Technology is reshaping almost every sector in the economy, and the Indian insurance industry is no exception; It is on the cusp of a significant technological transformation.
With India set to make insurance a $280 billion industry, technology has a vital role in enabling this phenomenal, inevitable growth.
The insurance industry: Then and now
From being limited to public sector undertakings to warming up to liberalization reforms and accepting FDI, the insurance industry of the new millennium was an entirely different beast as compared to its 20th Century counterpart.
The last two decades, however, have seen this industry through near-exponential evolution catalyzed, this time, by technology.
The insurance space has previously operated within the barriers of traditional frameworks and manual functions. But as IT gained a foothold in insurance, it brought about fundamental changes in day-to-day operations, customer outreach and service, fraud detection, prediction of risk, and ultimately, risk prevention.
The deployment of new-age technological advances such as: smartphone penetration, Big Data, Artificial Intelligence (AI) and Machine Learning (ML) is changing the face of insurance in India.
The increasing use of the internet has transformed the distribution channels for insurance products.
The key catalysts
Technologies with prevalent use-cases in insurance – or Insurtech – have emerged from varied domains of innovation.
Some of the critical changes that have powered the evolution across the sector are:
Smatphones & Internet
Smartphones and easy access to the internet have created the single most substantial growth in serviceable customers and made it possible to reach underserved parts of the nation where physical presence has not been practical.
AI & Machine Learning
Artificial Intelligence and Machine Learning have facilitated the analysis of customer-related data and, as a result, led to better risk profiling and precision in premium calculations.
Internet of Things
Internet of Things or IoT has enabled the real-time collection of behavioral data about the insured. Better tracking of a vehicle’s usage, for instance, could be factored into the calculation of premiums or even lead to more unique pricing models such as paying per number of kilometers driven.
Blockchain could be beneficial in various aspects of Insurance: transparent claims; obtaining data driven insights to offer best services to customers; and supporting more efficient payments between insurers and third parties.
Drones & IoT
Drones and IOT devices are useful in gathering required geographical data using sensors, pictures, etc. and transmitting such information in real- This technology would be used primarily in farming sector at regional/local levels for assessing land and crop health; extent, type and severity of damage, issuing forewarning, and settlement of compensation under crop insurance schemes.
RPA – Policy issuance frameworks old and new serve comparable functionalities where a lot of clients are associated with giving an assortment of strategies, dependent on certain characterized procedures and standards.
Scalability unfortunately isn’t viable and what makes it cumbersome is multiple systems a policy punching employee must go through, which hinders the procedure significantly further, leading to inefficiencies and mistakes. RPA has permitted the issuance framework to understand information and process it from different frameworks.
The future of innovation
Aside the widespread technologies fueling the changes in the sector, the industry is preparing itself for the next wave of evolution. Insurance companies have been exploring use-cases in upcoming technologies like Blockchain or DLT as well as smart contracts based on this technology.
Some of the explored applications are the underwriting of group or community insurance, transparent premium fluctuations based on customer behavior, and automated claims settlement for sufficiently evidenced claims.
Bajaj Allianz is among India’s top private-sector insurance providers to have adopted key technology-based business initiatives.
Bajaj Allianz has unfurled online interactions through AI-powered chatbots, web portals, mobile applications, and insurance aggregators to facilitate the online purchase of insurance plans and registration of claims.
Besides, the company has also established its presence across a multitude of digital channels to serve any customer remotely. We are using Blockchain in real-time claim settlement for Travel insurance.
AI enabled bot is helping customers resolve their queries online. Many such technological advancements which we are using help us in achieving our Motto, “Caringly Yours”.
For the insurance industry, long-term growth opportunities shall largely reside in digital solutions, technology-based processes, and innovative products. A glimpse into the future of the industry reveals – more remote distribution and customer service channels, increased automation.
Insurers of the future will be more focused and inclined towards risk prevention rather than risk mitigation.
President & Head of operations
Bajaj Allianz General Insurance Company Ltd.