content from OTT providers, hyper-personalisation and tailored services are baseline expectations and often lead to increased sales. As a general rule, people are more inclined to opt for products and services with the “specially made for you” tag. Why should the insurance industry lag behind?

A simple way of increasing insurance penetration is to reach out to customers with targeted offers and pricing to encourage insurance buying. AI and Machine Learning (ML)-based tools would help insurers provide customised policy offerings to consumers by determining their financial stability, lifestyle, and possible risk factors. For instance, customers who are regular in their financial patterns and exhibit lower risk factors would qualify for lower premiums. Personalised services could significantly increase sales and customer loyalty and ensure a higher success rate when cross-selling.

This would also require changes in risk and actuarial models, but more importantly in creating an ecosystem and network of systems which have personalisation at the core, would be of strategic importance in realising the value of ‘I’ in personalisation.

4. Rebooting the operating model

AI and Big Data are central to the reinvention of the traditional operating models of insurance. Insurance companies can automate tedious and manual processes like underwriting and claims management to increase efficiency while increasing accuracy and output. For the smart management of claims, insurers can deploy AI and ML-based models to access the severity of damages via intelligent image processing, predict repair costs, and provide instant updates to both the insurer and the consumer.

Advancements in digital technologies would also enable the accurate analysis of user data to determine their risk profiles, allowing insurers to price their policies accordingly. Insurance companies can take advantage of wearables like smartwatches and fitness bands to track consumer health metrics and promote active lifestyles. For instance, insurers can offer discounts on policies or price their premiums based on people’s activity levels. Not only would this provide insurers with a comprehensive overview of data but would also encourage consumers to practice a healthier lifestyle.

Technology can remarkably aid insurers in streamlining their services and making them more customer-centric to ensure easy insurance buying and selling. The experience quotient is poised to become a deal maker/breaker in the insurance sector. Organisations geared towards customer-centricity and ecosystem experiences on the back of technology will be the natural winners in the coming decade.

ALSO, READ: Applications of Artificial Intelligence In Banking 2020

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