By Arun Balakrishnan, Chief Executive Officer & Co-founder, Xceedance
Insurance companies across the globe are transforming operations and implementing digital processes to enhance the policyholder experience, increase efficiency, and gain a competitive edge. While many organisations in the sector were already exploring new ways to leverage technology to re-think their operations, the COVID-19 pandemic accelerated the need for fresh, digital-first business solutions in the sector. There has also been a renewed interest in insurance-focused technology accelerators, and many emerging insurtech companies are devising new techniques for delivering significant outcomes across the insurance value chain. Insurtechs are leveraging emerging technologies including robotic process automation (RPA), artificial intelligence (AI), machine learning, augmented reality (AR), and Blockchain, and implementing new, connected approaches driven by the Internet of Things (IoT) and connected devices. When combined with the regulatory framework, educational structure, and government support for 4IR, India is well-positioned to be a leader in this space in the coming years.
The emergence of the connected ecosystem
The insurance industry, like the banking and financial services sectors before it, is transforming. 4IR is driving much of that change through the creation of a new world of connected devices and ecosystems, which is having a profound impact on the way insurers create products and engage with policyholders.
The Indian insurance ecosystem is driving digital transformation initiatives not only for customer acquisition or to drive sales but also to improve custom centricity and claims management. Here are some trends we are observing on the impact of 4IR on insurance and the opportunity it presents:
• As the volume and quality of structured and unstructured data sources continue to grow exponentially, advancements in Big Data, analytics, machine learning, and AI are allowing insurers to harness that data effectively. Carriers can deliver hyper-personalised insurance offerings to policyholders by better assessing risk using customer and third-party data. The more accurate the data is, the more realistic and likely that all types of associated risks can be priced individually, rather than relying on general exposure categories.
• Adjusters today can carry out surveys and inspections in near real-time by using smartphone apps, connected devices, and automated support systems.
• Customers traditionally deal with agents and brokers, but with AI-enabled conversational chatbots, insurance companies can deliver highly contextual customer service and reduce operational costs across call centres and support teams. For instance, HDFC ERGO empowered its customers to use the AI-enabled chatbot “DIA” on Google Assistant and easily identify the nearest network hospital.
• There has been a surge in the number of consumers using the self-service option to purchase insurance policies, especially for motor, life, and health coverage. Customers also prefer using these platforms to file claims without the need to speak to customer support agents. Insurance companies should look to continually invest in digital initiatives to automate workflows and make the purchase of insurance agile and real-time. For example, AI-assisted underwriting has digitised 70%-80% of the process in health insurance and more than 90% of the policies are being processed online.
Exploring strategic partnerships for sustainable growth
Historically, the global insurance industry has been slow to adopt new technologies and ways of doing business. Reliance on traditional insurance business models that are familiar to insurers and their policyholders is often a primary factor in the insurance industry’s technology sluggishness. However, next-generation business models and offerings, like embedded and usage-based insurance, are seeing traction across the global insurance marketplace with the rapid proliferation of digital-first insurance service providers and insurtech organisations.
But that trend can create an imbalance for traditional insurance organisations still using traditional models and approaches. So, how can these established re/insurers adjust to using new advanced technologies identify and implement operational improvements and keep pace with up-and-coming market entrants? One way is through partnerships and strategic vendor relationships.
To help harness the promise of intelligent technology and data-driven transformation in the fourth industrial revolution, insurance organisations are increasingly turning to expert external resources — organisations with deep insurance industry experience and a track record of success in helping clients transform their operations and grow. External technology partners can act as an extended innovation arm to an insurance firm and give those firms the much-needed impetus and competitive edge required to keep pace with competitors and remain successful.
The current pace of change in insurance is significant and can be challenging for insurance firms to navigate. External strategic technology service providers have the experience, the relationships, and the expertise to help companies create a differentiated value proposition. This new era requires new thinking and the ability to leverage emerging technologies to explore the full potential of the growing opportunities that are available today in the market. The insurance firms that can effectively leverage 4IR technologies will find themselves positioned to lead and shape the future of the insurance sector.